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Court Of Chancery Explains When A False Statement Consitutes A Breach Of Duty

Posted In Fiduciary Duty
Higher Education Management Group Inc. v. Mathews, C.A. 9110-VCP (November 3, 2014) It is a breach of the duty of loyalty for a corporate director to lie to the entity's stockholders. But, as this decision explains, a false statement is not a lie unless the speaker knows it is false. Hence, a complaint that asserts a derivative action must contain facts that show a majority of the board is not disinterested because they knew they had lied. Just alleging their statement was wrong does not get you there. Share
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