Philadelphia Business Lawyers: Conflict of Interest / Self-Dealing Transactions - Business Law Legal Blogs Posted by Casey B. Green - Lawyers.com

Philadelphia Business Lawyers: Conflict of Interest / Self-Dealing Transactions

Courts will closely scrutinize conflict of interest and self-dealing transactions (i.e., having an individual and/or corporation on both sides of the same transaction). Traditionally, these types of transactions are subjected to the “entire fairness review”. In order to survive this standard review, the price andthe dealing must be fair. Globe Woolen Co. v. Utica Gas & Elec. Co., 224 N.Y. 483 (fundamental business organization case holding that there is a breach of fiduciary duty of loyalty despite a director, who served on two boards of two companies, did not vote on a transaction because neither fair price nor fair dealing was present). Fair price is typically the equivalency of value between what the corporation gave up and what the corporation received. Fair dealing has several factors (none dispositive) of candor and disclosure:

1)      Not only abstaining vote, but excusing yourself to not exert pressure on the deal;

2)      Imbalance between the corporations at negotiation;

3)      Involvement of disinterested advisors; and

4)      Candor – director should not stand in silence when he or she is aware that the agreement is detrimental to one side.

For more information, call Philadelphia business lawyers at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Courts will closely scrutinize conflict of interest and self-dealing transactions (i.e., having an individual and/or corporation on both sides of the same transaction). Traditionally, these types of transactions are subjected to the “entire fairness review”. 

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Casey B. Green

Licensed since 2003

Member at firm Sidkoff, Pincus & Green, P.C.

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Casey B. Green

Licensed since 2003

Member at firm Sidkoff, Pincus & Green, P.C.

AWARDS

AV Preeminent
Champion Badge Platinum

RECENT POSTS