LAW 633 Lecture 22: BA - Prof Sharpe - Class 22
31 May 2020
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Zahn v. transamerica. (duty of loyalty; self-dealing dominant shareholder) Rule: director may not use position on board for personal benefit at the expense of stockholders: background: transamerica owned 80% of class b and 66. 23% of class a stock in axton-fisher tobacco co. and 66. 23%. See grimes: derivative suit must either show demand futility or have a wrongful rejection, first complaint: prove demand futility: excusal of demand. Page 3 of 7: n. y. does not use the reasonable doubt standard, but has similar substantive requirements, futility if board is, i. Loyalty: majority of directors are interested in the transaction and not independent, and: n. y. : majority of directors interested in challenged transaction. , del. : majority of board has material financial or familial interest: del. Stanford connection: norms and expectations of institutions prevent independence, mbca 7. 44(c). Directors do not lose independence simply because they were. Care: board is not informed: n. y. : directors failed to inform themselves to degree reasonably appropriate, del.
