Court of Chancery Holds Veto Power May Constitute Control

Posted on June 5, 2006 by Edward M. McNally
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Williamson v. Cox Communications, Inc., C.A. No. 1663-N, 2006 WL 1686375 (Del. Ch. June 5, 2006).

For the first time, the Court of Chancery has ruled that the power to veto a transaction may constitute the power to control a Delaware corporation. This is significant because a controlling stockholder has fiduciary duties to the other stockholders. While the facts of this case are probably unique and its implication for the litigants are unclear at this early stage, the complaint has withstood a motion to dismiss.

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