Monday, May 19, 2014

Fiegler v. Lawrence case brief summary

Fiegler v. Lawrence (1976) 
 
o    Because of shareholder ratification it shifts the burden of proof to the objecting shareholder to demonstrate that the terms are so unequal as to amount to a gift or waste of corporate assets.
o    Only 1/3 of the disinterested shareholders voted. It was the vote of the people who wanted it that put it over. The result is that it is not a fair vote.  Does not sanitize.
o    Thus they can’t win under case law so they go to statute.
o    Only applies to contracts or transactions (looking at deal between company and directors/officers
o    Del Stat. § 144(a)(1) page 406 - Sanitizing votes: Director or officer must tell the board of directors two things:
§ the material facts (not all facts) as to relationship or interest and
§ the material facts as to the k or transaction 
o    § 144(a)(2) must tell the shareholders
o    K is fair if approved/ratified by the board of directors, committee, or shareholders
o    D’s argue that there is nothing in statute requiring disinterested or independent ratifying by shareholders. Only disinterested directors in directors vote.
o    Holding: Court does not take this broad interpretation they say the statute merely removes an interested director cloud when its terms are met.
§ Question 4 – First try a disinterested director vote then try a shareholder

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