The Business Litigation Blog

Personal relationships among shareholders provided evidence of director lack of independence

A Zynga shareholder filed a derivative suit for breach of fiduciary duty by certain directors and officers that sold shares in a secondary stock offering. After the offering, the stock price fell significantly. The case was dismissed because the plaintiff failed to allege demand futility. The Delaware Supreme Court reversed, finding the plaintiff adequately alleged a majority of the directors were conflicted. Of note, it found that one director was not independent because she and her husband co-owned a private airplane with Zynga’s founder and majority shareholder, which the court found evidenced a close and personal relationship preventing the director from acting independently.

Sandys v. Pincus, No. 157, 2016 (Del. Dec. 5, 2016)

1 comment for “Personal relationships among shareholders provided evidence of director lack of independence”

  1. Selena posted on Friday, May 12, 2017 at 7:48:42 PM

    Thanks for the outstanding advice, it actually is useful.

Post a comment

Comments closed

 
Real Time Web Analytics