Delaware Court Clarifies Judicial Standard of Review for Evaluating Director Actions Affecting a Stockholder Vote
On August 14, 2007, the Delaware Court of Chancery issued a decision in Mercier v. Inter-Tel (Delaware), Inc., et al., declining to enjoin the consummation of a merger that had been approved by a majority of Inter-Tel’s stockholders. The decision is significant in that it sets out to reformulate the well-known standard requiring a "compelling justification" for directors to interfere with an exercise of the stockholder franchise, and holds that a board can take action to reschedule a vote so as to provide additional information to stockholders when the vote is imminent and the directors think the stockholders are going to make the wrong decision.
Lauren Kornsey, Senior Manager, Marketing and Business Development
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