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Controlling Stockholder Breaches Fiduciary Duties By Coercing Onerous Financing Terms

The Delaware Court of Chancery reaffirmed the principle that a stockholder with actual control of a corporation violates its fiduciary duties by advancing its own interests to the detriment of the corporation.

The court held that Georgetown Basho Investors, LLC, the controlling stockholder of Basho Technologies, Inc., owed and breached fiduciary duties to Basho as a stockholder with actual-but not majority-control. The court ultimately awarded plaintiffs Earl Gallaher and various investment funds under his control damages in the aggregate amount of $20,268,878.

Read the source article in the National Law Review.

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