Court Of Chancery Explains The Gentile Doctrine
When is a claim that stockholders were wrongly diluted by the issuance of stock a derivative claim and not a direct claim? Under the Gentile rule, such a claim is derivative unless the dilution was done to benefit a controlling stockholder of a control group. Determining when several stockholders constitute a "group" for this purpose is not easy. Just acting together is not enough. This decision explains what else is required, such as acting to carry out a preconceived goal.