Boards of directors now have a legal instrument to channel shareholder suits from multiple jurisdictions into “a single court of their choosing.”
“Merger lawsuits are often filed in multiple states at once, which critics say give plaintiffs’ lawyers undue leverage to extract settlements, most of which earn no money for shareholders.”
In a ruling on Monday, however, Delaware Chancellor Andre Bouchard dismissed a lawsuit challenging the merger of North Carolina-based First Citizens BancShares Inc. and South Carolina-based First Citizens Bancorporation Inc. in which shareholders sought to sue FC North in Delaware rather than North Carolina, as stipulated in FC North’s bylaws.
As a result of the decision, “[b]oards are now free to make a decision when they enter into a transaction that they don’t want to be sued in multiple jurisdictions, and the court said that’s a perfectly appropriate decision.”
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