Friday, July 13, 2007

Elbit Systems, Ltd, a shareholder in ImageSat International N.V., announced it that has been named in a lawsuit made by certain minority shareholders of ImageSat against other shareholders owning a majority of ImageSat stock, as well as certain ImageSat officers and directors. The suit alleges the defendants' breached fiduciary obligations they had to the company, by squandering potentially lucrative business opportunities, in order to protect Israel's political and national security interests. (The majority shareholders allegedly have ties to the Israeli government and defense establishment).

Generally, minority shareholders have a significant uphill battle in making a claim against majority shareholders for breach of fiduciary duty, etc. Their ultimate success will depend in part upon what the court believes actually happened, what laws govern -- even if the case is held in NY, another jurisdiction's laws may apply -- and what the operative documents provide. Should be a fascinating case if it ever goes to trial.

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