The Supreme Court of Delaware today reversed dismissal of claims that a party in "control" of a corporation expropriated from majority shareholders the value of their majority rights. The shareholders alleged that a large minority shareholder used his de facto control to engineer transactions that, in two simultaneous steps, transferred majority voting control to him and then sold the voting control to a third party. The court held that the transactions, in substance, allowed the minority shareholder to expropriate for himself the "control premium" that rightfully belonged to the majority shareholders. The majority shareholders thus stated "direct" claims rather than "derivative" ones that they could bring only on behalf of corporation itself. Gatz v. Ponsoldt, No. 298, 2006 (Del. Apr. 16, 2007).
Barry Barnett
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