Pennsylvania Supreme Court Adopts ALI Procedures for Termination of Shareholder Derivative Suits by Directors
Morgan Lewis Title
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On April 21, the Pennsylvania Supreme Court handed down a unanimous opinion that could be important to any publicly held corporation. In Cuker v. Mikalauskas, the Court endorsed Pennsylvania's use of the "business judgment rule" in reviewing actions of corporate directors. More importantly, the Court adopted a procedural mechanism for applying the rule to decisions by corporate directors to terminate shareholder derivative actions.
Of significance not only for Pennsylvania corporations but also for businesses incorporated elsewhere, the Court became the first to adopt the procedures embodied in the American Law Institute's 1994 Principles of Corporate Governance on termination of derivative suits.
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