Shareholders are not philanthropists. They are investors who expect to see a return on the money they put into a company. Because companies have a vested interest in attracting shareholders, laws have been put in place to make sure they act fairly and honestly when communicating with their shareholders about the state of the company. This generally means requiring companies to reveal the state of their finances, market value, any legal issues they may be having that could affect their profits, etc.
Before handing over large sums of money to the control of another, it makes sense that shareholders would want to make sure their money is in safe hands. If it turns out the shareholders were deceived or lied to, filing a lawsuit against the company for fraud and/or breach of fiduciary duties is common. Unfortunately, thanks to a new ruling by the Delaware Supreme Court, shareholders have a new reason to hesitate before taking their grievances to the courts. Continue reading ›