Case Law Summaries

Delaware – Caremark Liability

DelawareHughes v. Hu, 2019-0112, decided April 27, 2020. The Delaware Chancery Court held that a stockholder filing a derivative suit had established demand futility where the complaint established the board faced a substantial likelihood of liability under Caremark for failing to establish a system of internal controls over the corporation’s financial reporting. The complaint alleged, among other things, the audit committee met sporadically, failed to address known problems, and relied blindly on management instead of establishing its own system of oversight.

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