Aronson v Lewis
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''Aronson v Lewis'', 473 A.2d 805 (Del. 1984), is a
US corporate law United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governanc ...
case, from
Delaware Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent Del ...
concerning the possibility of a shareholder to bring a
derivative suit A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. Shareholder derivative suits are ...
.


Facts

A shareholder claimed that the directors of Meyers Parking System Inc. had improperly wasted corporate assets. The CEO, Mr Fink, then 75 years old, was also a 47% shareholder and its founder. It was alleged he personally selected the other directors. They had given to Mr Fink a generous five year employment contract, a subsequent term as a consultant with a large salary, and an annual bonus equal to 5% of the company's pre tax profits. The contract also said that this continued regardless of Mr Fink's continued ability to perform the job.


Judgment

Justice Moore rejected the claim on the ground that the plaintiff had not shown that making a demand on the board would have been futile. He held that the '
business judgment rule The business judgment rule is a case law-derived doctrine in corporations law that courts defer to the business judgment of corporate executives. It is rooted in the principle that the "directors of a corporation... are clothed with hepresumpti ...
' was applicable. This meant,


See also

*
United States corporate law United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governanc ...
*
UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary lega ...


References


External links

* {{caselaw source , case = ''Aronson v Lewis'', 473 A.2d 805 (Del. 1984) , courtlistener =https://www.courtlistener.com/opinion/2379496/aronson-v-lewis/ , googlescholar = https://scholar.google.com/scholar_case?case=2805892431585302628 , justia =https://law.justia.com/cases/delaware/supreme-court/1984/473-a-2d-805-4.html United States corporate case law Delaware state case law 1984 in Delaware 1984 in United States case law