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Kala Collett, RPLU, Marketing Speciality - Executive Liability

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Delaware Ruling May Have Positive Impact on Directors & Officers Liability Rates

By Kala Collett, RPLU, Marketing Speciality - Executive Liability

clock July 11, 2016 at 10:00 AM

The Delaware Supreme Court may have singled-handedly done what the market has been trying to do for years: Make Directors & Officers liability insurance more affordable.

In early May, the Delaware Supreme Court essentially instructed trial courts to throw out future lawsuits challenging corporate acquisitions or mergers that have been properly approved by shareholders. The implications in the Zales case are far-reaching and may discourage M&A litigation. The ruling should also continue to soften D&O rates for publicly traded companies.

A High Bar

The Delaware court’s decision spelled out the future hurdles necessary to oppose a merger or acquisition. If investors are fully informed and have the authority to turn down a takeover, a merger or acquisition cannot be challenged. That’s true even if there were significant mistakes made by directors in the process, so long as a majority of shares owned by disinterested stockholders voted in favor of the deal.

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Topics: Property + Casualty, Market Trends

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