In a recent decision, Chancellor Kathaleen McCormick of the Delaware Chancery Court examined what constitutes a sale of “substantially all” of a selling company’s assets for purposes of Section 271 of the Delaware General Corporation Law (DGCL), granting a company’s motion to dismiss a stockholder’s lawsuit alleging that a sale of the “crown jewel” of the company amounted to a sale of substantially all of its assets and accordingly required stockholder approval. Altieri v. Alexy, No. 2021-0946-KSJM (Del. Ch. May 22, 2023).
In a recently issued opinion in HControl Holdings v. Antin Infrastructure Partners, Chancellor McCormick of the Delaware Court of Chancery allowed a buyer to avoid closing on a transaction based on the failure of a closing condition related to the capitalization representation.
Last Friday, Gov. Greg Abbott signed into law House Bill 19, creating Texas “business courts” to hear certain types of complex commercial disputes. These courts will open on September 1, 2024. The creation of these courts raises a host of strategic questions for litigants, as described in detail below. In-house lawyers would do well to start familiarizing themselves with the business courts’ structure and the strategic issues and decision points that may arise when the courts open their doors next year.
The recent Delaware Court of Chancery decision, In re McDonald’s Corporate Stockholder Derivative Litigation is a reminder of corporate officer duties and the vital role that corporate officers play in corporate governance, at both publicly and privately held corporations. These duties stem from officers’ status as both agents and fiduciaries. For boards of directors and other officers to perform their roles effectively, it is critical for officers to understand an satisfy their duties. Failure to do so may deprive boards of directors of information they need to monitor operations, mitigate risks and establish strategy and can expose officers to personal liability.
Holly Gregory and Claire Holland have authored the United States chapter of Getting the Deal Through – Corporate Governance 2023, an annual summary of key corporate governance practices in 19 jurisdictions worldwide. Topics addressed in the chapter include: sources of governance rules and practice, shareholders’ rights, duties and liability, anti-takeover devices, board structures, legal duties of the board, and disclosure and reporting requirements. Holly Gregory has served as the contributing editor since 2015.
On June 1, 2023, the majority of an en banc panel of the Ninth Circuit found that Gap Inc.’s forum selection clause does not violate the anti-waiver provision of the Securities Exchange Act of 1934 (the “Exchange Act”) or Delaware law, entrenching its split with the Seventh Circuit’s circuit ruling on the same questions and ensuring that the enforcement of forum selection clauses across jurisdictions will remain unsettled for the foreseeable future.
The Delaware Court of Chancery recently reminded litigants of the “fundamental right . . . to an open court system.” Minnie Sarwal v. Nephrosant, Inc., C.A. No. 2023-0222-BWD (Del Ch. May 11, 2023). The Court’s ruling in Sarwal, as well as another recent decision, serve as a strong reminder that litigants should not presume information will be kept confidential, no matter how sensitive it may be. If a party cannot demonstrate a particularized harm from disclosure that outweighs the public interest in accessing the information, the Court of Chancery will not permit confidential treatment.