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Court of Chancery Enjoins Transaction Pending Clearer Disclosure of Banker’s Conflicts

Posted In M&A

Vento v. Curry, C.A. No. 2017-0157-AGB (March 22, 2017)

A board must disclose all information material to the stockholder vote for a transaction.  Moreover, disclosures may be inadequate when they are buried in various places in a lengthy proxy statement.  One piece of material information is conflicts involving the board’s advisors.  The Court of Chancery is prepared to preliminary enjoin a transaction where the proxy omits or fails to sufficiently disclose material details concerning, for instance, a banker’s conflict.  For example, the inadequately disclosed conflict warranting an injunction in this case involved the fees the buy-side banker expected to receive for its participation in debt financing for the deal.