December 21, 2005
Poison Pill Promises Enforceable
Chancellor William B. Chandler III of the Delaware Court of Chancery denied a defendant's (News Corp.'s) motion to dismiss on a claim that the defendant's board of directors had broken a promise to rescind a poison pill plan. The case can now proceed to trial. Institutional shareholders claim that the board made the promise in order to secure their votes for reincorporating the company in Delaware (from Australia). The judge did dismiss claims based on fraud, misrepresentation and breach of fiduciary duty however. The judge's ruling reinforces the common view that the Delaware Supreme Court's Omnicare decision, in which a board's decision to bind itself without a "fiduciary out" provision was set aside, will not be widely applied outside its facts -- which is a relief.
TrackBack URL for this entry:
Listed below are links to weblogs that reference Poison Pill Promises Enforceable: