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L-R: Joanna J. Cline, Christopher B. Chuff and, M. Duncan Grant of Pepper Hamilton.

It is well-settled Delaware law that a stockholder is deemed to be a controller when it owns more than 50 percent of the corporation’s stock or it owns less than 50 percent of the corporation’s stock, but nevertheless exercises actual control over the corporation or the challenged decision. A recent opinion by the Delaware Court of Chancery, Basho Technologies Holdco B  v. Georgetown Basho Investors, C.A. No. 11802-VCL, provides valuable guidance on the circumstances under which a minority stockholder, such as a venture capital (VC) firm, may be deemed to be a controlling stockholder such that it owes fiduciary duties to the corporation in which it has invested.


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