No Right of Minority in Delaware to Put Shares to Corporation
Blaustein v. Lord Baltimore Capital Corp., No. 272, 2013 (Del. Jan. 21, 2014).
Issue Addressed: Whether the common law imposes any duty on directors of closely held corporations to consider buying out minority stockholders. Short Answer: No
This Delaware Supreme Court decision affirmed several basic principles that have been long established in Delaware. The general statements of the law almost form a syllogism to defeat the claims in this case.
- The directors of a closely help corporation have no general fiduciary duty to repurchase the stock of a minority stockholder.
- An investor must rely on contractual protections if liquidity is a matter of concern. The Shareholders’ Agremeent in this case gave no such unequivocal protection.
- The stockholder in this case had no right to the formation of an independent committee of the board to negotiate to buy her shares.
For additional background details, the Court of Chancery opinion that was affirmed was highlighted on these pages.