Delaware Suit Means SPACs Will Face Tougher Legal Scrutiny
By Tom Zanki (January 14, 2022, 4:57 PM EST) -- Special-purpose acquisition company founders and directors doing business in Delaware will face increased litigation risks unless they provide fuller disclosure before merger proposals or enact other safeguards that can stem accusations of conflicts, experts say, following a recent Chancery Court action.
The sober outlook reflects the Delaware Chancery Court's refusal to toss an investor's suit alleging a SPAC's management disloyally pursued a merger favoring insiders, essentially signaling fiduciary duties to shareholders under the state's traditional corporate law will apply to modern vehicles like SPACs. Many SPACs, like operating companies, are incorporated in Delaware for certain legal and tax reasons.
Stay ahead of the curve
In the legal profession, information is the key to success. You have to know what’s happening with clients, competitors, practice areas, and industries. Law360 provides the intelligence you need to remain an expert and beat the competition.
Access to case data within articles (numbers, filings, courts, nature of suit, and more.)
Access to attached documents such as briefs, petitions, complaints, decisions, motions, etc.
Create custom alerts for specific article and case topics and so much more!