| Summary: | The Court of Chancery in Delaware is, in regard to adjudicating corporate governance issues, the most preeminent court in the United States. The Court is one of equity, and has century-long tradition of dealing with litigation arising out of disputes concerning the internal affairs of corporations. Therefore, it should come as no surprise that sixty-four percent of Fortune 500 companies are incorporated in Delaware. What might be surprising is the frequency of shareholder litigation involving directors in M&A-transactions. The aim of this thesis is to establish what duties directors owe shareholders in the context of an M&A-transaction. The thesis thus includes a brief overview of the subject matter jurisdiction of the courts in Delaware as well as a summary of how corporations are formed and how mergers are carried into effect. The main fiduciary duties directors owe shareholders as well as the standards of review with which director action is judged is then analyzed. This includes the overarching duties of care and loyalty, as well as the duty to act in good faith, the duty of oversight and the duty of disclosure. The analysis regarding the standard of reviews focuses on the business judgment rule, enhanced scrutiny under Unocal, Revlon and Blasius, and finally entire fairness. Furthermore, the effects of the recent Trulia and Corwin verdicts are discussed.
|
|---|
