Search Team

Search by Last Name
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
Z

Articles

Gatz v. Ponsoldt: Delaware Supreme Court's Recent Clarification of Direct v. Derivative Claims

January 21, 2009

Articles

Gatz v. Ponsoldt: Delaware Supreme Court's Recent Clarification of Direct v. Derivative Claims

January 21, 2009

Back to News Listing

May 2007 Delaware Supreme Court Decisions case summary

Gatz v. Ponsoldt : Delaware Supreme Court’s Recent Clarification of Direct v. Derivative Claims”
by Brian Rostocki
Delaware Supreme Court Decisions case summary
May 2007

The Delaware Supreme Court’s recent decision in Gatz v. Ponsoldt (1) provides further clarification in a developing line of cases on what suits may be filed directly on behalf of shareholders or derivatively on behalf of a corporation. The procedural posture of this case is lengthy (2), but the decision before the Supreme Court on appeal dealt with the Chancery Court’s dismissal of the case based on the plaintiffs’ failure to meet the Rule 23.1 demand requirement for derivative actions. The transactions generating the issues on appeal are also complex, but essentially involve a large minority shareholder using his de facto control to engineer transactions that, in two simultaneous steps, transferred majority voting control to him and then sold that voting control to a third party (3). The end result was that the company’s public shareholders – who previously had held the company’s majority stock interest – became minority shareholders in an enterprise controlled by the third party (4).

Stay current with Fish Sign up for our Newsletter