OLCOTT V Meaning and
Definition
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OLCOTT V refers to the court case known as Olcott v. Delaware, 904 A.2d 422 (Del. 2006). This case involved a lawsuit brought by the minority shareholders of an insurance company called Blue Cross & Blue Shield of Delaware (BCBSD) against the majority shareholders. The court case was heard in the Supreme Court of Delaware.
In Olcott v. Delaware, the minority shareholders alleged that the majority shareholders breached their fiduciary duties by engaging in a self-dealing transaction, namely the sale of the BCBSD subsidiary, BCBSD Inc., to a third party. The minority shareholders claimed that the sale was unfair and resulted in the majority shareholders receiving excessive compensation at the expense of the minority shareholders.
The court in Olcott v. Delaware analyzed the fiduciary duties owed by majority shareholders in a close corporation, which included the duty of loyalty and the duty of care. The court determined that the majority shareholders breached their duty of loyalty by not acting in the best interests of the minority shareholders and engaging in self-dealing.
As a result of the court's ruling, it ordered rescissory damages, which required the majority shareholders to pay back the benefits they obtained from the self-dealing transaction. The case of Olcott v. Delaware serves as an important precedent in Delaware corporate law by reinforcing the fiduciary duties owed by majority shareholders to minority shareholders in a closely held corporation.
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