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The Delaware law of the fiduciary duties of directors establishes a general duty to disclose to stockholders all material information reasonably available when seeking stockholder action. But there is no per se doctrine imposing liability. A fiduciary disclosure obligation attaches to proxy statements and any other disclosures in contemplation of shareholder action. Directors of Delaware corporations are under a fiduciary duty to disclose fully and fairly all material information within the board's control when it seeks shareholder action.
Based on corporate financial statements that had overstated the earnings of the corporation, appellant individual shareholders and members of a class brought an action alleging breach of fiduciary duty by appellee corporate directors. The trial court dismissed the action with prejudice for failure to state a claim under Del. Ch. Ct. R. 12(b)(6) on the basis that appellees had no fiduciary duty and federal securities law had applied. Appellants sought review.
The court affirmed the decision of the trial court and held that dismissal of appellant's claim for breach of fiduciary duty against appellee corporate directors for overstating the financial condition of the company was proper in the absence of allegations stating a derivative action or a cause of action with a suitable remedy. However, the court held that the dismissal should have been without prejudice so that appellant's could refile an amended complaint because federal law had not preempted a shareholder action, although appellant's duty of disclosure had to be linked to shareholder action.