Thursday, November 21, 2013

Arnold v. Society for Savings Bancorp, Inc. case brief

Arnold v. Society for Savings Bancorp, Inc. case brief summary
650 A.2d 1270 (1994)


CASE SYNOPSIS
Plaintiff appealed from decision of the Court of Chancery of the State of Delaware, New Castle County, granting summary judgment to defendants in a suit arising out of a merger of defendant, a Massachusetts holding corporation, with a wholly-owned Connecticut subsidiary of defendant Delaware corporation.

CASE FACTS
Plaintiff sought preliminary injunction to enjoin the consummation of merger of defendant Massachusetts holding corporation with a wholly-owned Connecticut subsidiary of defendant Delaware corporation. Plaintiff claimed that the trial court erred in holding that certain alleged omissions and misrepresentations in the merger's proxy statement were immaterial and were not required to be disclosed.

DISCUSSION

  • On appeal, the court held that once defendants traveled down the road of partial disclosure of history leading up to the merger, they had an obligation to provide stockholders with an accurate, full, and fair characterization of those historic events. 
  • The court found that the existence of a bid for an acceptance corporation, a subsidiary of defendant Delaware corporation, was material. 
  • The court further held that a limitation provision in defendant Delaware corporation's certificate of incorporation, which paralleled language of Del. Code Ann. tit. 8, § 102(b)(7), shielded the individual defendants from personal liability for failing to disclose the bid for the acceptance corporation and that the shield was not waived.

CONCLUSION
The court reversed in part as to the materiality of the partial disclosure of the proxy and affirmed the remainder of the judgment.


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