Merger The board of directors of Plant Indus-tries, Inc. ( Plant), under the gui
ID: 384901 • Letter: M
Question
Merger The board of directors of Plant Indus-tries, Inc. ( Plant), under the guidance of Robert B. Bregman, the chief executive officer of the corporation, embarked on a course of action that resulted in the sale of several unprofitable subsidiaries. Bregman then engaged in a course of action to sell Plant National ( Quebec) Ltd., a subsidiary that constituted Plant’s entire Canadian operations. This was a profitable subsidiary that comprised more than 50 percent of Plant’s assets, sales, and profits. Do Plant’s shareholders have to be ac-corded voting and appraisal rights regarding the sale of this subsidiary? Katz v. Bregman, 431 A. 2d 1274, Web 1981 Del. Ch. Lexis 449 ( Court of Chancery of Delaware)
Explanation / Answer
Yes. For the very reason that Plant National (Quebec) Ltd., which is a profitable subsidiary that comprised more than 50% of plants assets, sales and profits, it is imperative that shareholders need to be in agreement of voting and appraisal rights with regard to the sale of this subsidiary. When it comes to company sale, it is important for the board of directors and chairman of the organization to accord their Investors and Shareholders on these strategic decisions that may directly impact the financials of the organization.