Klang v. Smith's Food & Drug Centers, Inc.

VEASEY, Chief Justice:

This appeal calls into question the actions of a corporate board in carrying out a merger and self-tender offer. Plaintiff in this purported class action alleges that a corporation’s repurchase of shares violated the statutory prohibition against the impairment of capital. Plaintiff also claims that the directors violated their fiduciary duty of candor by failing to disclose material facts prior to seeking stockholder approval of the transactions in question.

No corporation may repurchase or redeem its own shares except out of “surplus,” as statutorily defined, or except…