Zapata Corp. v. Maldonado (Del.1981)
FACTS
-Maldonado instituted a derivative suit in which the requirement of demand was
excused.
Four of the defendants in the claim were no longer on the Board. The remaining
directors appointed two new outside directors to the board and created
an “independent investigation committee” composed solely of the two new directors.
The independent committee investigated Maldonado’s claims and then asked that the
derivative suits be dismissed – on the grounds that continuing the suit would only hurt
the corporation.
DISCUSSION/RULES
Court rules that an independent committee should be able to file a motion to dismiss a
derivative action if:
o Court should inquire into the independence and good faith of the committee
o Court should determine, applying its own independent business judgment,
whether the motion should be granted.
FACTS
-Maldonado instituted a derivative suit in which the requirement of demand was
excused.
Four of the defendants in the claim were no longer on the Board. The remaining
directors appointed two new outside directors to the board and created
an “independent investigation committee” composed solely of the two new directors.
The independent committee investigated Maldonado’s claims and then asked that the
derivative suits be dismissed – on the grounds that continuing the suit would only hurt
the corporation.
DISCUSSION/RULES
Court rules that an independent committee should be able to file a motion to dismiss a
derivative action if:
o Court should inquire into the independence and good faith of the committee
o Court should determine, applying its own independent business judgment,
whether the motion should be granted.
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