By Jason Tyler*
A pdf version of this article may be downloaded here.
Applying general corporate law principles to Hollywood is challenging because the film industry is unique. This article attempts to offer some preliminary analysis of two recent Delaware [FN1] Court of Chancery cases dealing with contests for corporate control in light of Hollywood’s unique qualities. Recently, the Court of Chancery in eBay v. Newmark doubted the ability of firms to cite a threat to corporate culture as legitimate grounds for implementing a takeover defense.[FN2] Just over a year ago, the Court in Amylin expressed doubt about a firm’s ability to impede changes of control by embedding financial penalties, for lack of a better word, in otherwise ordinary business transactions.[FN3] In both cases, the final analysis proceeded naturally from a central tenet of Delaware’s corporate law jurisprudence: ultimate authority to elect corporate directors rests in the hands of the shareholders as the principals of their agent-directors.