Reference no: EM133450835

Question: Hollinger Inc was the controlling shareholder (68%) of a corporation called Hollinger International. Hollinger Inc. sought an injunction preventing Hollinger International, Inc. from selling the Telegraph Group Ltd. (England). The Telegraph Group was a wholly-owned subsidiary of Hollinger International. Hollinger Inc. argued that a preliminary injunction should be issued because the matter should have required a special meeting and a vote of the shareholders. They argued that the sale was of all or substantially all of Hollinger International's assets, which would compel such a meeting. The Telegraph Group was one of the most profitable parts of International and was its most prestigious asset, but it was certainly not its only asset. After its sale, International would be transformed from a respected international publishing company controlling one of the world's major newspapers to a primarily American publishing company whose most valuable remaining asset, the Chicago Sun-Times, was the second leading newspaper in the Second City. As a secondary argument, Hollinger Inc. argued that a preliminary injunction ought to issue against the Telegraph sale even if the Corporations Act did not specifically require a vote. Because Hollinger Inc.-affiliated directors had been excluded from the International board committee that approved the Telegraph sale, Inc. claimed that its rights as a controlling shareholder were oppressed, and the board had breached their fiduciary duty and Duty of Care.

Outline 3 considerations that the Court ought to bear in mind in assessing whether or not the sale of the Telegraph Group constitutes a sale of "all or substantially all" of the corporate assets, and conclude whether or not you agree that the sale should be blocked.

Pick 1 of the Fiduciary Duty or the Duty of Care. Analyze whether or not the particular duty was breached by the Board of Hollinger International.