Brief Fact Summary. Plaintiff shareholder, Martin Hariton, sued Defendant corporation, Arco Electronics, to prevent the sale of its assets for shares of acquiring company because it operated as a de facto merger.
Synopsis of Rule of Law. Asset sales statutes and merger statutes are independent of each other, and a corporation complying with one or the other is complying with the law.
The general theory of the Delaware Corporation Law is that action taken pursuant to the authority of the various sections of that law constitute acts of independent legal significance and their validity is not dependent on other sections of the Act.View Full Point of Law
Issue. The issue is whether the asset sale agreement between Defendant and Loral is invalid because Defendant did not comply with Delaware’s merger statute.
Held. The Supreme Court of Delaware held that the agreement was valid because it complied with Delaware’s statute regarding the sale of assets. The two statute provisions operate independently, and an agreement is valid if it complies with one or the other.
Discussion. The holding is opposite of Farris v. Glen Alden Corporation which prevented the same type of transaction, except it was a shareholder from the purchasing company that brought the action. This case did not present the same lopsided effects that the Farris transaction provided.