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Court Of Chancery Explains A Director's Duty Of Loyalty While Objecting To Policy

Posted In Directors

Shocking Technologies Inc v. Michael,  C.A. 7164-VCP (September 28, 2012, revised October 1, 2012)

Everyone agrees that a director should speak up even if he disagrees with the rest of the board of directors.  But when does a director go too far in his opposition to policies he wants to change?  In this decision, the Court wrestled with this question and decided that leaking confidential corporate information to pressure the company went too far.  Significantly, the information was not about any wrongdoing.  Hence, the finding of a breach of the duty of loyalty only goes so far as a precedent.

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