Richards Layton Discusses the Standing Demand Committee in Derivative Litigation
February 18, 2025
Publication| Corporate Governance| Corporate Transactions| Mergers & Acquisitions| Special Committees & Investigations| Corporate & Chancery Litigation
Recently, corporations and fiduciaries have faced enhanced litigation risk arising from entire fairness claims challenging related-party transactions and other transactions implicating unique interests of corporate fiduciaries. This risk is most pertinent for controlled public corporations, although it has also affected public and private corporations with significant non-majority holders. The prospect of costly entire fairness litigation has also proven to be ripe for exploitation by “entrepreneurial plaintiffs’ lawyers,” as this risk can alone supply plaintiffs with considerable settlement leverage. And this risk is not limited to the M&A sale transactions that have historically been the focus of stockholder litigation. Numerous other circumstances, such as financings and compensation awards, could implicate entire fairness review.