Sherwood, et al. v. Ngon, et al.
Plaintiffs moved for a temporary restraining order (TRO) to enjoin ChinaCast from holding its annual shareholder meeting. Plaintiffs claimed, among other things, that the board breached its fiduciary duty of disclosure when communicating its reasons for publicly disclosing that it had removed the current director from the company's slate and no longer recommended his reelection. Plaintiffs argued that this TRO was necessary to provide ChinaCast's shareholders sufficient time to consider corrective disclosures and plaintiffs' competing slate of nominees. The court concluded that it appeared that this action essentially was a dispute between two directors who disagreed about the best way to advance the interests of ChinaCast's shareholders. That disagreement, moreover, had culminated in an impasse in their working relationship. It was not, however, the place of a company's incumbent management or the court to decide whether one candidate was preferable to another for election to the board. Rather, the corporate law emphatically vested that power in the shareholder franchise. Accordingly, Plaintiffs Motion for a TRO was granted so that ChinaCast's shareholders received a fair opportunity to vote their preference on the future direction of the company. View "Sherwood, et al. v. Ngon, et al." on Justia Law