871 A.2d. 1108 (Del. 2005)
FACTS
-Examen is a DE corporation that did majority of business in CA. -Examen wanted to merge with another corporation (Reed Elsevier)
-The merger required shareholder approval. VantagePoint (a shareholder) opposed the merger.
-Conflict of Laws: Difference between how votes would be counted under DE law vs. CA law.
-Vantage had enough shares to veto merger under CA standard, but not under DE standard.
-Examen sued to determine what law (CA v. DE) should apply.
-DE follows Internal Affairs Doctrine, which states that the law of a state of incorporation should govern any disputes regarding corporations internal affairs.
-CA exercises power over corporations that are "psudeo-foreign" because they conduct most of their activities or have a majority of their shareholders in the state, but are incorporated in another state.
PROCEDURAL HISTORY
-Trial court found for Examen, stated DE law should apply. -VantagePoint appealed.
ISSUE
-Does the DE Internal Affairs Doctrine or the CA rule apply?HOLDING
-The DE Supreme Court affirmed with the trial court that the DE Internal Affairs Doctrine should apply.
-The issue about voting and mergers involves the relationship between a corporation and its shareholders. Therefore it is an 'internal affair'.
ANALYSIS
-Court states that the Internal Affairs Doctrine was designed to meet the constitutionality of the Commerce Clause. This made it so that the DE law was constitutional while the CA law was not.Course: Corporate Law
Topics: Internal Affairs Doctrine, Conflict of Laws
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