Court Opinion

ID: 9651457
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:19:46.26748+00
Date Added: 2024-06-11T18:12:34.083357
License: Public Domain

ROBERTS, Justice
(concurring).
In my view, the majority’s analysis goes awry when it stumbles over such obfuscating abstractions as “mandatory”-“direetory” and “voidable”-“void ab initio.” Neither the protection of the interests of corporate shareholders nor the furtherance of certainty in corporate transactions is advanced thereby.
*319In section 311, subd. B of the Business Corporation Law,1 the Legislature granted to shareholders important procedural guarantees in certain fundamental corporate transactions. The procedure there specified was designed to insure fair and honest dealing by directors and officers in sales, leases, or exchanges of all or substantially all of a corporation’s assets by requiring shareholder approval of the transaction. As a limitation on the power of directors and officers, these procedures surely are not optional with those very directors and officers. I fear that, by labelling the command of section 311, subd. B “directory,” the majority has in fact made them optional.
The precise issue in this case, however, is the availability of a remedy to an aggrieved shareholder against the transferee in a non-complying transaction. After the transaction has been consummated, 2 the legitimate expectations of the transferee and the public interest in certainty in commercial transactions surely demand legal recognition and, in certain circumstances, may outweigh the interest of an aggrieved shareholder in upsetting a completed transaction.
Therefore, I would hold that a court of equity, upon the suit of a shareholder, may decree the recission of a sale, lease, or exchange of all or substantially all of the assets of a corporation for failure to comply with the procedures of section 311, subd. B unless the transferee is a purchaser for value acting in good faith and without notice of noncompliance. Furthermore, I would hold that, if a transferee knows or has reason to know that a sale, lease, or exchange of all or substantially all of a corporation’s assets is involved, the requirements of good faith and lack of notice are not satisfied unless he has *320reasonably determined, upon examination of duly authenticated documentation, that the commands of section 311, subd. B have been obeyed.
Accordingly, an essential allegation in a complaint seeking such relief is that the transferee was not a purchaser for .value acting in good faith and without notice of noncompliance. Because appellant should have been permitted to amend his complaint to plead such an allegation, I concur in the result.

. Act of May 5, 1933, P.L. 364, art. Ill, § 311, subd. B, as amended, 15 P.S. § 1311, subd. B (1967).

. I express no view on remedies that are available to shareholders before consummation of the transaction.