Jun. 14 at 1:09 PM
$AFIB Part one:
What Triggers Personal Liability? (Delaware Law)
Because AFIB is incorporated in Delaware, its board members are bound by Delaware General Corporation Law. If a board member uses their insider position to enrich their own fund at the expense of retail shareholders, they cannot hide behind standard corporate protections.
If sued by shareholders, the court applies a strict legal standard called "Entire Fairness."
Shifted Burden of Proof
Normally, courts give board members the benefit of the doubt (the Business Judgment Rule). But when a controlling lender has a man on the board and gets special share issuances, the court throws that out. The board member and Deerfield must prove to a judge that:
Fair Dealing: The negotiation was completely honest, transparent, and not coerced.
Fair Price: The number of shares given to the lender was economically fair to the existing shareholders and not a cheap, dilutive cash-grab.