What obligations does a board of directors owe to a controlling stockholder? What actions can a board of directors take against a controlling stockholder? These and other important questions have been teed up as the Delaware Court of Chancery grapples with the claims brought in the widely discussed case CBS v. National Amusements, C.A. No. 2018-0342-AGB. On May 17, the vourt denied the temporary restraining order (TRO) sought by the plaintiffs because they requested unprecedented relief that would restrain the controller defendants’ exercise of their rights and powers, which could not be equitably granted.

The Proceedings

CBS and five of its independent directors filed a complaint and moved for a TRO against Shari Redstone and her father, Sumner Redstone, and several companies affiliated with them, including National Amusements, Inc. (NAI), seeking to prevent alleged interference with the board’s independence and operation. Redstone, through NAI, controls approximately 79.6 percent of the voting power of CBS, despite owning only approximately 10.3 percent of the company’s economic interest.