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Gimbel v. Signal Companies, Inc.
Delaware Court of Chancery
316 A.2d 599 (Del. Ch. 1974)
Signal Companies, Inc. (Signal) (defendant) was incorporated as an oil business. Signal then became a conglomerate that engaged in a variety of industries. Signal transferred its oil and gas business to its wholly owned subsidiary, Signal Gas & Oil Co. (Signal Oil). Signal’s operation involved constant acquisition and disposal of corporate branches. Signal’s board of directors approved a proposal to sell Signal Oil to Burmah Oil Inc. (Burmah). Signal’s books showed that Signal Oil represented 26 percent of Signal’s total assets, 41 percent of its net worth, and 15 percent of Signal’s revenues and earnings. Louis Gimbel (plaintiff), a Signal shareholder, sought a preliminary injunction to prevent the sale. Gimbel alleged that the approval by the Signal board was insufficient and that majority shareholder approval was necessary to authorize the sale, as it accounted for all or substantially all of Signal’s assets.
Rule of Law
Holding and Reasoning (Quillen, J.)
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