Brief Fact Summary. Plaintiff, Lev Zetlin, brought this action to receive the premium price for his minority shares that Defendants, Hanson Holdings, Inc. et al., received for their controlling shares.
Synopsis of Rule of Law. Absent bad faith such as corporate looting of assets or a conversion of a corporate opportunity, a party can purchase a controlling share of a corporation at a premium price without extending a tender offer to all shareholders.
More recently, in a case involving the opportunity to communicate with stockholders, the Court of Appeals stated: our consistent rejection of those seeking personal gain completely apart from any benefit to the corporation or its shareholders.View Full Point of Law
Issue. The issue is whether Plaintiff is entitled to the premium share value that Flintkote paid to Defendants for their controlling shares.
Held. The Court of Appeals of New York declined to adopt Plaintiff rule which would effectively mandate that a purchaser give a tender offer to all shareholders when they are only seeking a controlling interest in a corporation. The rule change should be provided by the legislature and not the courts, but the current law has never held that such a policy should be in place.
Discussion. The court realized that the rule advocated by Plaintiff would place a significant burden on parties who are simply trying to get a majority interest in a company rather than complete ownership.