Chancery Court Holds that a Board’s Refusal to “Approve” the Nomination of a Dissident Slate of Director Nominees for Purposes of Deactivating a Change of Control Put Provision is a Breach of Fiduciary Duty
March 15, 2013
On March 8, 2013, the Delaware Chancery Court, in an unpublished opinion by Chancellor Strine, ruled that an issuer’s board of directors cannot withhold its “approval” of the nomination of a dissident slate for purposes of using covenants in New York law indentures to pressure stockholders to vote for the incumbent board in a proxy contest. The approval would enable the issuer to avoid triggering a put right at 101% of par with respect to the notes issued under the indentures.
