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