Court Of Chancery Explains That The Existence Of A Controlling Stockholder Does Not Determine Demand Is Excused

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Teamsters Union 25 Health Services & Insurance Plan v. Baiera,  C.A.  No. 9503-CB (July 13, 2015)

A transaction with a controlling stockholder that is the subject of a derivative complaint still requires that a majority of the directors be interested before demand is excused.

Indeed, even past employment with the controller does not in itself establish a director is interested for the purpose of determining if demand is excused. This is an excellent review of the demand rules both generally and when the decision under attack has been made by a board committee.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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