Delaware Chancery Court Allows Backdating Case to Proceed

Chancellor William Chandler, in a very pointed opinion, denied Maxim Integrated Products’ motion to dismiss most of the backdating related claims brought against it by shareholder William Ryan (you can access a copy of Chancellor Chandler’s opinion here.) Noting that a majority of the board of directors approved each of the backdated options grants in question, Chancellor Chandler dismissed Maxim’s argument that Ryan’s derivatove suit should be dismissed because he did not ask the board to take action before he brought the suit – typically a requirement for such claims. Given the significant influence that the Delaware Chancery Court carries in the corporate law world, and the esteem in which Chancellor Chandler is especially held, this ruling is very significant, and may very well pave the way for a substantial number of future backdating related cases.