Richards Layton & Finger

The Delaware Supreme Court Provides Guidance on Directors' Fiduciary Duty of Disclosure

April 2018

In Appel v. Berkman, the Delaware Supreme Court reversed the Delaware Court of Chancery’s dismissal of claims relating to the merger of Diamond Resorts International, Inc. (“Diamond”), finding that the stockholders of Diamond were not fully informed when they tendered their shares in a first-step tender offer followed by a back-end merger under Section 251(h) of the Delaware General Corporation Law (DGCL). In reversing the Chancery Court, the Supreme Court held that Diamond’s failure to disclose the specific reasons for which its founder and chairman had abstained from approving the transaction rendered the disclosure document materially misleading.