Delaware Court Concludes Shareholder Appraisal Action Is a “Securities Claim” Under a D&O Policy

    View Authors August 2019

    In what appears to be a ruling of first impression, a Delaware Superior Court has held that a dissenting shareholders’ appraisal action constitutes a “Securities Claim” for purposes of coverage under a directors and officers (D&O) insurance policy.

    While this ruling was issued at the motion stage of the case and may yet find its way to appeal, this decision appears to provide companies with expanded protection under their D&O coverages when dissenting shareholders bring appraisal actions after acquisitions. This apparent expanded protection, however, may be fleeting if, upon renewal, D&O insurers seek to tighten up the definition of Securities Claim to avoid covering appraisal proceedings.