Smith v. Nu-West Industries, Inc.
Delaware Supreme Court
2000 WL 1641248 (2000)
- Written by Eric Miller, JD
Facts
Nu-West Industries, Inc. (Nu-West) (defendant) redeemed its Class A preferred stock on December 13, 1996. Aside from the per-share price, Nu-West paid dividends that had accrued over the previous six years. However, no dividend was paid for the period from January 1 to December 13, 1996. Nu-West’s certificate of incorporation provided that Class A preferred stock could be exchanged for debentures, in which case dividends would cease to accrue as of the date of the exchange. Similarly, in the event of liquidation, the preferred shareholders were entitled to unpaid dividends as accrued at the time of distribution. A group of preferred shareholders (plaintiffs), of whom Roger Smith was the named plaintiff, brought suit on the reasoning that Nu-West dividends accrued daily. Nu-West argued that its dividends accrued yearly and were only payable if accrued. Both sides moved for summary judgment.
Rule of Law
Issue
Holding and Reasoning (Chandler, J.)
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