In The News
| August 21, 2008
Breach Case In Company Sale Survives - Ruling Underscores Vulnerability Of Directors to Liability
Lawyers say a recent Delaware Court of Chancery ruling allowing a trial against corporate directors who approved selling a company for a premium illustrates directors’ ongoing vulnerability to breach-of-fiduciary-duty lawsuits — even if their actions benefited shareholders.
Some legal observers say the juxtaposition of the court’s ruling addressing the duties of a corporation’s directors with a July Delaware Supreme Court decision upholding dismissal of a breach-of-fiduciary-duty case against board members of a limited liability company highlights the greater legal protections LLC directors enjoy.
Both companies had exculpation provisions in their charters or operating agreements to protect board members from certain types of lawsuits, but Delaware law allows LLCs to offer more extensive protections. Wood v. Baum, No. 621, 2007 (Del.).
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