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Court Of Chancery Establishes Law On Double Derivative Litigation

Hamilton Partners LP v.  Englard, C.A. 4476-VCL ( December 15, 2010)

This is an important decision dealing with the often confusing law on double derivative suits. Briefly, the decision holds:  (1) there is no need for there to be jurisdiction over a parent in a double derivative suit when there is jurisdiction over the Delaware subsidiary;  (2) demand futility is measured at the parent level and (3) there is a derivative claim for the breach of duties owed to the subsidiary.  This last point is worth closer examination as the board of a subsidiary may act at the direction of its parent without liability.   Here some very odd facts lead to this result.

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