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