Derivative dilution claims can proceed as direct claims in instances where controlling shareholders benefited from the dilution, the Delaware Court of Chancery has ruled, invoking the rarely-used Gentile doctrine, established in a 2006 state Supreme Court decision. By applying the Gentile doctrine, the Chancery Court permitted shareholders to pursue dilution claims against a technology company and its controlling stockholders.
Rarely-Used Doctrine Invoked to Permit Shareholders' Claims to Proceed
Delaware Business Court Insider
March 6, 2013
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