The reason for statutory protect is that stockholders should not be forced against their will into something fundamentally different from that for which they bargained when they acquired their shares. Hariton v. Arco Electronics, DON’T WORRY ABOUT IT FOR FINAL Rule . A sale of assets accompanied with a mandatory plan of dissolution and distribution is legal even if no appraisal rights are given to shareholders. Delaware allows you to do whatever you want as long as it is stated in your provision. The Weinberger Approach ( Weinberger v. UOP ) Majority shareholder, Signal, wanted a cash out merger of UOP’s minority shareholders. Rule . Minority shareholders voting in favor of a proposed merger must be informed of all material information regarding the merger for the merger to be considered fair. Cash out merger. The acquiring company pays you cash to get out of the company so you are no longer a shareholder. Burden. P has to show some type of self-dealing, to show the deal is improper. After P shows this, the burden shifts to the D to show it is fair. Ultimate burden of proof is on the majority shareholder to show by a preponderance of the evidence that the transaction is fair, it is first the burden of the p attacking the merger to demonstrate some basis for invoking the fairness obligation. However, were corporate action has been approved by an informed vote of a majority of the minority shareholders, we conclude that the burden entirely shifts to the P to show that the transaction was unfair to the minority. The burden remains on those relying on the vote to show that they complexly disclose all material facts relevant to the transaction. Fairness : fair dealing and fair price. Similar concept to unconscionability like in contracts. All aspects of fairness must be examined as a whole. Fairness not present here. Fair Dealing – did it have fair terms
Embraces questions of when the transaction was timed, how it was initiated, structured, negotiated, disclosed to the directors, and how the approvals of the directors and the stockholders were obtained. Look at all the relevant material, things – for the experts to fight it out. Fair Price – how did the deal take place/transaction occur? Was it something that was quickly decided, of how the transaction came about? Relates to the economic and financial considerations of the proposed merger, including all relevant factors: assets, market value, earnings, future prospects, and any other elements that affect the intrinsic or inherent value of a company’s stock. AC Feasibility Study created – issue with regards to standing/positions of the people who conducted the test because they were both Signal Officers (majority shareholders) and board of directors of UOP (minority shareholders).
- Fall '19
- Corporation, Types of business entity, partner, Limited liability partnership