In the case of Katz v. Bregman (431 A.2d 1274 (Del.Ch.1981)) a corporation attempted to sell assets that constituted more than 51% of the corporations total assets and generated about 45% of the net sales. When the directors did not hold a shareholder vote to approve the sale, the shareholders who were opposed to the sale sued to stop the sale.
- The Court found that Delaware law (8 Del.C. §271(a)) requires majority shareholder approval for the sale of “all or substantially all” of the assets of a Delaware corporation.
- The Court found that based on §271(a), an asset sale of this magnitude required a shareholder vote.
- Compare this case with Gimbel v. Signal Companies, Inc. (316 A.2d 599 (Del.Ch. 1974)), which found that a shareholder vote was not required when the corporation was attempting to sell slightly less assets.