Document: MCG Capital Corp. v. Maginn, C.A. No. 4521-CC (Del. Ch. May 5, 2010)

This case was the first time that the Court of Chancery was presented with the question of whether preferred stockholders have the same standing to due derivatively on behalf of the corporation as common stockholders.  The Court held that until a series of preferred shares are given attributes that differ from other classes of stock by virtue of its designation in the corporation’s charter, all stock is created equal.  It therefore follows, that unless and until a corporation expressly denies preferred stockholders the right to due derivatively, they have the same right to do so (and must meet the same standards) as holders of common stock.  The Court also reiterated the previously-established rule that directors do not owe any fiduciary duties to holders of common stock warrants, and warrant holders therefore lack the standing to sue either directly or derivatively for breaches of fiduciary duty.