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Court Of Chancery Explains “By Reason Of The Fact” Test

Lieberman v. Electrolytic Ozone Inc., C.A. 10152-VCN ( August 31, 2015)

Former directors are entitled to advancement when they are sued “by reason of the fact” that they acted as directors in committing allegedly bad conduct. That test can be hard to apply. However, as this case makes clear, when the underlying acts occurred post-termination, it is hard to claim that advancement is warranted.



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