Md. High Court Ruling Allows Direct Shareholder Suits

Law360, New York (November 13, 2009, 3:18 PM EST) -- Reversing a lower court ruling, the Court of Appeals of Maryland has determined that the state's corporation laws should not block direct shareholder actions against company directors for breach of fiduciary duties in the cashout merger context.

Maryland's highest court found on Thursday that under state law, boards of directors owe common-law fiduciary duties to shareholders once they've made a decision to sell the company and negotiate a price shareholders will receive, and are liable directly to shareholders for any breach of those duties.

The case...
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