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Category Archives: Maryland Law update

Cross Pollination: Don't Limit Yourself

April 18, 2017

R. Shawn McBride recently published an article to the McBride For Business Blog on a topic that might be of interest: Cross Pollination:  Don’t Limit Yourself.

He examines how some regions are better at manufacturing, some regions are better at capital formation, some regions are better at fostering start-up companies and some regions are better for Fortune 500 companies.

You can see the full article here.

About the Author

R. Shawn McBride — R. Shawn McBride is the Managing Member of The R.Read the rest

Maryland Law Update: How a Board Might Exercise Business Judgment When a Shareholder Makes a Demand (Part III)

August 11, 2016

In Oliveira v. Sugarman,[1] the Court of Special Appeals of Maryland said that, in reviewing corporate decisions made by a board of directors, it needs to consider the business judgment rule—a presumption that the board acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the company. The court explained that a shareholder derivative action, like this one, begins with a demand on the board and the board is required to make a decision as to whether to pursue the demanded lawsuit.… Read the rest

Maryland Law Update: How a Board Might Exercise Business Judgment When a Shareholder Makes a Demand (Part II)

August 4, 2016

In Oliveira v. Sugarman,[1] two shareholders of iStar Financial Inc. (“iStar”), a Maryland corporation, sued former and current members of the company’s board of directors and senior management regarding employee compensation plans. In 2009, iStar approved an executive compensation plan to award shares of the company based on stock performance in order to retain key employees and to reduce the company’s tax burden. During the financial crisis, however, iStar became concerned that it did not have enough shares available for the performance-based awards and that key employees might leave for better-paying opportunities.… Read the rest

Maryland Law Update: How a Board Might Exercise Business Judgment When a Shareholder Makes a Demand (Part I)

July 28, 2016

In our previous blog series on Texas Double-Derivative Shareholder Suit, we introduced the concept of business judgment rule—the presumption that directors or managers, in performing their functions, were honest and well-meaning and that their decisions were informed and in the best interests of the company. We then delved a little deeper into the concept in another blog on the business judgment rule under New York law and discussed when board decisions might not be protected under the business judgment rule.… Read the rest

LLC Law Update: Piercing the Corporate Veil (Post 5)

February 25, 2016

Maryland.

In recent years, Maryland has become one of the most difficult states in which to pierce the corporate veil, with a success rate at about 25.81%.[1]  This is an interesting reversal, given that the state had a relatively liberal 40% rate until 1986.[2]  Under Maryland law, where there is no allegation of fraud, a court may still disregard the corporate entity and establish personal liability to enforce the so-called a “paramount equity,”[3] but this seems to be a pretty tough standard to meet.… Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 5)

October 20, 2015

Texas: An Issue for the Jury.

In Texas, a holder of shares of a corporation for at least six (6) months, or a holder of at least 5% of all of the outstanding shares of a corporation, is entitled to examine and copy the corporation’s relevant books, records of account, minutes, and share transfer records at a reasonable time, in person or through an agent, subject to the governing documents and on written demand stating a proper purpose.[1]  If the corporation raises a fact issue on the shareholder’s proper purpose, the issue will go to a jury trial.… Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 3)

October 10, 2015

Delaware: Reasonable Restrictions.

In Delaware, any stockholder is entitled to inspect the corporation’s books and records upon written demand, for any proper purpose.[1]  The statute defines a proper purpose as a purpose reasonably related to such person’s interest as a stockholder.[2]  Additionally, the statute grants the Court of Chancery the authority to “prescribe any limitations or conditions with reference to the inspection . . . as the court may deem just and proper.”[3]

In United Techs. Corp. v.Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 2)

October 8, 2015

Maryland: Hogans v. Hogans Agency, Inc.

In Hogans v. Hogans Agency, Inc., Hogans was a 37.5% stockholder of Hogans Agency, Inc., an insurance and real estate brokerage company, and an owner of a competing business.[1] In December 2013, Hogans sent a letter to the corporation requesting inspection of corporate records; the corporation responded by providing copies of the bylaws, minutes of the proceedings of stockholders, an annual statement of affairs for the most recent tax year available, and the name, address, and shares of each stockholder.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.