In this precedent setting decision, the Supreme Court holds that stockholders who are cashed out in a short-form merger may bring a class action for damages when there are violations of the duty of disclosure in the materials sent to them notifying them of the merger. In prior decisions, the Court of Chancery had reached somewhat inconsistent results in such cases, granting a quasi-appraisal remedy, but sometimes requiring stockholders to opt-in to be part of the stockholder group obtaining appraisal rights and also requiring an escrow of the merger consideration.
Here, the Supreme Court rejected both of those limits on the remedy. Instead, it held that all the minority stockholders had the right to be part of a class entitled to appraisal rights, subject to a right to opt-out of the class. In addition, stockholders do not have to escrow any of the merger consideration while the action is pending.
This result creates a "free rider" issue as there is little incentive for stockholders to opt-out. While it is possible the trial court will decide the fair value of their stock in the appraisal proceedings is less than the merger consideration, for smaller stockholders, the amounts in question may not justify the company enforcing any right to a refund.
Of course, the way out of this dilemma is to provide fair disclosure in the first place.
NSW Supreme Court on "disclosure to the world" Justice Smart in the NSW Supreme Court in Gene Simring v Commissioner of Police, NSW Police NSWSC 270 considered the applicability of the Victorian Court of Appeal decision (in Marke) that disclosure to a Freedom of Information applicant was not necessarily disclosure to the world at large, and that an applicant's purpose in seeking access can be relevant when making an assessment under
South Carolina Supreme Court Establishes HAMP Procedure The South Carolina Supreme Court has issued an administrative order that establishes a procedure which delays foreclosure sales in pending cases until HAMP applications can be processed where the mortgage is subject to HAMP, requires lenders to notify the court when HAMP applies in new cases, and allows foreclosure to proceed where loans are not [...
Mid-trial Disclosure of Brady Material May Violate Due Process United States v. Burke, ___ F.3d ___, 2009 WL 1926850 (10th Cir. 2009)Clarifying older case law that might have implied differently, the Court holds that belated, mid-trial disclosure of impeachment or exculpatory information per Brady violates due process, if it is shown that an earlier disclosure would have created a reasonable doubt of guilt...