November 12, 2019

November 12, 2019

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November 11, 2019

Subscribe to Latest Legal News and Analysis

Corporate Law and Acting in Bad Faith: As Delaware Goes, So Goes Washington?

In a posting yesterday, Professor Stephen Bainbridge poses the question “When an acquirer spots red flags: Should Microsoft’s board beware?” He points out:

Numerous Delaware cases (mostly arising in the oversight context, of course) hold that independent directors will be liable for acting in bad faith only when they ignore alleged “red flags” that are “either waved in one’s face or displayed so that they are visible to the careful observer.” Rattner v. Bidzos, 2003 WL 22284323 at 13 (Del. Ch. 2003), quoting In re Citigroup Inc. S’holders Litig., 2003 WL 21384599, at *2 (Del. Ch. 2003).

Microsoft, however, is incorporated in the State of Washington, not Delaware.  Not being familiar with Washington corporate law, I don’t have a view on whether Washington would follow Delaware.  However, I could find no reported decision of a Washington state court that cites either Bidzos or Citigroup.

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Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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