Van Gorkom - The court concluded that the board was grossly...

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2/17/2014 Corporations are fictitious persons Formed under state law Corporate law is a state matter So many companies in delaware, because of the predictability and articulation of the corporate law there Corporations came into existence in the last 19th century Main value of the corporate form...allows investors to invest with limited liability The one main way you can mess up your limited liability is to mix in assets Van Gorkom - Stockholders suing the board of directors for ill informed merger decision - Did not do their due diligence researching other options Transunion Van Gorkom - CEO - He calls a board meeting, only 2 other upper level executives that were notified of it prior to meeting - Meeting was only 2 hours - Time was one of the factors that the court took into account
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Unformatted text preview: - The court concluded that the board was grossly negligent- Violated the duty of care to the shareholders Business Judgement Rule ...acting in good faith…- Protects disinterested investors acting in good faith without jeopardizing their personal finances- The $55/share price was based on leveraged buyout valuation It is a low valuation of a company because it is valued by the bank- Should’ve seeked out a professional opinion about the valuation of the company- You cannot regard the $55 price as the intrinsic value of the company because no one else knew that the company was up for sale so nobody else could make offers. ..it’s a lockup....
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