The plaintiffs alleged that the defendants owed them fiduciary duties that included a duty to disclose material information when they purchased the shares of the plaintiffs. The court explained that directors of a Delaware corporation owe two fiduciary duties: care and loyalty.
The court added that “the duty of disclosure is not an independent duty, but derives from the duty of care and loyalty…. The duty of disclosure arises because of the application in the specific context of the board’s fiduciary duties . . . Its scope and requirements depend on context; the duty does not exist in a vacuum.” Slip op. at 26 (citations omitted).
The court described the need to engage in a context specific analysis to determine the scope and requirements of a disclosure obligation. The court referred to several recurring scenarios in which these issues arise, and provided a discussion of four scenarios that it labeled as prominent in an analysis of the duty of disclosure. In other words, the duty of disclosure most often arises in four common contexts described below as scenarios.
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