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Chancery Court Questions Whether Nominally Designated “Independent” Directors Satisfied Requirements of Stockholders Agreement

Posted by on Friday, March 12, 2021 in Delaware Corporate Law Bulletins, En Banc, Volume 74.

Robert S. Reder & Eunice (Chan Mi) Lim | 74 Vand. L. Rev. En Banc 37 (2021) |

Chancellor Bouchard’s blanket rejection of the Coty Stockholder Litigation defendants’ motions to dismiss demonstrates the Chancery Court’s refusal blindly to accept procedural safeguards purportedly put in place to protect minority stockholders. Instead, in the face of well-pled allegations of unfairness, the Chancery Court will examine whether those safeguards were honored in actual practice. In Coty Stockholder Litigation, Plaintiffs’ allegations concerning the underlying web of entangled interests between JAB and members of the Board, even the nominally Outside Directors, led the Chancellor to require a trial on the merits of Plaintiffs’ claims, reaffirming the Chancery Court’s commitment to protecting minority stockholders.

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Robert S. Reder and Eunice (Chan Mi) Lim