Delaware Supreme Court Overturns Ryan v. Lyondell and Provides Some Comfort to Boards of Directors, May 2009

http://www.blakes.com/english/legal_updates/mergers_aquisitions/may_2009/Alert221-DSC_Comfort.pdf

Blake, Cassels & Graydon LLP
Michael Gans and Lindsay Bunt
May 2009

Delaware Supreme Court Overturns Ryan v. Lyondell and Provides Some Comfort to Boards of Directors
Michael Gans and Lindsay Bunt >

Excerpts:

In July 2008, the Delaware Court of Chancery dismissed a summary judgment motion by the directors of Lyondell Chemicals, an independent chemical manufacturer, to dismiss shareholder litigation asserting that they had not met their fiduciary duty in recommending the sale of Lyondell to Basell AF at a 45% premium over the pre-announcement share price. In a decision that will provide comfort to Delaware directors, the Delaware Supreme Court recently overturned the lower court’s dismissal and granted the Lyondell directors the summary motion they sought.>

While Delaware jurisprudence on directors’ duty of loyalty (or fiduciary duty) is arguably now less relevant in Canada in light of the Supreme Court of Canada’s (SCC) guidance in BCE Inc., the reversal of the lower court decision in Ryan v. Lyondell confirms that (i) as in Canada, Delaware directors who are diligent and informed will be afforded a high level of judicial deference even if their processes, when viewed in hindsight, may have been imperfect, and (ii) a high bar is required to establish a breach of the duty of loyalty where a board is independent and disinterested with regard to a particular transaction.>

Read Full Article: http://www.blakes.com/english/legal_updates/mergers_aquisitions/may_2009/Alert221-DSC_Comfort.pdf
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This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.