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Case Citations [1] (April 2022 - August 2022)

handle is hein.ali/alicgv0098 and id is 1 raw text is: THE AMERICAN LAW INSTITUTE PRINCIPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMMENDATIONS PART VII. REMEDIES CHAPTER 1. THE DERIVATIVE ACTION § 7.01. Direct and Derivative Actions Distinguished Del.2021. Rptrs' Note 3 quot. in case quot. in ftn. Minority shareholders brought a direct action for breach of fiduciary duty against controlling shareholders, affiliates, and corporate directors, alleging that defendants caused corporation to exchange its equity for controlling shareholders' assets for inadequate consideration, resulting in the dilution of plaintiffs' voting rights and financial interests. The trial court denied defendants' motion to dismiss. This court reversed, holding that it overruled case law stating that plaintiffs' injuries formed a basis for their direct claims. Citing Principles of Corporate Governance § 7.01, the court observed that the rule proposed by case law-under which an action was classified as direct if it concerned actions by board members, the board members were also shareholders, and all shareholders were equally injured-was confusing and inaccurate, because a variety of actions that infringed on the fundamental rights of all shareholders did not also create the basis for direct claims. Brookfield Asset Management, Inc. v. Rosson, 261 A.3d 1251, 1272. COPYRIGHT C2022 By THE AMERICAN LAW INSTITUTE All rights reserved Printed in the United States of America For earlier citations, see the Appendices, Supplements, or Pocket Parts, if any, that correspond to the subject matter under examination.

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