Court of Chancery Clarifies the Scope of Disclosure Liability in Novel Contexts
November 15, 2023
Under Delaware law, corporate fiduciaries owe an affirmative duty of disclosure when seeking stockholder action—including, for example, presenting a matter for stockholder approval or proposing a transaction that otherwise requires stockholders to make an investment decision, such as whether to seek appraisal or participate in a corporation’s self-tender. In these circumstances, directors owe an affirmative duty to disclose all material information within the board’s control. Delaware courts have also established that when directors are not seeking stockholder action but choose to speak on a given topic, they must be truthful. In two recent opinions, the Delaware Court of Chancery addressed the scope of disclosure liability in two novel contexts.