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USA Corporations Law - Case Study Example

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Case Study
Pages 14 (3514 words)


The Delaware corporations' law states that the directors of a company should not benefit themselves from the operations of the company. They owe a fiduciary duty to the shareholders to act in good faith and in honesty as far as self-dealings with the company are concerned…

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USA Corporations Law

In dealing with this case, the court will be applying the review of the Securities Litigation Uniform Standards Act of 1998 (Pillegi, 2007). The court will be more concerned on the breach of the fiduciary duty of disclosure.

The court is likely to rule against the Barnes family (Marciano v. Nakash). The loan that the Ewing family made to the Ewing Corporation was valid and enforceable. The duty of disclosure requires that the directors disclose all the details that pertain to the transaction that is been carried out (Alexander, 2008). The disclosure is made to the board of directors and to the shareholders. Since the Ewing family did full disclosure of the material facts that involved the loan, including the terms of the loan and the deed of trust, it will be hard for the Barnes to prove that the fiduciary duty was breached (Pillegi, 2007). Furthermore, the shareholders approved the loan. This is despite the fact that the voting was done along family lines. It is beyond doubt that the voting of the directors and the shareholders was done in good faith.

The burden of proof will be different for both parties of the dispute. The Barnes is required to prove that the Ewing directors breached the fiduciary duty in approving that loan. ...
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