Benihana of Tokyo, Inc. v. Benihana, Inc. case brief
Benihana of Tokyo, Inc. v. Benihana, Inc. case brief summary
906 A.2d 114 (Del. 2006)
Plaintiff company appealed a judgment by
the Court of Chancery of the State of Delaware in and for New Castle
County that found defendant subsidiary's board of directors acted
properly in approving the issuance of $ 20 million in preferred
CASE FACTS Due to financial problems and a change
of corporate control, three of the members of the subsidiary's board
of directors considered the issuance of convertible stock and its
sale to defendant potential buyer. Ultimately, the entire board
approved resolutions ratifying the execution of a stock purchase
agreement with the buyer and authorizing the stock issuance.
Thereafter, the company filed an action against all but one of the
subsidiary's directors, alleging breaches of fiduciary duties.
state supreme court found that the subsidiary's certificate of
incorporation did not prohibit the issuance of preferred stock with
The record clearly established that the board
possessed all of the material information when it approved the
Consequently, the trial court properly concluded that
the board's approval of the transaction was a valid exercise of its
business judgment, for a proper corporate purpose, under Del.
Code Ann. title 8, §§ 144(a)(1), 102(b)(3).
The judgment was affirmed. Recommended Supplements for Corporations and Business Associations Law
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