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Article

Comments

Restatement of Corporate Freezeouts (with V. Brudney), 87 Yale Law Journal 1354 (1978)

Abstract

Apparently overruling earlier decisions, the Supreme Court of

Delaware has recently declared that a merger effected "for the sole

purpose of freezing out minority stockholders ...is an abuse of the

corporate process ...[and a] violation of a fiduciary duty for which

the Court may grant.. . relief." In Singer v. Magnavox Co. a parent

corporation had merged with its eighty-four-percent-owned subsidiary.

Minority stockholders of the subsidiary had received only cash for their

shares and thus had been eliminated from participation in the combined

enterprise. The court confirmed that the parent owed a fiduciary

duty to the minority by reason of its status as majority stockholder, but

then-in what is generally viewed as a new development in Delaware

law-the court held that this duty would not be met unless a corporate

purpose for the merger, other than mere elimination of the minorityheld

stock, were supported by the evidence.

Date of Authorship for this Version

1978

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