holding that a Delaware corporation is not bound by the Securities Act “simply because the company is incorporated” there
How later courts described this case
- holding that a Delaware corporation is not bound by the Securities Act “simply because the company is incorporated” there
- interpreting the “Delaware Securities Act as a Blue Sky Law governing transactions which are subject to Delaware jurisdiction under traditional tests,” and finding that the Delaware Securities Act did not apply to the challenged transaction because “[p]laintiffs [were] residents of Pennsylvania and were not solicited [in Delaware]. Nor [did] it appear that the contract was made in Delaware nor that any part of the ‘sale’ occurred [there].”
- holding that a *417 Delaware corporation is not bound by the Securities Act “simply because the company is incorporated” there
- observing that “6 Del.C. § 7303 is almost identical to, and in fact is identical in the wording of its three subprovi sions to, Securities And Exchange Commission Rule 10b-5”
Written by the judges who cited it.
Later courts went against this
Overruled on other grounds by Weinberger v. UOP, Inc., 1983 Del. LEXIS 371 (1983)
380 A.2d 969, 981 (Del. 1977), overruled on other grounds by Weinberger v. UOP, Inc., 457 A.2d 701
Distinguished
Distinguished by Roland International Corp. v. Najjar, 1979 Del. LEXIS 423 (1979)
We held that any statement in Stauffer inconsistent with the principles restated in Singer was inapplicable to a § 251 merger. 380 A.2d at 980.
The opinion
McNEILLY, Justice
(concurring):
I concur in the result, and I agree with the holding of the majority that a § 251 merger, made for the sole purpose of freezing out minority stockholders, is an abuse of the corporate process; and that the complaint, which so alleges in this suit, states a cause of action for violation of a fiduciary duty for which the Court may grant such relief as it deems appropriate under the circumstances. I also agree with the learned and eloquent analysis of the Delaware case law on the subject of mergers made by Justice Duffy in his opinion.
In these cases of going private, be they mergers under § 251 or § 253, it is my opinion that Sterling v. Mayflower, Del.Supr., 33 Del.Ch. 293 , 93 A.2d 107 (1952), establishes an avenue for judicial scrutiny with a firm foundation based upon factual determinations of fundamental fairness and economic reasonableness which should be our guideline for future cases. It is not disputed that majority stockholders owe to the minority a fiduciary obligation in dealing with the latter’s holdings, and full compliance with the statutory requirements to effect a merger does not insulate a breach of that duty from judicial intervention, although it may affect the relief afforded. In my opinion a complaint alleging such a breach states a cause of action, shifting the burden to the majority to establish the entire fairness of the transaction. To determine whether that burden has been met under Sterling , I think the Court must scrutinize the business purpose, or economic necessity, desirability and feasibility involved, evidence of self-serving, manipulation, or overreaching, and all other relevant factors of intrinsic fairness or unfairness. Upon finding a breach of the fiduciary duty owed, the Court must then grant such relief as the circumstances require, by injunction, appraisal, damages, or other available equitable relief, if any, keeping in mind, however, the continuing legislative approval of mergers and the judicially mandated avoidance of their disruption by dissenting stockholders.