Court Of Chancery Explains When Disclosures Required Absent A Stockholder Vote
This is an interesting decision for two reasons. First, it explains when directors might have a duty to cause the company to make disclosures to the stockholders about transactions that do not require the stockholders’ vote. Briefly, when a transaction not requiring a stockholders vote is so related to a transaction requiring their vote that the two matters are tied together, then the stockholders are entitled to be fully informed about both matters.
Second, while SEC filings may, in some instances, fill in the holes in the company’s proxy statement disclosures, that is not always the case, particularly when there are still omissions of material facts. It is better to make the proxy statement itself the disclosure vehicle.