Director Duties in M&A Transactions: Navigating...

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Presenting a live 90-minute webinar with interactive Q&A

Director Duties in M&A Transactions:

Navigating Evolving Standards of

Review Under Delaware Law When Do Delaware Courts Apply the Business Judgment Standard vs.

the Entire Fairness Standard in Evaluating Fiduciary Duty Compliance?

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

WEDNESDAY, JUNE 1, 2016

Gardner F. Davis, Partner, Foley & Lardner, Jacksonville, FL

Michael D. Allen, Director, Richards Layton & Finger, Wilmington, Del.

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Director Duties in M&A Transactions Navigating Evolving Standards of Review

Under Delaware Law

June 1, 2016

Michael D. Allen

I. Evolving standards of review

6

Overview of Discussion Topics

7

Standards of Review in Controlling Stockholder

Transactions

Controller As Buyer

Standard of Review: MFW

In MFW (Kahn v. M&F Worldwide Corp., 88 A.3d 65 (Del. 2014)), the

Delaware Supreme Court affirmed the Court of Chancery’s grant of

defendants’ motion for summary judgment in an action challenging a

merger of M&F Worldwide with its controlling stockholder.

The Court held that the business judgment standard of review applies

to a controlling stockholder merger when it is conditioned, ab initio, on:

– Negotiation and approval by an independent, fully functioning and

duly empowered special committee that fulfills its duty of care; and

– The uncoerced, fully informed vote of a majority of the minority

stockholders.

8

Standard of Review: MFW

Thus, under the MFW framework, in controller buyouts, the business

judgment standard of review will be applied if and only if:

– the controller conditions the transaction on the approval of both a

special committee and a majority of the minority stockholders from

the outset;

– the special committee is independent;

– the special committee is empowered to freely select its own

advisors and to say no definitively;

– the special committee meets its duty of care in negotiating;

– the vote of the minority is fully informed; and

– there is no coercion of the minority.

9

Standard of Review: Post-MFW

In Swomley v. Schlecht, No. 9355-VCL (Del. Ch. Aug. 27, 2014)

(TRANSCRIPT), the Court of Chancery granted a motion to dismiss

breach of fiduciary duty claims in an MFW-structured going-private

transaction.

The Court noted that the point of the MFW structure is to assist in

obtaining dismissal at a preliminary stage.

Swomley highlights “gross negligence” standard on duty of care

analysis.

10

11


Transactions

Controller As Seller Getting Different Consideration

Standard of Review: Disparate Consideration for Controller

Recent DE Cases have addressed the standard of review in M&A

transactions where the controlling stockholder is not the Buyer, but

receives different consideration from the minority stockholders.

SEPTA v. Volgenau – Partial Roll-over

In re John Q. Hammons Hotels Inc. – Different assets

DE Courts have held that “entire fairness” standard does not apply ab

initio in such transactions, but will apply absent “robust procedural

protections” – i.e., (i) approval by disinterested and independent special

committee and (ii) approval by stockholders in non-waivable majority of

the minority vote.

Similar to MFW though some differences – e.g., no need to condition

the transaction at the outset on non-waivable majority of the minority

stockholder vote.

Uncertainty as to structure in a sale transaction may highlight the

desirability of a special committee at the outset. 12

13


Transactions

Safe Harbor For Equal Treatment

Standard of Review: Safe Harbor for Equal Treatment

Mere fact of controlling stockholder (where controller is not the buyer or

receiving different consideration) does not lead to “entire fairness”

standard .

To the contrary, recent DE cases note some “safe harbor” where the

controller is receiving the same consideration as the minority

stockholders (In re Synthes, In re Mortons).

Note that in certain other cases an argument that the controller pursued

the transaction due to a need for liquidity gained traction with the DE

courts – resulted in application of “entire fairness” standard (In re

InfoGroup).

14

15

Legal Effect of Disinterested Stockholder Approval

Upon Standard of Review

Effect of Stockholder Vote on Standard of Review: KKR Financial

In Corwin v. KKR Financial Holdings LLC, No. 629, 2014 (Del. Oct. 2,

2015), the Delaware Supreme Court affirmed the Court of Chancery’s

grant of defendants’ motions to dismiss with prejudice a suit challenging

the acquisition of KKR Financial Holdings LLC ("KFN") by KKR & Co.

L.P. ("KKR").

In December 2013, KKR and KFN executed a stock-for-stock merger

agreement.

Merger was subject to approval by a majority of KFN shares held

by persons other than KKR and its affiliates.

Requisite vote was obtained after full disclosure.

16


Plaintiffs claimed that KFN’s directors breached their fiduciary duties by

agreeing to the merger and that KKR breached its fiduciary duty as a

controlling stockholder.

The Court of Chancery held:

KKR, which owned less than 1% of KFN's stock, was not a

controlling stockholder.

Although KKR controlled KFN’s day-to-day operations through an

investment advisory agreement, it could not dictate the

composition of the Board – and the Board remained free to reject

the proposed merger.

Business judgment standard of review would apply to the merger

"because it was approved by a majority of the shares held by

disinterested stockholders of KFN in a vote that was fully

informed.“

17


The Delaware Supreme Court affirmed the holding that KKR was not a

controller, as plaintiffs did not plead facts sufficient to support an

inference that KKR could prevent the KFN board from “freely exercising

its independent judgment in considering the proposed merger.”

The Delaware Supreme Court also affirmed the holding that where a

transaction is not subject to entire fairness, a fully informed, uncoerced

vote of the disinterested stockholders invokes the business judgment

rule standard of review, even if that vote is required by statute.

The Delaware Supreme Court confirmed the Court of Chancery’s

conclusion that Gantler v. Stephens is a narrow decision focusing on

the definition of “ratification,” not on the standard of review.

18

19

Pleading Standard of Review of Non-Exculpated

Claims Against Disinterested Directors

Standard of Review: Cornerstone

In In re Cornerstone Therapeutics Inc., No. 8922-VCG (Del. Ch. Sept.

10, 2014), the Court of Chancery denied a motion to dismiss in a going-

private transaction conditioned upon both special committee and

majority of the minority stockholder approval.

The transaction was not conditioned from the outset on a majority of the

minority vote.

The Court certified to the Delaware Supreme Court the question of the

appropriateness of the Court’s decision not to dismiss the disinterested

directors at the motion to dismiss stage.

20

Standard of Review: Cornerstone

In In re Cornerstone Therapeutics Inc., S’holder Litig., Nos. 564, 2014 &

706, 2014 (Del. May 14, 2015), the Delaware Supreme Court held that

in an action for damages against corporate fiduciaries, plaintiffs must

plead non-exculpated claims against each independent director to

survive a motion to dismiss, regardless of the underlying standard of

review for the transaction or for interested directors.

“[T]he mere fact that a plaintiff is able to plead facts supporting the

application of the entire fairness standard to the transaction, and can

thus state a duty of loyalty claim against the interested fiduciaries, does

not relieve the plaintiff of the responsibility to plead a non-exculpated

claim against each director who moves for dismissal.”

21

22

Standard of Review in Non-Merger Transactions

With a Controlling Stock Approved by an

Independent Committee

Standard of Review: EZCorp Consulting

In In re EZCorp Consulting Agreement Derivative Litigation, C.A. No.

9962-VCL (Jan. 25, 2016), the Court concluded that the entire fairness

test applies to any transaction in which a stockholder obtains a non-

ratable benefit.

Philip Cohen indirectly controlled EZCorp through ownership of Class A

(Voting) Common Stock.

– Class A (Voting) Common Stock represented approximately 5% of

equity

– Class B (Non-Voting) Common Stock was publicly traded

For fiscal years 2011 through 2014, EZCorp entered into an advisory

services agreement with affiliates of Cohen, and each agreement was

approved by the audit committee.

In 2014, the audit committee terminated the renewal of the advisory

services agreement.

23


Following the termination, Cohen removed three Board members, two

of whom were members of the audit committee; a fourth director

resigned the same day.

Plaintiffs brought suit to challenge the advisory services agreements.

After procedural motions, the only parties left in the litigation were

Cohen and his affiliates and Thomas Roberts, a facially independent

director and member of the audit committee that approved certain of

the advisory services agreements.

Defendants moved to dismiss for failure to state a claim, arguing that

the business judgment rule was applicable to the decisions of the audit

committee (comprised of independent directors) to approve the

advisory services agreements.

24


The Court distinguished recent cases in which the business judgment

rule applied to transactions in which an independent committee

approved compensation to a controller, finding instead that the weight

of authority supported the conclusion that the entire fairness standard

of review applies to any transaction in which the controller receives a

non-ratable benefit.

The Court noted that the cases applying the business judgment rule

relied on Aronson v. Lewis.

– The Court held that Aronson should be limited to an analysis of

demand futility, not to the application of the standard of review.

– The “crux of Aronson’s holding was to reinforce the requirement

that a plaintiff allege particular facts that would call into question

the ability of the board to consider a demand.”

25


The Court next analyzed the independence of directors for demand

futility under 23.1, noting demand is futile when the particularized

factual allegations create reasonable doubt, as of the time the

complaint is filed, that the board could have exercised its independent

and disinterested judgment.

– Of the seven directors challenged, the Court found reasonable

doubt as to six; as a majority of the board lacked independence,

demand was futile.

– The Court found reasonable doubt as to senior executives of

EZCorp.

– The Court found reasonable doubt as to directors who, while not

employees, were employed by related parties or had ties to the

controller’s entities.

26


Most notably, the Court found reasonable doubt as to a director who

had no employment or consulting arrangement with EZCorp or its

affiliates, or with the controller or its affiliates.

– The following facts, however, gave rise to reasonable doubt:

‐ The director’s personal participation in the decisions to

approve the advisory services agreement after problems had

arisen

‐ The director’s immediate return to the board after the other

directors terminated the advisory services agreement

‐ The implications of the controller’s willingness to remove

outside directors who disagreed with him

– The Court noted as a consideration the director’s “apparent

eagerness to be of use.” While not dispositive, it was a factor in

light of other allegations that supported a reasonable inference

that “Cohen wanted to bring back a cooperative member of the

placid antebellum regime.”

27

28

Standard of Review Applicable to

Financial Advisors

Standard of Review: In re Zale

On appeal, the Delaware Supreme Court in Singh v. Attenborough, No.

645, 2015 (Del. May 6, 2016) upheld the Court of Chancery’s ruling in

Zale below.

The Court affirmed that when a merger is approved by an informed

body of disinterested stockholders, the business judgment rule applies,

further judicial examination of director conduct is generally

inappropriate, and “dismissal is typically the result.”

The Court clarified that while Delaware law insulates advisors from

liability by requiring plaintiffs to prove scienter, advisors cannot avoid

liability merely because the board of directors (in relying in good faith

upon the advisors) did not act in bad faith:

“To grant immunity to an advisor because its own clients were duped by

it would be unprincipled and would allow corporate advisors a level of

unaccountability afforded to no other professionals in our society.”

29

This presentation and the material contained herein are provided as general

information and should not be construed as legal advice on any specific matter or as

creating an attorney-client relationship. Before relying on general legal information

or deciding on legal action, request a consultation or information from a Richards,

Layton & Finger attorney on specific legal needs.

30

31 ©2016 Foley & Lardner LLP

Gardner F. Davis

Factors to Consider

in a Sales Process

©2016 Foley & Lardner LLP

II. Factors to Consider in a Sale Process

A. Financial Advisor Risks

32



Delaware courts are giving increased scrutiny to investment banker conflicts of interest

− In re Rural Metro, 2014 WL 971718 (Del. Ch. March 7, 2014)

− In re El Paso Corp., 41 A.3d 432 (Del. Ch. 2012)

− In re Atheros Communications, 2011 WL 864928 (Del. Ch. March 4, 2011)

− In re Del Monte Foods, 25 A.3d 813 (Del. Ch. 2011)

33



■ Delaware Chancery cases recognize “the

central role played by investment banks

in the evaluation, exploration, selection

and implementation of strategic

alternatives”

− In re Atheros Communications, 2011 WL

864928 (Del. Ch. March 4, 2011)

− In re Del Monte Foods, 25 A.3d 813 (Del. Ch.

2011)

34



■ In suits against directors

− Reviewing court necessarily will consider the

extent to which a board has relied on expert

services

− When managing the sale of the company, the

directors’ advisors play a pivotal role

35



■ Shareholder lawsuits against the board in

M&A context raise three general charges

relating to investment banker’s

performance

1. Substantive misconduct (conflicts of

interest and deceit)

2. Disclosure claim

3. Technical, substantive attacks on financial

advisor’s valuation methodology and

professional advice

36



■ Review of Del Monte

− Alleged conflicts and misconduct of

investment banker so tainted sale process

that remedial action required

− Concern regarding investment banker’s dual

role of providing buy-side financing and

advising seller

37



■ Atheros Communications

− 98% of banker’s fee is contingent

− Need to disclose to shareholders

38



■ Rural Metro

− Board should specifically discuss and

consider imposing limits upon sell-side

financial advisor’s ability to provide staple

financing or participating in buy-side

financing

39


II. Factors to Consider in a Sale Process

B. Conflicts of Interest

40



■ Controlling Stockholder Freeze-Out

Mergers

41



■ Who is a “controlling shareholder”?

− Owns majority of shares

Kahn v. Lynch Communications, 638 A.2d 1110 (Del. 1994)

− Actual control – voting and managerial power to actually control

Morton’s Restaurant Group, 74 A.3d 656 (Del. Ch. 2013)

Zhongpin, 2014 WL 6735457 (Del. Ch. Nov. 26, 2014)

In re KKR Financial Holdings, 2014 WL 151285 (Del. Ch. Oct. 14, 2014)

42



■ Is it a conflict?

− Law presumes large shareholders have a strong incentive to maximize the value of their shares in a change of control transaction

− Not conflict where large shareholder supports arm’s length transaction that spreads transaction consideration ratably across all stockholders

Morton’s Restaurant Group, 74 A.3d 656, 661 (Del. Ch. 2013)

but see Rural/Metro Corp., 2014 WL 971718 (Del. Ch. March 7, 2014

43



■ Southern Peru Copper Corp., 2011 WL 4907799 (Del. Ch. Oct. 14, 2011)

− Relationship between special committee and controlling shareholder in conflict transaction

− Special committee put itself in a world where there was only one strategic option to consider – the one proposed by controller

− Dynamic where special committee at best had two options, either figure out way to do the deal the controller wanted or say no

− Narrow mandate to “evaluate” transaction proposed by controller

44



1. Authorizing resolution should expressly

and unequivocally empower special

committee to negotiate with the

controller and to consider other strategic

alternatives

2. Special committee should focus on

“give/get” analysis

45



■ Lessons learned from Dole Foods: what

not to do when controlling shareholder

wants to go private

46



■ Kahn v. M&F Worldwide Corp.

− Delaware Supreme Court affirms business

judgment review applies to properly

structured controlling stockholder buyouts

47



Kahn v. M&F Worldwide Corp.

1. Controlling stockholder conditions the

procession of the transaction on the

approval of both a special committee and a

majority of minority stockholder

2. Special committee is independent

3. Special committee is empowered to freely

select its own advisors and to say no

definitively

48



4. Special committee needs to meet its duty of

care in negotiating a fair price

5. The vote of the minority is informed

6. No coercion of the minority stockholders

49

Director Duties in M&A Transactions Navigating Evolving Standards of Review

Under Delaware Law

June 1, 2016

Michael D. Allen

II. Proxy statement disclosures

III. Officer liability

51

Overview of Discussion Topics

52

Proxy Statement Disclosures

Duty of Disclosure

In Stroud v. Grace, 606 A.2d 75, 84 (Del. 1992), the Delaware Supreme

Court held that directors have a “fiduciary duty to disclose fully and

fairly all material information within the board’s control when it seeks

shareholder action.”

In Shell Petroleum, Inc. v. Smith, 606 A.2d 112 (Del. 1992), the

Delaware Supreme Court held that omitted information is material if

there is a substantial likelihood that:

– a reasonable stockholder would consider it important in deciding

how to vote; and

– the omitted information would alter the “total mix” of information

made available to the stockholder.

53

Disclosure of Projections

In Maric Capital Master Fund, Ltd. v. PLATO Learning, Inc., C.A. No.

5402-VCS (Del. Ch. May 13, 2010), the Court of Chancery enjoined the

acquisition of PLATO Learning, Inc. pending additional disclosures

regarding, among other things, discrepancies in the proxy statement

about discount rates employed by the financial advisor in its analyses

and free cash flow projections provided to the company’s financial

advisor.

In Steamfitters Local Union 447 v. Walter, C.A. No. 5492-CC (Del. Ch.

Jun. 21, 2010) (TRANSCRIPT), the Court of Chancery denied a motion

to expedite a preliminary injunction hearing which was premised on the

fact that a company being purchased by a private equity buyer did not

include free cash flow projections in its proxy statement for the

transaction.

– The Court held that the free cash flow estimates were not material

because (i) unlike PLATO Learning, the estimates had not been

presented to the banker and later excised and (ii) unlike Netsmart,

the Company had not undertaken to present estimates of free

cash flow, but actually provided stale, meaningless estimates. 54

Disclosure of Projections

In In re Orchid Cellmark Inc. S’holder Litig., C.A. No. 6373-VCN (Del.

Ch. May 12, 2011), the Court of Chancery denied a preliminary

injunction and refused to order disclosure of management’s estimate of

cash flow because management’s outlook for the company was more

optimistic than the Board’s and “it is not for the Court to . . . determine

which set of projections better captures the Company’s financial

condition where the Board’s decision appears to be reasonable.”

In Kahn v. Chell, C.A. No. 6511-VCL (Del. Ch. June 7, 2011)

(TRANSCRIPT) Vice Chancellor Laster noted that the Court of

Chancery expects projections to be disclosed and that if they are not,

the lack of disclosure could be evidence of bad faith on the part of

directors.

55

Disclosure of Investment Banker Compensation

In In re Atheros Commc’ns, Inc. S’holder Litig., C.A. No. 6124-VCN

(Del. Ch. 2011), the Court of Chancery preliminarily enjoined the

acquisition of Atheros Communications, Inc. by Qualcomm Incorporated

pending supplemental disclosures related to, among other things,

Atheros’ failure to disclose that 98% of the fee payable to its financial

advisor was contingent upon the closing of the transaction.

In In re Art Tech. Group, Inc. S’holders Litig., Consol., C.A. No. 5955-

VCL (Del. Ch. Dec. 20, 2010) (TRANSCRIPT), the Court of Chancery

enjoined the stockholder vote on Oracle’s acquisition of ATG pending

supplemental disclosure of substantial fees Oracle paid since 2007 to

ATG’s financial advisor.

– The supplemental disclosures were required to be made by a

Form 8-K, and were required to be in the market for 10 calendar

days before the adjourned vote could take place.

56

Disclosure-Only Settlements: In re Trulia

In In re Trulia, Inc. Stockholders Litigation, C.A. No. 10020-CB (Del. Ch.

Jan. 22, 2016), the Court rejected a disclosure-only settlement of litigation

challenging the stock-for-stock merger of Trulia and Zillow.

– The Court indicated that disclosure-only settlements rarely yield

genuine benefits for stockholders.

– The Court stated it “will be increasingly vigilant” in its review of

disclosure-only settlements.

– The Court stated that disclosure-only settlements are unlikely to be

approved in the absence of “plainly material” misrepresentations and

omissions and narrowly tailored releases.

57

Disclosure-Only Settlements: In re Trulia

The Court recommended that disclosure claims be litigated outside of a

settlement-approval proceeding and in an adversarial context.

– In a preliminary injunction motion the plaintiffs bear the burden of

showing that disclosure of an omitted fact would likely have been

material to a reasonable investor.

– In an application by the plaintiffs’ attorneys for fees after the

defendants voluntarily supplement proxy materials with one or more

of the disclosures sought by plaintiffs the defendants are incentivized

to oppose excessive fee requests.

The Court also suggested appointing an amicus curiae, paid for by both

parties, to assist the Court in evaluating the alleged benefits of

supplemental disclosures.

58

Disclosure-Only Settlements: In re BTU

In In re BTU Int’l Inc. S’holder Litig., C.A. No. 10364-CB (Del. Ch. Feb. 18,

2016), plaintiffs alleged disclosure and price claims related to a $33 million

stock-for-stock deal.

After limited discovery, the parties reached a settlement that required (i)

disclosure of management free cash flow projections used by the

company’s financial advisor, (ii) disclosures regarding management’s level

of involvement in negotiating the deal and post-closing employment and

(iii) the mailing of a letter to stockholders clarifying that standstill

agreements with 6 bidders had expired.

59

Disclosure-Only Settlements: In re BTU

Based on Trulia, the parties narrowed the scope of the released claims,

foregoing the release of “unknown” claims and focusing on disclosure and

merger-related fiduciary duty claims.

– The Court questioned including the words “foreign” and “regulatory” in

the released claims definition and reiterated the Court’s preference to

have disclosure claims resolved through an adversarial process.

The Court held that the disclosures satisfied the “plainly material standard”

and determined that the settlement contained a “Trulia-compliant release.”

60

Disclosure-Only Settlements: Current Landscape

Disclosure-based settlements are carefully scrutinized including the

plaintiffs’ basis for filing claims, the discovery taken, and the process by

which releases were or were not tailored to the specific case

Important role for defense counsel to play before settlement to ensure

creation of appropriate record to support releases.

If presenting settlements negotiated previously, counsel for plaintiffs

and defendants should take steps to ensure that the Court is presented

with an adequate record showing:

The extent to which the non-disclosure-based claims being

released were carefully investigated by plaintiff.

The factual and legal bases for concluding that the claims lacked

merit.

In negotiating settlements, defense counsel should expect plaintiffs to

press for narrower releases and/or to decline to agree to disclosure-

only terms.

61

62

Officer Liability

Officer Liability

In Gantler v. Stephens, C.A. No. 132, 2008 (Del. Jan. 27, 2009), the

Supreme Court held that officers of Delaware corporations owe the

same fiduciary duties as directors.

First Delaware Supreme Court decision to directly address officer

fiduciary duties

In Hampshire Group, Ltd. V. Kuttner, C.A. No. 3607-VCS (July 12,

2010), the Court of Chancery noted that officers are “expected to

pursue the best interests of the company in good faith (i.e., to fulfill their

duty of loyalty) and to use the amount of care that a reasonably prudent

person would use in similar circumstances (i.e., to fulfill their duty of

care).”

In Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 781 (Del. Ch. Feb.

2, 2016), the Court of Chancery held that officers have a duty to provide

the board of directors with the information that the directors need to

perform their statutory and fiduciary roles.

No statutory provision giving officers comparable exculpation as that

given to directors under Section 102(b)(7) of the DGCL

63

Officer Liability: Dole

In 2013 in In re Dole Food Co., Inc., C.A. No. 8703-VCL (Del. Ch. Sept.

10, 2013) (TRANSCRIPT), the Court of Chancery declined to schedule

a motion to enjoin the going-private transaction by Dole’s 40%

stockholder, because plaintiff could pursue a post-closing damages

case.

In February 2015, after discovery, in In re Dole Food Co., Inc. S’holder

Litig., C.A. No. 8703-VCL (Del. Ch. Feb. 5, 2015), the Court of

Chancery denied motion for summary judgment under MFW based on

disputed issues of material fact as to satisfaction of MFW requirements.

In its August 2015 post-trial decision, the Court of Chancery held Dole’s

chairman and CEO and another director and officer liable for breach of

duty of loyalty and awarded $148,190,590.18 in damages ($2.74 per

share).

The case settled for $114 million.

64

Officer Liability: Dole

The Court found Michael Carter, Dole’s president, COO and general

counsel, liable for damages as both a director and officer

The Court held that Carter was not entitled to exculpation under Section

102(b)(7) because in his capacity as director, he breached his duty of

loyalty to Dole and its stockholders by not acting in good faith

The Court held that Carter owed the same duties to Dole as an officer,

and was found to have equally breached his duty of loyalty

Most of Carter’s interactions with the special committee were in his role

as an officer, and in that role, he was not protected by the 102(b)(7)

exculpatory clause

65

Officer Liability for Fraud: Prairie Capital III, LP

In Prairie Capital III, LP v. Double E Holding Corp., C.A. No. 10127-VCL

(Del. Ch. Nov. 24, 2015), the Court of Chancery addressed post-closing

fraud claims in the context of a sale of a portfolio company by one

private equity fund to another.

The portfolio company’s CEO and CFO engaged in negotiations with

the buyer; the company emphasized the growth story and sales figures;

the buyer conditioned final offer on the company’s sales figures.

The buyer alleged that the company falsified its sales figures by

shipping products on false pretenses and including in accounts

receivable products that were not shipped.

The Court found that an individual who makes a false representation

that is indirectly communicated to a third party may be liable to the third

party for fraud, and that an officer who participates in fraud is not

shielded from liability on grounds that the officer acted on behalf of the

corporation.

66

For Additional Information

Michael D. Allen Director

302.651.7760

[email protected]

67

This presentation and the material contained herein are provided as general

information and should not be construed as legal advice on any specific matter or as

creating an attorney-client relationship. Before relying on general legal information

or deciding on legal action, request a consultation or information from a Richards,

Layton & Finger attorney on specific legal needs.

68

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