Delaware
How Cede & Co. v. J. M. B. Realty Corp. applies in Delaware: state-specific rules, key cases, and bar exam notes for Corporate Law.
Delaware law maintains that the equitable remedy of specific performance may be granted in cases involving fiduciary duties, especially in corporate governance disputes. The case emphasizes the principle that shareholders must receive fair treatment and that management's fiduciary duty cannot be sidestepped.
Delaware courts will enforce shareholder rights through specific performance if there is a recognized breach of fiduciary duty and where damages inadequately remedy the situation.
The Delaware Supreme Court held that a board's actions to impede a stockholder vote were deemed invalid due to improper motive.
The court ruled that the business judgment rule applies to controlling shareholders when a transaction is approved by both a special committee of independent directors and fully informed minority shareholders.
The court emphasized the importance of directors acting in good faith when making decisions that affect shareholder interests.
While both Delaware and federal law acknowledge the fiduciary duties of directors and their obligations to shareholders, Delaware law more rigorously defines specific performance and other equitable remedies available in corporate governance disputes. Federal law often focuses more on statutory compliance and investor protection at a broader level, emphasizing disclosure over fiduciary enforcement.
The principles established in Cede & Co. are integral to understanding Delaware Corporations Law, making it an important topic on the Delaware bar exam.