Court Of Chancery Explains Duties Owed To Preferred Stockholders
Fletcher International LTD v. ION Geophysical Corp., C.A. 5109-VCP (May 28, 2010)
Preferred stockholders like to claim, in addition to the rights they have to be "preferred" under the certificate of incorporation, that they also have the right to enforce fiduciary duties to them by the board. Not so as this decision explains. When the preferred stock's "contract" touches on a topic, such as the right to share in merger consideration, then that defines their rights and they cannot resort to fiduciary duty law to expand those rights.
