Directors who are mere “stooges” for a controlling shareholder who loots a company may face personal liability for their lassitude, even if they don’t benefit from the shareholder’s conduct, a Delaware judge ruled Dec. 21.
Vice Chancellor Leo E. Strine Jr. held in ATR-Kim Eng Financial Corp. v. Carlos Araneta and PMHI Holdings Corp. that two directors of Delaware-based PMHI violated their fiduciary duties by remaining passive while the company’s 90 percent shareholder transferred its assets to his family for no consideration.
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