Judge Paul A. Engelmayer
Greece-based OceanFreight Inc. and DryShips Inc. are organized under Marshall Islands law. Their shares trade on the NASDAQ Global Markets in New York. Litwin, on behalf of OceanFreight shareholders, sought to enjoin a special shareholder meeting to approve a merger into DryShips’ Ocean Rig subsidiary. Each OceanFreight share was valued at $19.85 in cash and Ocean Rig stock. The court denied relief, concluding that foreign private issuers of publicly traded securities are exempt from Securities Exchange Act §§14(a),(b), (c), and (f) and 16 of the Securities Exchange Act. The exemption’s purpose was to encourage foreign issuers to list on U.S. exchanges, whereas subjecting them to the “full panoply” of U.S. “regulatory burdens” might drive such companies away from the American market. As to Litwin’s claims that OceanFreight’s board of directors breached its fiduciary duties in negotiating the merger the court—turning to Delaware law, followed by the Marshall Islands—observed that fiduciary duty does not require “every board to follow a judicially prescribed checklist of sales activities,” but requires the board act reasonably. Thus an auction or market canvass was not needed to maximize OceanFreight shareholder value.