*685OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed, with costs.

Plaintiff Zetlin owned approximately 2% of the outstanding shares of Gable Industries, Inc., with defendants Hanson Holdings, Inc., and Sylvestri, together with members of the Sylvestri family, owning 44.4% of Gable’s shares. The defendants sold their interests to Flintkote Co. for a premium price of $15 per share, at a time when Gable stock was selling on the open market for $7.38 per share. It is undisputed that the 44.4% acquired by Flintkote represented effective control of Gable.

Recognizing that those who invest the capital necessary to acquire a dominant position in the ownership of a corporation have the right of controlling that corporation, it has long been settled law that, absent looting of corporate assets, conversion of a corporate opportunity, fraud or other acts of bad faith, a controlling stockholder is free to sell, and a purchaser is free to buy, that controlling interest at a premium price (see Barnes v Brown, 80 NY 527; Levy v American Beverage Corp., 265 App Div 208; Essex Universal Corp. v Yates, 305 F2d 572).

Certainly, minority shareholders are entitled to protection against such abuse by controlling shareholders. They are not entitled, however, to inhibit the legitimate interests of the other stockholders. It is for this reason that control shares usually command a premium price. The premium is the added amount an investor is willing to pay for the privilege of directly influencing the corporation’s affairs.

In this action plaintiff Zetlin contends that minority stockholders are entitled to an opportunity to share equally in any premium paid for a controlling interest in the corporation. This rule would profoundly affect the manner in which controlling stock interests are now transferred. It would require, essentially, that a controlling interest be transferred only by means of an offer to all stockholders, i.e., a tender offer. This would be contrary to existing law and if so radical a change is to be effected it would best be done by the Legislature.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur in memorandum.

Order affirmed.

CLARK, Chief Judge.

This is a derivative action brought by minority stockholders of Newport, Steel Corporation to compel accounting-for, and restitution of, allegedly illegal gains which accrued to defendants as a. result of the sale in August, 1950, of their controlling interest in the corporation. The principal defendant, C. Russell Feldmann, who represented and acted for the others, members of his family,1was at that time not only the dominant-stockholder, but also the chairman of' the board of directors and the president of the corporation. Newport, an Indiana. *175corporation, operated mills for the production of steel sheets for sale to manufacturers of steel products, first at Newport, Kentucky, and later also at other places in Kentucky and Ohio. The buyers, a syndicate organized as Wilport Company, a Delaware corporation, consisted of end-users of steel who were interested in securing a source of supply in a market becoming ever tighter in the Korean War. Plaintiffs contend that the consideration paid for the stock included compensation for the sale of a corporate asset, a power held in trust for the corporation by Feldmann as its fiduciary. This power was the ability to control the allocation of the corporate product in a time of short supply, through control of the board of directors; and it was effectively transferred in this sale by having Feldmann procure the resignation of his own board and the election of Wilport’s nominees immediately upon consummation of the sale.

The present action represents the consolidation of three pending stockholders’ actions in which yet another stockholder has been permitted to intervene. Jurisdiction below was based upon the diverse citizenship of the parties. Plaintiffs argue here, as they did in the court below, that in the situation here disclosed the vendors must account to the nonparticipating minority stockholders for that share of their profit which is attributable to the sale of the corporate power. Judge Hincks denied the validity of the premise, holding that the rights involved in the sale were only those normally incident to the possession of a controlling block of shares, with which a dominant stockholder, in the absence of fraud or foreseeable looting, was entitled to deal according to his own best interests. Furthermore, he held that plaintiffs had failed to satisfy their burden of proving that the sales price was not a fair price for the stock per se. Plaintiffs appeal from these rulings of law which resulted in the dismissal of their complaint.

The essential facts found by the trial judge are not in dispute. Newport was a relative newcomer in the steel industry with predominantly old installations which were in the process of being supplemented by more modern facilities. Except in times of extreme shortage Newport was not in a position to compete profitably with other steel mills for customers not in its immediate geographical area. Wilport, the purchasing syndicate, consisted of geographically remote end-users of steel who were interested in buying more steel from Newport than they had been able to obtain during recent periods of tight supply. The price of $20 per share was found by Judge Hincks to be a fair one for a control block of stock, although the over-the-counter market price had not exceeded $12 and the book value per share was $17.03. But this finding was limited by Judge Hincks’ statement that “[w]hat value the block would have had if shorn of its appurtenant power to control distribution of the corporate product, the evidence does not show.” It was also conditioned by his earlier ruling that the burden was on plaintiffs to prove a lesser value for the stock.

Both as director and as dominant stockholder, Feldmann stood in a fiduciary relationship to the corporation and to the minority stockholders as beneficiaries thereof. Pepper v. Litton, 308 U.S. 295, 60 S.Ct. 238, 84 L.Ed. 281; Southern Pac. Co. v. Bogert, 250 U.S. 483, 39 S.Ct. 533, 63 L.Ed. 1099. His fiduciary obligation must in the first instance be measured by the law of Indiana, the state of incorporation of Newport. Rogers v. Guaranty Trust Co. of New York, 288 U.S. 123, 136, 53 S.Ct. 295, 77 L.Ed. 652; Mayflower Hotel Stockholders Protective Committee v. Mayflower Hotel Corp., 89 U.S.App.D.C. 171, 193 F.2d 666, 668. Although there is no Indiana case directly in point, the most closely analogous one emphasizes the close scrutiny to which Indiana subjects the conduct of fiduciaries when personal benefit may stand in the way of fulfillment of trust obligations. In Schemmel v. Hill, 91 Ind.App. 373, 169 N.E. 678, 682, 683, McMahan, J., said:

*176“Directors of a business corporation act in a strictly fiduciary capacity. Their office is a trust. Stratis v. Andreson, 1926, 254 Mass. 536, 150 N.E. 832, 44 A. L.R. 567; Hill v. Nisbet, 1885, 100 Ind. 341, 363. When a director deals with his corporation, his acts will be closely scrutinized. Bossert v. Geis, 1914, 57 Ind.App. 384, 107 N.E. 95. Directors of a corporation are its agents, and they are governed by the rules of law applicable to other agents, and, as between themselves and their principal, the rules relating to honesty and fair dealing in the management of the affairs of their principal are applicable. They must not, in any degree, allow their official conduct to be swayed by their private interest, which must yield to official duty. Leader Publishing Co. v. Grant Trust Co., 1915, 182 Ind. 651, 108 N.E. 121. In a transaction between a director and his corporation, where he acts for himself and his principal at the same time in a mat- ' ter connected with the relation between them, it is presumed, where he is thus potential on both sides of the contract, that self-interest will overcome his fidelity to his principal, to his own benefit and to his principal’s hurt.” And the judge added: “Absolute and most scrupulous good faith is the very essence of a director’s obligation to his corporation. The first principal duty arising from his official relation is to act in all things of trust wholly for the benefit of his corporation.”

In Indiana, then, as elsewhere, the responsibility of the fiduciary is not limited to a proper regard for the tangible balance sheet assets of the corporation, but includes the dedication of his uncorrupted business judgment for the sole benefit of the corporation, in any dealings which may adversely affect it. Young v. Higbee Co., 324 U.S. 204, 65 S.Ct. 594, 89 L.Ed. 890; Irving Trust Co. v. Deutsch, 2 Cir., 73 F.2d 121, certiorari denied 294 U.S. 708, 55 S.Ct. 405, 79 L.Ed. 1243; Seagrave Corp. v. Mount, 6 Cir., 212 F.2d 389; Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 62 A.L.R. 1; Commonwealth Title Ins. & Trust Co. v. Seltzer, 227 Pa. 410, 76 A. 77. Although the Indiana case is particularly relevant to Feldmann as a director, the same rule should apply to his fiduciary duties as majority stockholder, for in that capacity he chooses and controls the directors, and thus is held to have assumed their liability. Pepper v. Litton, supra, 308 U.S. 295, 60 S.Ct. 238. This, therefore, is the standard to which Feldmann was by law required to conform in his activities here under scrutiny.

It is true, as defendants have been at pains to point out, that this is not the ordinary case of breach of fiduciary duty. We have here no fraud, no misuse of confidential information, no outright looting of a helpless corporation. But on the other hand, we do not find compliance with that high standard which we have just stated and which we and other courts have come to expect and demand of corporate fiduciaries. In the often-quoted words of Judge Cardozo: “Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the ‘disintegrating erosion’ of particular exceptions.” Meinhard v. Salmon, supra, 249 N.Y. 458, 464, 164 N.E. 545, 546, 62 A.L.R. 1. The actions of defendants in siphoning off for personal gain corporate advantages to be derived from a favorable market situation do not betoken the necessary undivided loyalty owed by the fiduciary 'to his principal.

The corporate opportunities of whose misappropriation the minority stockholders complain need not have been an absolute certainty in order to support this action against Feldmann. *177If there was possibility of corporate gain, they are entitled to recover. In Young v. Higbee Co., supra, 324 U.S. 204, 65 S.Ct. 594, two stockholders appealing the confirmation of a plan of bankruptcy reorganization were held liable for profits received for the sale of their stock pending determination of the validity of the appeal. They were held accountable for the excess of the price of their stock over its normal price, even though there was no indication that the appeal could have succeeded on substantive grounds. And in Irving Trust Co. v. Deutsch, supra, 2 Cir., 78 F.2d 121, 124, an accounting was required of corporate directors who bought stock for themselves for corporate use, even though there was an affirmative showing that the corporation did not have the finances itself to acquire the stock. Judge Swan speaking for the court pointed out that “The defendants’ argument, contrary to Wing v. Dillingham [5 Cir., 239 F. 54], that the equitable rule that fiduciaries should not be permitted to assume a position in which their individual interests might be in conflict with those of the corporation can have no application where the corporation is unable to undertake the venture, is not convincing. If directors are permitted to justify their conduct on such a theory, there will be a temptation to refrain from exerting their strongest efforts on behalf of the corporation since, if it does not meet the obligations, an opportunity of profit will be open to them personally.”

This rationale is equally appropriate to a consideration of the benefits which Newport might have derived from the steel shortage. In the past Newport had used and profited by its market leverage by operation of what the industry had come to call the “Feldmann Plan.” This consisted of securing interest-free advances from prospective purchasers of steel in return for firm commitments to them from future production. The funds thus acquired were used to finance improvements in existing plants and to acquire new installations. In the summer of 1950 Newport had been negotiating for cold-rolling facilities which it needed for a more fully integrated operation and a more marketable product, and Feldmann plan funds might well have been used toward this end.

Further, as plaintiffs alternatively suggest, Newport might have used the period of short supply to build up patronage in the geographical area in which it could compete profitably even when steel was more abundant. Either of these opportunities was Newport’s, to be used to its advantage only. Only if defendants had been able to negate completely any possibility of gain by Newport could they have prevailed. It is true that a trial court finding states: “Whether or not, in August, 1950, Newport’s position was such that it could have entered into ‘Feldmann Plan’ type transactions to procure funds and financing for the further expansion and integration of its steel facilities and whether such expansion would have been desirable for Newport, the evidence does not show.” This, however, cannot avail the defendants, who — contrary to the ruling below — had the burden of proof on this issue, since fiduciaries always have the burden of proof in establishing the fairness of their dealings with trust property. Pepper v. Litton, supra, 308 U.S. 295, 60 S.Ct. 238; Geddes v. Anaconda Copper Mining Co., 254 U.S. 590, 41 S.Ct. 209, 65 L.Ed. 425; Mayflower Hotel Stockholders Protective Committee v. Mayflower Hotel Corp., 84 U.S.App.D.C. 275, 173 F.2d 416.

Defendants seek to categorize the corporate opportunities which might have accrued to Newport as too unethical to warrant further consideration. It is true that reputable steel producers were not participating in the gray market brought about by the Korean War and were refraining from advancing their prices, although to do so would not have been illegal. But Feldmann plan transactions were not considered within this self-imposed interdiction; the trial court found that around the time of the Feld-mann sale Jones & Laughlin Steel Cor*178poration, Republic Steel Company, and Pittsburgh Steel Corporation were all participating in such arrangements. In any event, it ill becomes the defendants to disparage as unethical the market advantages from which they themselves reaped rich benefits.

We do not mean to- suggest that a majority stockholder cannot dispose of his controlling block of stock to outsiders without having to account to his corporation for pi’ofits or even never do this with impunity when the buyer is an interested customer, actual or potential, for the corporation’s product. But when the sale necessarily results in a sacrifice of this element of corporate good will and consequent unusual profit to the fiduciary who has caused the sacrifice, he should account for his gains. So in a time of market shortage, where a call on a corporation’s product commands an unusually large premium, in' one form or another, we think it sound law that a fiduciary may not appropriate to himself the value of this premium. Such personal gain at the expense of his coventurers seems particularly reprehensible when made by the trusted president and director of his company. In this case the violation of duty seems to be all the clearer because of this triple role in which Feldmann appears, though we are unwilling to say, and are not to be understood as saying, that we should accept a lesser obligation for any one of his roles alone.

Hence to the extent that the price received by Feldmann and his co-defendants included such a bonus, he is accountable to the minority stockholders who sue here. Restatement, Restitution §§ 190, 197 (1937); Seagrave Corp. v. Mount, supra, 6 Cir., 212 F.2d 389. And plaintiffs, as they contend, are entitled to a recovery in their own right, instead of in right of the corporation (as in the usual derivative actions), since neither Wilport nor their successors in interest should share in any judgment which may be rendered. See Southern Pacific Co. v. Bogert, 250 U.S. 483, 39 S.Ct. 533, 63 L.Ed. 1099. Defendants cannot well object to this form of recovery, since the only alternative, recovery for the corporation as a whole, would subject them to a greater total liability.

The case will therefore be remanded to the district court for a determination of the question expressly left open below, namely, the value of defendants’ stock without the appurtenant control over the corporation’s output of steel. We reiterate that on this issue, as on all others relating to a breach of fiduciary duty, the burden of proof must rest on the defendants. Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265-266, 66 S.Ct. 574, 90 L.Ed. 652; Package Closure Corp. v. Sealright Co., 2 Cir., 141 F.2d 972, 979. Judgment should go to these plaintiffs and those whom they represent for any premium value so shown to the extent of their respective stock interests.

The judgment is therefore reversed and the action remanded for further proceedings pursuant to this opinion. -

SWAN, Circuit Judge

(dissenting).

With the general principles enunciated in the majority opinion as to the duties of fiduciaries I am, of course, in thorough accord. But, as Mr. Justice Frankfurter stated in Securities and Exchange Comm. v. Chenery Corp., 318 U.S. 80, 85, 63 S.Ct. 454, 458, 87 L.Ed. 626, “to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a fiduciary? In what respect has he failed to discharge these obligations ?” My brothers’ opinion does not specify precisely what fiduciary duty Feldmann is held to have violated or whether it was a duty imposed upon him as the dominant stockholder or as a director of Newport. Without such specification I think that both the legal profession and the business world will find the decision confusing and will be unable to foretell the extent of its impact upon customary practices in the sale of stock.

The power to control the management of a corporation, that is, to elect direc*179tors to manage its affairs, is an inseparable incident to the ownership of a majority of its stock, or sometimes, as in the present instance, to the ownership of enough shares, less than a majority, to control an election. Concededly a majority or dominant shareholder is ordinarily privileged to sell his stock at the best price obtainable from the purchaser. In so doing he acts on his own behalf, not as an agent of the corporation. If he knows or has reason to believe that the purchaser intends to exercise to the detriment of the corporation the power of management acquired by the purchase, such knowledge or reasonable suspicion will terminate the dominant shareholder’s privilege to sell and will create a duty not to transfer the power of management to such purchaser. The duty seems to me to resemble the obligation which everyone is under not to assist another to commit a tort rather than the obligation of a fiduciary. But whatever the nature of the duty, a violation of it will subject the violator to liability for damages sustained by the corporation. Judge Hincks found that Feldmann had no reason to think that Wilport would use the power of management it would acquire by the purchase to injure Newport, and that there was no proof that it ever was so used. Feld-mann did know, it is true, that the reason Wilport wanted the stock was to put in a board of directors who would be likely to permit Wilport’s members to purchase more of Newport’s steel than they might otherwise be able to get. But there is nothing illegal in a dominant shareholder purchasing from his own corporation at the same prices it offers to other customers. That is what the members of Wilport did, and there is no proof that Newport suffered any detriment therefrom.

My brothers say that “the consideration paid for the Stock included compensation for the sale of a corporate asset”, which they describe as “the ability to control the allocation of the corporate product in a time of short supply, through control of the board of directors; and it was effectively transferred in this sale by having Feldmann procure the resignation of his own board and the election of Wilport’s nominees immediately upon consummation of the sale.” The implications of this are not clear to me. If it means that when market conditions are such as to induce users of a corporation’s product to wish to buy a controlling block of stock in order to be able to purchase part of the corporation’s output at the same mill list prices as are offered to other customers, the dominant stockholder is under a fiduciary duty not to sell his stock, I cannot agree. For reasons already stated, in my opinion Feldmann was not proved to be under any fiduciary duty as a stockholder not to sell the stock he controlled.

Feldmann was also a director of Newport. Perhaps the quoted statement means that as a director he violated his fiduciary duty in voting to elect Wil-port’s nominees to fill the vacancies created by the resignations of the former directors of Newport. As a director Feldmann was under a fiduciary duty to use an honest judgment in acting on the corporation’s behalf. A director is privileged to resign, but so long as he remains a director he must be faithful to his fiduciary duties and must not make a personal gain from performing them. Consequently, if the price paid for Feld-mann’s stock included a payment for voting to elect the new directors, he must account to the corporation for such payment, even though he honestly believed that the men he voted to elect were well qualified to serve as directors. He can not take pay for performing his fiduciary duty. There is no suggestion that he did do so, unless the price paid for his stock was more than its value. So it seems to me that decision must turn on whether finding 120 and conclusion 5 of the district judge are supportable on the evidence. They are set out in the margin.1

*180Judge Hincks went into the matter of valuation of the stock with his customary care and thoroughness. He made no error of law in applying the principles relating to valuation of stock. Concededly a controlling block of stock has greater sale value than a small lot. While the spread between $10 per share for small lots and $20 per share for the controlling block seems rather extraordinarily wide, the $20 valuation was supported by the expert testimony of Dr. Badger, whom the district judge said he could not find to be wrong. I see no justification for upsetting the valuation as clearly erroneous. Nor can I agree with my brothers that the $20 valuation “was limited” by the last sentence in finding 120. The controlling block could not by any possibility be shorn of its appurtenant power to elect directors and through them to control distribution of the corporate product. It is this “appurtenant power” which gives a controlling block its value as such block. What evidence could be adduced to show the value of the block “if shorn” of such appurtenant power, I cannot conceive, for it cannot be shorn of it.

The opinion also asserts that the burden of proving a lesser value than $20 per share was not upon the plaintiffs but the burden was upon the defendants to prove that the stock was worth that value. Assuming that this might be true as to the defendants who were directors of Newport, they did show it, unless finding 120 be set aside. Furthermore, not all the defendants were directors; upon what theory the plaintiffs should be relieved from the burden of proof as to defendants who were not directors, the opinion does not explain.

The final conclusion of my brothers is that the plaintiffs are entitled to recover in their own right instead of in the right of the corporation. This appears to be

completely inconsistent with the theory advanced at the outset of the opinion, namely, that the price of the stock “included compensation for the sale of a corporate asset.” If a corporate asset was sold, surely the corporation should recover the compensation received for it by the defendants. Moreover, if the plaintiffs were suing in their own right, Newport was not a proper party. The case of Southern Pacific Co. v. Bogert, 250 U.S. 483, 39 S.Ct. 533, 63 L.Ed. 1099, relied upon as authority for the conclusion that the plaintiffs are entitled to recover in their own right, relates to a situation so different that the decision appears to me to be inapposite.

I would affirm the judgment on appeal.

ALLEN, Chancellor.

The present action is brought under Section 211(c) of our corporation law and seeks an order requiring the convening of an annual meeting of shareholders of Health Med Corporation, a Delaware corporation. The Answer admits that no annual meeting of stockholders of that corporation has been held for several years, but attempts to allege affirmative defenses to the relief sought. In addition, that pleading asserts an affirmative right to a declaratory judgment unrelated, in my opinion, to the annual meeting.

Pending is a motion by plaintiff seeking (1) judgment on the pleadings and (2) dismissal of defendant’s affirmative claim for relief. That motion raises two distinct legal issues. The first relates to plaintiff’s Section 211 claim: it is whether defendant, *1003having admitted facts that constitute a pri-ma facie case for such relief, has pleaded facts which, if true, would constitute an equitable defense to the claim.

The second issue is raised by plaintiff’s motion to dismiss claims asserted by defendant as cross-claims and counterclaims. It is whether the circular ownership of stock among the companies involved in this litigation violates Section 160(c) of our general corporation law. Stated generally, Section 160(c) prohibits the voting of stock that belongs to the issuer and prohibits the voting of the issuer’s stock when owned by another corporation if the issuer holds, directly or indirectly, a majority of the shares entitled to vote at an election of the directors of that second corporation.

Plaintiff is Marvin Speiser, the owner of 50% of Health Med’s common stock. Mr. Speiser is also president of Health Med and one of its two directors. Named as defendants are the company itself and Leon Baker, who owns the remaining 50% of Health Med’s common stock and is Health Med’s other director. Because of the particular quorum requirements set forth in Health Med’s certificate, Baker, as the owner of the other 50% of Health Med’s common stock, is able to frustrate the convening of an annual meeting by simply not attending. Thus, the need for the Section 211 action.

Despite the admission of facts constituting a prima facie case under Section 211, Baker asserts that a meeting should not be ordered. He contends, in a pleading denominated as “Second Affirmative Defense and Cross-Counterclaim” (hereafter simply the counterclaim), that the meeting sought is intended to be used as a key step in a plan by Mr. Speiser to cement control of Health Med in derogation of his fiduciary duty to Health Med’s other shareholders. For his part, to thwart an allegedly wrongful scheme Baker seeks a declaratory judgment that shares of another Delaware corporation — Health Chem (hereafter “Chem”) —held by Health Med may not be voted by Health Med. The prohibition of Section 160(c) is asserted as the legal authority for this affirmative relief.

I conclude that Mr. Speiser is now entitled to judgment on his claim seeking to compel the holding of an annual meeting by Health Med, but that plaintiff’s motion to dismiss the counterclaim must be denied. The legal reasoning leading to these conclusions is set forth below, after a brief recitation of the admitted facts.

I.

The facts of the corporate relationships involved here are complex even when simplified to their essentials.

There is involved in this case a single operating business — Chem, a publicly traded company (American Stock Exchange). On its stock ledger, Chem’s stockholders fall into four classes: the public (40%), Mr. Speiser (10%), Mr. Baker (8%) and Health Med (42%). In fact, however, Health Med is itself wholly owned indirectly by Chem and Messrs. Speiser and Baker. Thus, the parties interested in this matter (as owners of Chem’s equity) are Speiser, Baker and Chem’s public shareholders.

How the circular ownership here involved came about is not critical for present purposes. What is relevant is that Chem (through a wholly owned subsidiary called Medallion Corp.) owns 95% of the equity of Health Med 1 . However, Chem’s 95% equity ownership in Health Med is not represented by ownership of 95% of the current voting power of Health Med. This is because what Chem owns is an issue of Health Med convertible preferred stock which, while bearing an unqualified right to be converted immediately into common stock of Health Med representing 95% of Health Med’s voting power, in its present unconverted state, carries the right to only approximately 9% of Health Med’s vote. In its unconverted state the preferred commands in toto the same dividend rights (i.e., 95% of all dividends declared and paid) as it would if converted to common stock.

Speiser and Baker own the balance of Health Med’s voting power. Each presently votes 50% of Health Med’s only other issue of stock, its common stock.

*1004This structure may be grasped most easily through a graphic presentation.

OWNERSHIP OF VOTING STOCK HEALTH HEP * HEALTH-CHEM

(1) Ownership interests are approximate.

(2) Holdings in Health-Chem exceed 100% because Speiser and Baker holdings reflect assumed exercise of options.

This circular structure was carefully constructed as a means to permit Messrs. Speiser and Baker to control Chem while together owning less than 35% of its equity. It has functioned in that way successfully for some years. Speiser has served as president of all three corporations. When Speiser and Baker’s mutual plan required shareholder votes, Speiser apparently directed the vote of Health Med’s holdings of Chem stock (its only substantial asset) in a way that together with the vote of Speiser and Baker’s personal Chem holdings, assured that their view would prevail.

The conversion of Chem’s (Medallion’s) preferred stock in Health Med would result in the destruction of the Baker-Speiser control mechanism. Under Section 160(c) of the Delaware corporation law (quoted and discussed below), in that circumstance, Health Med would certainly be unable to vote its 42% stock interest in Chem. As a *1005result, the other shareholders of Chem (i.e., the owners of the real equity interest in Chem) would have their voting power increased to the percentages shown on the above chart, that is, the voting power of the public stockholders of Chem would increase from 40% to 65.6%.

For reasons that are not important for the moment, Speiser and Baker have now fallen out. Control of Health Med and the vote of its Chem stock thus has now become critical to them. Mr. Speiser, by virtue of his office as President of Medallion and of Health Med, is apparently currently in a position to control Health Med and its vote. Baker asserts, not implausibly, that Speiser now seeks a Health Med stockholders meeting for the purpose of removing Baker as one of Health Med’s two directors in order to remove his independent judgment from the scene.

None of Chem’s public shareholders have heretofore complained that the failure to convert Chem’s (Medallion’s) preferred stock in Health Med to common constituted a wrong. Several shareholders have, however, now moved to intervene in this action and asked to be aligned with Mr. Baker. This application is resisted by Mr. Speiser — who asserts some estoppel arguments personal to Mr. Baker as a ground for dismissing Bakers counterclaim.2

II.

Despite defendant Baker’s pleading, which intermingles aspects of his affirmative defense to the Section 211(c) claim with elements of his affirmative claim for declaratory relief, I believe the two issues raised by this motion can most appropriately be analyzed independently. The allegedly wrongful control of Chem that is at the center of the claim for affirmative relief is not a matter that will be voted upon at (nor be significantly affected by) a Health Med stockholder meeting. The Section 160 claim is not that Chem (Medallion) ought not to be permitted to vote its stock at a Health Med meeting, but that Health Med is precluded from exercising rights as a Chem shareholder. Thus, while the two claims are factually related, they are, in my opinion, essentially independent claims legally. I therefore analyze them separately and turn first to Speiser's motion for judgment on the pleadings with respect to his Section 211(c) claim.

Section 211(b) of our corporation law contains a mandatory requirement that every Delaware corporation “shall” hold an “annual meeting of stockholders ... for the election of directors.” Section 211(c) confers authority upon this court to order that such an annual meeting be convened when a plaintiff demonstrates that (1) he is a shareholder of the company and (2) no annual meeting has been held within 30 days of the date designated therefor or, if no date had been set, for 13 months since the last annual meeting. Proof of these two statutory elements has been said to constitute a prima facie case for relief. Saxon Industries, Inc. v. NKFW Partners, Del.Supr., 488 A.2d 1298 (1984).

Given the central role of the shareholders’ annual meeting in the scheme of corporate governance contemplated by Delaware law, it is not surprising that once these statutory elements have been shown, the cases have recognized that the right to an order compelling the holding of such a meeting is “virtually absolute.” Coaxial Communications, Inc. v. CNA Financial Corp., Del.Supr., 367 A.2d 994 (1976); Prickett v. American Steel and Pump Corporation, Del.Ch., 251 A.2d 576 (1969). *1006Since, however, the statutory language of Section 211(c) is permissive, not mandatory (“... the Court of Chancery may summarily order a meeting to be held ...”), the statute itself would seem to contemplate the possibility of a prima facie case being defeated. While the Supreme Court has acknowledged such a possibility as a general matter, see Saxon Industries, supra at 1301, no Delaware case actually declining to compel a meeting once the statutory elements have been proven has been cited. Thus, the question here is whether facts have been pleaded which, if true, would establish this as that rare instance in which relief should be denied to plaintiff establishing a prima facie case under Section 211(c).

In addressing this question, the task is to evaluate the legal sufficiency of the facts alleged while ignoring wholly conclusory statements. Schleiff v. Baltimore & O.R.R., Del.Ch., 130 A.2d 321 (1957); 5 Wright & Miller, Federal Practice and Procedure § 1368 at p. 692. Of course, on such a motion, the non-moving party is entitled to the benefit of any inferences that may fairly be drawn from his pleading. The motion should not be granted unless it appears to a reasonable certainty that under no set of facts that could be proven under the allegations of the Answer would plaintiff’s prima facie claim be defeated. Cf. Harman v. Masoneilan International, Inc., Del.Supr., 442 A.2d 487 (1982).3

Two affirmative defenses are alleged. The first is as follows:

17. Plaintiff is estopped from prosecuting this action by reason of the fact that he caused, participated in and acquiesced in the conduct complained of in the Complaint.

I take this to mean that Speiser acquiesced in the failure of Health-Med to hold an annual meeting for several years. Altema-tively, it may mean that Speiser acquiesced in the creation of a quorum requirement (a majority of each class of stock) that, in effect, gives both Baker and Speiser the practical power to prevent the convening of a meeting. Accepting as true the factual assertion that Speiser acquiesced in both respects, the question arises whether either such action constitutes a defense to the prima facie case that here has concededly been made out. I cannot believe so.

In the light of the compulsory nature of the requirement for an annual meeting, see 8 Del. C. § 211(b), it would require a powerful equity for this court to fail to act when a shareholder satisfies the statutory elements of a claim under Section 211(c). Mere acquiescence in the failure to hold earlier meetings, or indeed actual connivance to avoid earlier meetings, ought not, in my opinion, deprive shareholders generally of the right to elect directors at an annual meeting. Compare In Re Potter Instrument Co., 593 F.2d 470 (2d Cir. 1979).

The second basis alleged in the answer for denying the relief sought by Speiser is that the meeting sought is a step in a plan to remove Baker from office and, thus, to secure to Speiser complete control of Health Med and, through it, Chem. This is said to be inequitable, to give rise to “unclean hands” and to involve a breach of fiduciary duty to Chem. While the pleading raising this defense relates principally to the Section 160 counterclaim discussed below, it is asserted as having some relevance to plaintiffs Section 211 claim as well. It is summarized in paragraph 18 of Baker’s pleading:

18. The meeting of stockholders of Health Med sought by the complaint herein is not sought for any lawful purpose or interest of Health Med, but is, upon information and belief, sought as a further step in an unlawful scheme by *1007plaintiff Speiser to arrogate to himself absolute control of Health-Chem, whose equity securities are the only assets of Health Med, in violation of Section 160(c) of the Delaware General Corporation Law and in derogation of the rights of the stockholders of Health-Chem other than Speiser and his family.

The facts alleged to flesh out this conclusory statement do state a claim, as I hold below, for relief, but what seems clear is that they allege no wrong to Health Med or its shareholders that will occur by reason of the holding of Health Med’s annual meeting statutorily required by subsection (b) of Section 211. All that is really alleged with respect to Health Med is that Baker will likely be voted out of office as a Health Med director and the company will fall under the complete domination of Speiser. The answer to that, of course, is if the votes entitled to be cast at the meeting are cast so as to obtain that result, so be it. Surely Speiser qua Health Med shareholder is entitled to so vote. That the Chem (Medallion) 9% vote will be cast against Baker (as very likely as it seems) would not he a reason to enjoin the meeting4 and cannot be a reason to excuse compliance with the command of Section 211(b).

Accordingly, I conclude that Baker has not alleged facts which, if proven, would show this to be that theoretically possible case in which a prima fade case under Section 211(c) is defeated by the existence of a supervening equity counseling the withholding of the remedy authorized by that statute.

III.

I tura now to Speiser’s motion to dismiss the counterclaim seeking a declaratory judgment that Health Med may not vote its 42% stock interest in Chem. The prohibition contained in Section 160 of our corporation law is asserted as the principal basis for such relief.

The pertinent language of the statute is as follows:

Shares of its own capital stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held directly or indirectly, by the corporation, shall neither be entitled to vote nor counted for quorum purposes.

Baker’s argument is that the Chem stock owned by Health Med is disabled by this statute from voting because Chem controls Health Med through its unconditional present right to convert its Health Med preferred to a 95% interest in Health Med’s common stock. For present purposes, I, of course, accept this allegation as true. In expressing this argument in statutory terms, Baker argues that the unconditional power to convert its preferred stock to a controlling interest in Health Med’s common stock and thus become the owner of a majority of the stock entitled to vote in an election of directors of Health Med, itself constitutes “indirect” ownership by Chem of a “majority of the shares entitled to vote in an election of directors” of Health Med. Baker also supports this interpretation with arguments concerning the policy of the statute and claims of violation of fiduciary duty.

Mr. Speiser, for his part, claims that a literal, and a fair, reading of the statutory words that Baker relies upon cannot support his argument. Speiser’s counter-argument focuses on just what stock is “entitled to vote” and argues that unless and until the preferred stock is converted, it has the legal attributes of preferred stock and not of any other security into which it may later be transmuted. In its present state, it is clear that the preferred can cast only 9% of the vote at the election of directors of Health Med. Thus, it is argued that the literal language of Section 160(c) compels the conclusion that the voting *1008structure of these companies does not violate that statute.

Speiser’s argument is cogent. It is a literal argument, but I do not criticize it for that.5 As a general matter, those who must shape their conduct to conform to the dictates of statutory law should be able to satisfy such requirements by satisfying the literal demands of the law rather than being required to guess about the nature and extent of some broader or different restriction at the risk of an ex post facto determination of error. The utility of a literal approach to statutory construction is particularly apparent in the interpretation of the requirements of our corporation law— where both the statute itself and most transactions governed by it are carefully planned and result from a thoughtful and highly rational process.

Thus, Delaware courts, when called upon to construe the technical and carefully drafted provisions of our statutory corporation law, do so with a sensitivity to the importance of the predictability of that law. That sensitivity causes our law, in that setting, to reflect an enhanced respect for the literal statutory language. See, e.g., Orzeck v. Englehart, Del.Supr., 195 A.2d 375 (1963); Federal United Corp v. Havender, Del.Supr., 11 A.2d 331 (1940); Field v. Allyn, Del.Ch., 457 A.2d 1089 (1983); Providence & Worcester Co. v. Baker, Del.Supr., 378 A.2d 121 (1977). When the task is to construe the meaning of reasonably precise words contained in our corporation statute, such as “entitled to vote,” our preference, generally, must be to accord them their usual and customary meaning to persons familiar with this particular body of law.

The statutory language of Section 160(c) which Baker relies upon, when read literally does not, in my opinion, proscribe the voting of Health Med’s stock in Chem. That is, I cannot conclude that Chem (or its Medallion subsidiary) presently “holds,” even indirectly, a majority of the stock “entitled to vote” in Health Med’s election of directors. The stock entitled to vote in such an election, and the extent of its voting power, is technically defined in Health Med’s certificate of incorporation. In its unconverted state, Medallion’s holding of preferred simply does not represent a majority of the voting power of Health Med.

However, acceptance of Speiser’s argument does not end the matter. The clause the parties argue over, even when read as Speiser reads it, does not purport to confer a right to vote stock not falling within its literal terms; it is simply a restriction. More importantly, other statutory words may be read to extend Section 160(c) prohibition to the voting of Health Med’s Chem holdings. Specifically, the principal prohibition of the statute is directed to shares of its own capital stock “belonging to the corporation.” This phrase is not a technically precise term whose literal meaning is clear; it requires interpretation. I turn then to the analysis of these statutory words that leads me to conclude that they do reach the facts pleaded in the counterclaim.

A.

First a word on the function of courts when interpreting statutes. While it is our responsibility to accord to clear and definite statutory words their ordinary meaning, the process of interpretation cannot be—and has never been—entirely a dictionary-driven enterprise. Words themselves are imperfect and ambiguous symbols and the human imagination that shapes them into legal commands is inevitably unable to foresee all of the contexts in which the problem addressed will later arise. Thus, in construing a statute:

There is no surer guide ... than its purpose when that is sufficiently disclosed; nor any surer mark of oversolici-tude for the letter than to wince at carrying out that purpose because the words do not formally quite match with it.

*1009 Federal Deposit Insurance Corp. v. Tremaine, 133 F.2d 827, 830 (2d Cir.1943) (L. Hand, J.). A due respect for the legislative will requires a sympathetic reading of statutes designed to promote the attainment of the end sought. See Magill v. North American Refractories Company, Del.Supr., 128 A.2d 233 (1956). Over four hundred years ago, Lord Coke gave guidance to English judges engaged in the process of statutory interpretation that is sound today:

The office of all Judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief ... and to add force and life to the cure and remedy according to the true intent of the makers of the Act....

Heydon’s Case, 3 Co.Rep. 7a, 76 Eng.Rep. 637 (King’s Bench 1584).

Following this sensible advice, we then begin our inquiry into what the legislature meant and intended by the words “belonging to,” as used in Section 160(c), by a historical inquiry into the purposes meant to be served by Section 160(c) and statutes like it. This history is particularly instructive here because it demonstrates, I believe, that the very evil the statute sought to address is present here.

B.

Almost from the earliest stirrings of a distinctive body of law dealing with corporations, courts have been alert to the dangers posed by structures that permit directors of a corporation, by reason of their office, to control votes appertenant to shares of the company’s stock owned by the corporation itself or a nominee or agent of the corporation. See Ex Parte Holmes, N.Y.Sup.Ct., 5 Cow. 426 (1826); In the Matter of Barker, N.Y.Supr.Ct., 6 Wend. 509, 10 N.Y.Com.L.Rpt. 508 (1828); Brewster v. Hartley, Cal.Supr., 37 Cal. 15 (1869); Monsseaux v. Urquhart, La.Supr., 19 La. Ann. 482, 30 La. 362 (1867); American Railway—Frog Co. v. Haven, Mass.Supr., 101 Mass. 398 (1869); Allen v. De Lager-berger, Ohio Super., 10 Ohio Dec.Rep. 341 (1888).

The rule that finds its first expression in these cases can be said to be of common law origin in the sense that it arose as a judicial gloss on the statutory right to vote shares. The reason for the rule is not mysterious. Such structures deprive the true owners of the corporate enterprise of a portion of their voice in choosing who shall serve as directors in charge of the management of the corporate venture. Chief Justice Taft, while still an Ohio trial court judge, stated the rationale succinctly in 1888:

The power to vote is a power incident to ownership of stock, but to allow the directors acting for the corporation to vote the stock would not be distributing the power equally among the stockholders, as the dividends are distributed equally amongst them by payment into the treasury of the company, and it would be entrusting to persons in power the means of keeping themselves in power.

Allen v. De Lagerberger, 10 Ohio Dec.Rep. 341 (1888).

The earliest reported American decision on the point was even more succinct:

It is not to be tolerated that a Company should procure stock in any shape which its officers may wield to the purposes of an election; thus securing themselves against the possibility of removal.

Ex Parte Holmes, N.Y.Sup.Ct., 5 Cow. 426, 435 (1826).

As the country experienced a movement in the latter part of the 19th century towards comprehensive general laws of incorporation, the rule came to be expressed in those statutes. The first general incorporation law of this State of which I am aware, the Act of 1883, contained such a prohibition. See 17 Del. Laws 212, 225 (1883). The predecessor of our present general corporation law statute, first adopted in 1899, contained an expression of the rule typical for that period:

Section 24. Shares of stock of the corporation belonging to the corporation *1010shall not be voted upon directly or indirectly.

21 Del. Laws 453 (1899).

The nineteenth century cases on this subject dealt with a variety of schemes through which a corporation could control the voting of its own stock: trusts (Ex Parte Holmes, supra), agency (Monsseaux v. Urquhart, supra; American Railway-Frog Co. v. Haven, supra) and pledges (Brewster v. Hartley, supra). The attempted use of a subsidiary for that purpose, however, was not treated during that period because, until very late in the century, corporations generally had no power to own stock in other corporations. 6A W. Fletcher, Cyclopedia of the Law of Private Corporations § 2825 (rev. perm. ed. 1981). But, with the amendment of the New Jersey corporation law in 1896 to permit holding company structures (see State v. Atlantic City & S.R. Co., N.J.Ev. & Apps., 72 A. Ill (1909)) and the 1899 emulation of that statute in Delaware (see Chicago Corp. v. Munds, Del.Ch., 172 A. 452, 454 (1934)) the mischief addressed by Section 160(c) and its predecessors became feasible through the use of a separate corporation. The leading case dealing with this manifestation of the problem arose in Delaware in 1934. That case—Italo Petroleum Corp. v. Producers Oil Corp., Del.Ch., 174 A. 276 — construed a version of the statutory prohibition not materially different from the section of the 1899 Act quoted above. Chancellor Wol-cott there rejected the argument that stock belonging to a 99% owned subsidiary was not stock “belonging to the [parent] corporation” because it was owned legally by the subsidiary. Thus, he construed the statutory prohibition against voting (directly or indirectly) stock belonging to the corporation as a prohibition against voting stock belonging (directly or indirectly) to the corporation. In so holding, this court was motivated by the same concerns that underlay the pre-statute cases and the statutory codification itself:

It seems to me to be carrying the doctrine of distinct corporate entity to an unreasonable extreme to say that, in a contest over control of a corporation those in charge of it should be allowed to have votes counted in their favor which are cast by a subsidiary stockholder wholly owned, controlled, dominated and therefore dictated to by themselves as the spokesmen of the parent.

Italo Petroleum Corp. v. Producers Oil Corp., supra at 279.

The statutory language construed in Ita-lo remained substantially unchanged until 1967 when a version similar to the current version of Section 160(c) was enacted.6 56 Del. Laws 50 (1967). One knowledgeable commentator has referred to the 1967 amendment as codifying the result of Italo Petroleum. Folk, The Delaware General Corporation Law at p. 159 (1972). Actually, it did that and something more; it specified instances in which stock owned by a subsidiary would be conclusively presumed to be stock “belonging to” its parent. The critical question is, however, did the 1967 amendment intend to do the obverse? Did it intend to create a conclusive statutory presumption that, in no event would stock owned by another corporation that did not satisfy the new test (a majority of shares entitled to vote, etc.) be deemed to be stock “belonging to the corporation?”

There is no hint in the legislative words that such a result was intended and I think that (given the surprising fact that the underlying problem can — as this case attests — arise in situations in which the parent does not hold a majority of the stock entitled to vote at the election of the subsidiary’s directors) the policy of the statute would require a clear expression of such an intention before it could be found. Moreover, there seems slight reason relating to the purpose of the statute for the legislature to have intended to create a safe harbor for entrenchment schemes implemented through the use of corporate subsidiaries while leaving all other agencies through which such plans could be executed gov*1011erned by the general language “belonging to.”

Accordingly, attempting to read these words in a sensible way consistent with the underlying purpose of the enactment, I conclude that stock held by a corporate “subsidiary” may, in some circumstances, “belong to” the issuer and thus be prohibited from voting, even if the issuer does not hold a majority of shares entitled to vote at the election of directors of the subsidiary.

C.

Assuming the truth of the facts alleged in the counterclaim, I am of the view that this is such a case. Here the substantial ownership of Chem in Health Med is not simply large, it is — at 95% — practically complete. The difference in that regard between this case and Italo Petroleum, is modest and cannot be regarded as material. Here, as there, the parent is required, by generally accepted accounting rules, to treat the subsidiary’s stock ownership as treasury shares on its own books. While those principles do not serve as a substitute for legal analysis, they are expertly fashioned rules designed to reflect financial reality. Where GAAP principles require a parent to account for stock as treasury shares, I would think a corporation would have a difficult task in persuading a disinterested court that those shares ought not to be deemed to belong to it for purposes of Section 160(c).

The facts alleged exemplify the very problem Section 160(c) was intended to resolve. That is, here the capital of one corporation (Chem) has been invested in another corporation (Health Med) and that investment, in turn, is used solely to control votes of the first corporation. The principal (indeed the sole) effect of this arrangement is to muffle the voice of the public shareholders of Chem in the governance of Chem as contemplated by the certificate of incorporation of that corporation and our corporation law. In purpose and effect the scheme here put in place is not materially different from the schemes repeatedly struck down for more than one hundred fifty years by American courts. See, e.g., Italo Petroleum Corp. v. Producers Oil Corp., Del.Ch., 174 A. 276 (1934) and cases cited supra p. 1009.

For the foregoing reason, the motion to dismiss the counterclaim will be denied.

D.

Another independent reason exists for denying Speiser’s motion to dismiss.

While I have said that courts interpreting the meaning of our technical corporation law statute have a particular sensitivity to the utility of a technical and literal interpretation of that law when the words chosen are reasonably specific and clear, our law is the polar opposite of technical and literal when the fiduciary duties of corporate officers and directors are involved. See generally, Revlon v. MacAndrews & Forbes Holdings, Inc., Del.Supr., 506 A.2d 173 (1985); Weinberger v. UOP, Del.Supr., 457 A.2d 701 (1983); Singer v. Magnavox, Del.Supr., 380 A.2d 969 (1977); Guth v. Loft, Del.Supr., 5 A.2d 503 (1939). In that setting, technical matters are brushed aside so that the fairness of the underlying reality may be assessed. The facts alleged in the counterclaim properly invoke this more searching level of review.

Here the counterclaim alleges facts which, if true, establish that Mr. Speiser is in control of Health Med and through it, of Chem. By reason of that fact, he is placed under a duty to exercise the power of his various offices only for the benefit of the involved corporation and its shareholders and not for his personal benefit. In my opinion, the counterclaim alleges facts which, if true, constitute a breach of the duty of loyalty that Mr. Speiser owes to the shareholders of Chem. Most pointedly, it is a fair inference from the facts alleged that no corporate purpose of Chem is served by the failure of Chem to cause Medallion to convert its preferred stock in Health Med to common stock. Indeed, it is alleged that:

Speiser’s ... use of the voting power of Medallion to vest absolute control over Health-Chem in himself is an unlawful *1012manipulation of Health-Chem’s corporate machinery to advance Speiser’s personal interests.

It is, of course, elementary that the legal power of Chem and its Medallion subsidiary to convert or fail to convert its Health-Med preferred is subject to an overriding duty, recognized in equity, to act or fail to act only in a way consistent with the fiduciary duty of loyalty that Chem’s board owes to the shareholders of that company. See Weinberger v. UOP, Del.Supr., 457 A.2d 701 (1983); Sterling v. Mayflower Hotel Corp., Del.Supr., 93 A.2d 107 (1952).

It seems clear that the only function served by permitting the Health Med preferred to remain outstanding, as preferred, is to perpetuate a control mechanism that has the effect of depriving the public shareholders of Chem — the only operating company involved — of the power to elect a board not endorsed by Mr. Speiser (or both Speiser and Baker while they remained in cahoots). That can only be a valid interest of Chem on the supposition that Mr. Speiser knows better than do the other shareholders who should manage the enterprise. That may be reasonable, but it is irrelevant; Chem’s certificate of incorporation distributes voting power equally among holders of its common stock not according to any other theory. Should the shareholders wish freely to confer upon certain holders of its stock dominant power in the election of directors, there are ways in which that may be done. See, e.g., Lacos Land Co. v. Arden Group, Inc., Del.Ch., 517 A.2d 271 (1986). But, unless the shareholders express their will to structure the governance of their enterprise in that fashion, it is hard to imagine that a valid corporate purpose is served by perpetuating a structure that removes from the public shareholders the practical power to elect directors other than those supported by management.

Thus, as I read the counterclaim, it alleges a valid claim of breach of fiduciary duty owed by Speiser to the shareholders of Chem. If proven, that claim could result, minimally, in a mandatory injunction requiring Chem to convert the Health Med preferred into common, in which event the terms of Section 160(c) would, even under Speiser’s interpretation of that statute, clearly prohibit the voting by Health Med of its 42% holding in Chem.

IV.

For the foregoing reasons, plaintiff’s motion for judgment on the pleadings with respect to the Section 211(c) claim will be granted and his motion to dismiss Baker’s counterclaim will be denied.

IT IS SO ORDERED.

HARTNETT, Vice Chancellor.

In this stockholder’s derivative action, Leonard I. Schreiber, the plaintiff, brought suit on behalf of defendant — Texas International Airlines, Inc. (“Texas International”), a Delaware corporation, challenging the propriety of a loan from Texas International to defendant — Jet Capital Corporation (“Jet Capital”), the holder of 35% of the shares of stock of Texas International. Also joined as individual defendants were Texas International’s board of directors— several of whom also served on Jet Capital’s board of directors. The matter is presently before the Court on cross-motions for summary judgment. Defendants’ motion is based on their contention that there has been no showing of waste and that plaintiff lacks standing to bring this suit. Plaintiff’s motion is based on his contention that the transaction was tainted by vote-buying and is therefore void. For the reasons set forth below, both motions must be denied.

I

The essential facts are undisputed. The lawsuit arises out of the corporate restructuring of Texas International which occurred on June 11, 1980. The restructuring was accomplished by way of a share for share merger between Texas International and Texas Air Corporation (“Texas Air”), a holding company formed for the purpose of effectuating the proposed reorganization. Texas Air is also a Delaware corporation. At the annual meeting held on June 11, *191980 the shareholders voted overwhelmingly in favor of the proposal. As a result the shareholders of Texas International were eliminated as such and received in trade for their stock an equal number of shares in Texas Air. Texas International in turn became a wholly-owned subsidiary of Texas Air.

Prior to the merger Texas International was engaged in the airline business servicing the cities of Houston and Dallas, Texas. All concede that the purpose of the merger was to enable Texas International — under a new corporate structure — to diversify, to strengthen itself financially and in general to be transformed into a more viable and aggressive enterprise. According to the proxy statement issued in connection with the merger, management indicated that although there were no commitments at that time, it was actively considering the possibility of acquiring other companies engaged in both related as well as unrelated fields.

During the formulation of the reorganization plan, management was confronted with an obstacle, the resolution of which forms the basis for this lawsuit, because Jet Capital, the owner of the largest block of Texas International’s stock, threatened to block the merger. Jet Capital’s veto power resulted from a provision in Texas International’s Certificate of Incorporation which required that each of its four classes of stock participate in the approval of a merger. At that time, Texas International’s four classes of outstanding stock consisted of 4,669,182 shares of common stock and three series of convertible preferred stock; 32,318 shares of Series A stock, 66,075 shares of Series B stock and 2,040,000 shares of Series C stock. According to the Certificate of Incorporation a majority vote was required of both the common stockholders and the Series A preferred stockholders voting as separate classes. Similarly, a majority vote was required of the Series B and Series C preferred stockholders, but voting together as a single class. Because Jet Capital owned all of the Series C preferred stock — the larger class — it was in a position to block the merger proposal. Jet Capital indicated that although the proposal was indeed beneficial to Texas International and the other shareholders, it was nevertheless compelled to vote against it because the merger, if approved, would impose an intolerable income tax burden on it. This was so because the merger had an adverse impact on Jet Capital’s position as the holder of certain warrants to purchase Texas International’s common stock which would expire in 1982. There were warrants outstanding for the purchase of 1,029,531 shares of Texas International common stock at $4.18 per share and, of these, Jet Capital owned sufficient warrants to acquire 799,-880 shares of Texas International’s common shares. As the holder of these warrants, Jet Capital was faced with three alternatives.

The first alternative for Jet Capital was for it to participate in the merger and exchange its Texas International warrants for Texas Air warrants. However, according to an Internal Revenue Service ruling obtained by management, each holder of an unexercised Texas International warrant would be deemed to have realized taxable income from the merger as if the warrant had been exercised. Thus, it was estimated that Jet Capital would incur an $800,000 federal income tax liability. Because Jet Capital was a publicly held company, its management could not justify the assumption of such a tax liability and, therefore, did not consider this a viable alternative.

The second alternative was for Jet Capital to exercise the warrants prematurely. The merger would then be tax free to it as it would be to the other shareholders. This, however, was also not deemed to be feasible because Jet Capital lacked the approximately three million dollars necessary to exercise the warrants. Jet Capital’s assets — other than its Texas International stock — were worth only $200,000. In addition, borrowing money at the prevailing interest rates in order to finance an early exercise of the warrants was deemed prohibitively expensive by the management of Jet Capital. In any event, this alternative was considered to be imprudent because the early exercise of the warrants posed an unnecessary mar*20ket risk because the market value of Texas International’s stock on the date of the early exercise might prove to be higher than that on the expiration date. As a result, this alternative was also not considered viable.

The third and final alternative was for Jet Capital to vote against the merger and thus preclude it. Given these alternatives, Jet Capital obviously chose to oppose the restructuring.

In order to overcome this impasse, it was proposed that Texas International and Jet Capital explore the possibility of a loan by Texas International to Jet Capital in order to fund an early exercise of the warrants. Because Texas International and Jet Capital had several common directors, the defendants recognized the conflict of interest and endeavored to find a way to remove any taint or appearance of impropriety. It was, therefore, decided that a special independent committee would be formed to consider and resolve the matter. The three Texas International directors who had no interest in or connection with Jet Capital were chosen to head up the committee. After its formation, the committee’s first act was to hire independent counsel. Next, the committee examined the proposed merger and, based upon advice rendered by an independent investment banker, the merger was again found to be both a prudent and feasible business decision. The committee then confronted the “Jet Capital obstacle” by considering viable options for both Texas International and Jet Capital and, as a result, the committee determined that a loan was the best solution.

After negotiating at arm’s length, both Texas International and Jet Capital agreed that Texas International would loan to Jet Capital $3,335,000 at 5% interest per annum for the period up to the scheduled 1982 expiration date for the warrants. After this period, the interest rate would equal the then prevailing prime interest rate. The 5% interest rate was recommended by an independent investment banker as the rate necessary to reimburse Texas International for any dividends paid out during this period. Given this provision for anticipated dividends and the fact that the advanced money would be immediately paid back to Texas International upon the exercise of the warrants, the loan transaction had virtually no impact on Texas International’s cash position.

As security Jet Capital was required to pledge all of its Series C preferred stock having a market value of approximately 150% of the amount of the loan. In addition, Jet Capital was expected to apply to the prepayment of the loan any after tax proceeds received from the sale of any stock acquired by Jet Capital as a result of the exercise of the 1982 warrants.

The directors of Texas International unanimously approved the proposal as recommended by the committee and submitted it to the stockholders for approval — requiring as a condition of approval that a majority of all outstanding shares and a majority of the shares voted by the stockholders other than Jet Capital or its officers or directors be voted in favor of the proposal. After receiving a detailed proxy statement, the shareholders voted overwhelmingly in favor of the proposal. There is no allegation that the proxy statement did not fully disclose all the germane facts with complete candor.

The complaint attacks the loan transaction on two theories. First, it is alleged that the loan transaction constituted vote-buying and was therefore void. Secondly, the complaint asserts that the loan was corporate waste. In essence, plaintiff argues that even if the loan was permissible and even if it was the best available option, it would have been wiser for Texas International to have loaned Jet Capital only $800,-000 — the amount of the increased tax liability — because this would have minimized Texas International’s capital commitment and also would have prevented Jet Capital from increasing its control in Texas International on allegedly discriminatory and wasteful terms. Plaintiff also points out that the 5% interest rate on the loan was only equal to the amount of dividends Texas International would have been expected *21to pay during the period between the time of the early exercise and the date the warrants expired. Jet Capital, therefore in effect it is urged, received an interest free loan for the nearly two-year period preceding the 1982 warrant expiration date.

II

In support of their motion for summary judgment, defendants contend that plaintiff lacks standing to maintain a derivative suit on behalf of Texas International because he was not a stockholder at the time this suit was filed. As a result of the reorganization merger plaintiff’s stock holdings in Texas International were converted into shares of Texas Air and the merger occurred prior to the filing of the complaint. Defendants also contend that they are entitled to summary judgment because they assert the record fails to establish any factual basis to support a claim of corporate waste.

In reply and in support of his motion for summary judgment, plaintiff contends that the loan constituted vote-buying and therefore the entire merger transaction was void and his standing to maintain a derivative suit on behalf of Texas International is therefore preserved. These contentions regarding standing, vote-buying and corporate waste will be discussed seriatim.

III

First to be considered is defendants’ assertion that plaintiff does not have standing to bring this suit.

As required by 8 Del.C. § 327 a plaintiff who brings a derivative suit on behalf of a corporation must be a stockholder of the corporation at the time he commences the suit.1 This suit was brought after plaintiff’s shares in Texas International were converted into shares in Texas Air by the merger and it is clear that a merger which eliminates a complaining stockholder’s ownership of stock in a corporation also ordinarily eliminates his status to bring or maintain a derivative suit on behalf of the corporation, whether the merger takes place before or after the suit is brought, on the theory that upon the merger the derivative rights pass to the surviving corporation which then has the sole right or standing to prosecute the action. Bokat v. Getty Oil Co., Del.Supr., 262 A.2d 246 (1970); Weinberger v. UOP, Inc., Del.Ch., 426 A.2d 1333 (1981); Hutchison v. Bernhard, Del.Ch., 220 A.2d 782 (1965); Braasch v. Goldschmidt, Del.Ch., 199 A.2d 760 (1964); Heit v. Tenneco, Inc., D.Del., 319 F.Supp. 884 (1970). This rule, however, is not without exception.

In Helfand v. Gambee, Del.Ch., 136 A.2d 558 (1957), a corporate reorganization occurred in response to an antitrust consent decree whereby the shareholders of the existing corporation received shares of a newly organized corporation. Vice Chancellor Marvel permitted the plaintiff to maintain his derivative suit on behalf of the new corporation despite the fact that the complaint sought relief for acts which allegedly occurred during the existence of the old corporation and despite the fact that the complaining stockholder voted in favor of the merger. Standing to sue was granted because it was held that the sole purpose of 8 Del.C. § 327 was to prevent the evil of the purchasing of shares for the purpose of bringing a derivative action based on transactions antedating the purchase and because the plaintiff merely held “two pieces of paper rather than one” as evidence of her long investment in the corporation and its new alter ego. 136 A.2d 562. The Court focused on the involuntary nature of the transaction, in that it was pursuant to a consent decree, as well as considering the purpose for the enactment of 8 Del.C. § 327.

*22In considering the statutory intent of section 327, the Court relied upon Rosenthal v. Burry Biscuit Corporation, 60 A.2d 106, 111 (Del.Ch.1948), in which Chancellor Seitz concluded that the sole purpose of section 327 was “to prevent what has been considered an evil, namely, the purchasing of shares in order to maintain a derivative action designed to attack a transaction which occurred prior to the purchase of the stock.” Chancellor Seitz also stated that “rigidity is not needed where the equitable owner of stock is seeking to protect the corporate interests.” 60 A.2d 112. See also Bokat v. Getty Oil Co., Del.Supr., 262 A.2d 246, 250 (1970). Thus, it is clear that the provisions of 8 Del.C. § 327 are not inflexible standards and this Court, as a Court of Equity, must examine carefully the particular circumstances of each case.

In the present case the merger pursuant to the plan of reorganization is quite similar to the reorganization in Helfand. The reorganization now before the Court is merely a share for share merger with a newly formed holding company, which retained the old company as a wholly-owned subsidiary of the new holding company with the shareholders of the old company owning all the shares of the new holding company. The structure of the old and new companies is virtually identical except for a slight dilution in the overall stock holdings occasioned by Jet Capital’s exercise of its warrants. Just as in Helfand, plaintiff brought this derivative suit after a reorganization, challenging acts which occurred prior to the reorganization when plaintiff was a shareholder. Although in Helfand, unlike here, the old company was dissolved and suit was maintained on behalf of the new company, the analogy between Helfand and this case is still valid because plaintiff in the present case possesses the same equitable derivative standing as did the plaintiff in Helfand. And the instant action is really a double derivative suit. 13 Fletcher, Cyclopedia Corporations (Perm.Ed.) § 5977. Plaintiff’s position is involuntary insofar as he voted against the merger and his equity interest in the business entity is really still the same. To deny standing, therefore, would not serve to advance the stated purpose of section 327 and would open the door to great abuses. Because the merger had no meaningful effect on the plaintiff’s ownership of the business enterprise, he should have standing to maintain a derivative suit to correct an alleged breach of fiduciary duty. This is evident when the structure of the two corporations is examined because they are virtually identical. In essence, plaintiff still possesses an equitable right to sue derivatively for the benefit of Texas International’s interests as they exist after the reorganization.

Several Delaware cases have denied standing to maintain a stockholder’s derivative suit after a merger. Bokat v. Getty Oil Co., supra; Weinberger v. UOP, Inc., supra; Hutchison v. Bernhard, supra, and Braasch v. Goldschmidt, supra. In those cases, however, the mergers were either cash-out mergers or mergers with outside or pre-ex-isting corporations with substantial assets.

In Heit v. Tenneco, Inc., D.Del., 319 F.Supp. 884 (1970), a case which is, of course, not binding on this Court, the facts were quite different from the facts in the present case because a mere facelifting reorganization was not involved and the plaintiff had a remedy: to attempt to enjoin the merger which occurred during the course of the litigation. And the ruling in Helfand was neither cited nor discussed by the District Court. I am therefore not persuaded that the rule as set forth in Heit is controlling in the unusual factual circumstances of the present case and I find that plaintiff does have standing to maintain this suit.

IV

Next to be considered is plaintiff’s motion for summary judgment on the grounds that vote-buying existed and, therefore, the entire transaction including the merger was void because Jet Capital, in consideration for being extended an extremely advantageous loan, withdrew its opposition to the proposed merger. Thus, it is alleged that in substance and effect, Tex*23as International purchased Jet Capital’s necessary vote in contravention of settled law and public policy. As a consequence, plaintiff urges that the less than unanimous shareholder consent was insufficient to ratify a void act and its illegality permeated the entire transaction rendering the merger itself void. The critical inquiry, therefore, is whether the loan in question was in fact vote-buying and, if so, whether vote-buying is illegal, per se.

It is clear that the loan constituted vote-buying as that term has been defined by the courts. Vote-buying, despite its negative connotation, is simply a voting agreement supported by consideration personal to the stockholder, whereby the stockholder divorces his discretionary voting power and votes as directed by the offeror. The record clearly indicates that Texas International purchased or “removed” the obstacle of Jet Capital’s opposition. Indeed, this is tacitly conceded by the defendants. However, defendants contend that the analysis of the transaction should not end here because the legality of vote-buying depends on whether its object or purpose is to defraud or in some manner disenfranchise the other stockholders. Defendants contend that because the loan did not defraud or disenfranchise any group of shareholders, but rather enfranchised the other shareholders by giving them a determinative vote in the proposed merger, it is not illegal per se. Defendants, in effect, contend that vote-buying is not void per se because the end justified the means. Whether this is valid depends upon the status of the law.

The Delaware decisions dealing with vote-buying leave the question unanswered. See Macht v. Merchants Mortgage & Credit Co., Del.Ch., 194 A. 19 (1937); Hall v. Isaacs, Del.Ch., 146 A.2d 602 (1958), aff’d, Del.Supr., 163 A.2d 288 (1960); and Chew v. Inverness Mgt. Corp., Del.Ch., 352 A.2d 426 (1976). In each of these decisions, the Court summarily voided the challenged votes as being purchased and thus contrary to public policy and in fraud of the other stockholders. However, the facts in each case indicated that fraud or disenfranchisement was the obvious purpose of the vote-buying.

The seminal Delaware case, Macht v. Merchants Mortgage & Credit Co., supra, involved a series of criminally manipulative transactions instigated by a designing director in ordér to wrest control of the corporation from the other stockholders for fraudulent motives. In that case the Court stated with respect to vote-buying:

“As to the 224 shares which Sigmund Ades, Harry Ades and Sylvia Ades Norin-sky hold as a ‘Protective Committee,’ my conclusion is that they should not be permitted to vote. The deposit of these shares with the committee by the various holders was secured by paying out money to the depositing stockholders as an inducement to them to do so. The money was drawn from Home out of the assets formerly belonging to Merchants. It was I believe subsequently repaid to Home by Sigmund Ades, acting as the agent of his father, Harry Ades. In so far as the voting power of these shares is concerned, I think there can be no doubt that it was purchased. To allow voting rights that are bought to be exercised is against public policy, and would be in fraud of the other stockholders. Dieckmann v. Robyn, 162 Mo.App. 67, 141 S.W. 717; Brady v. Bean, 221 Ill.App. 279; Smith v. San Francisco, etc., Co., 115 Cal. 584, 47 P. 582, 35 L.R.A. 309, 56 Am.St.Rep. 119.” 194 A. 22.

Likewise in Hall and Chew the courts emphatically stated that vote-buying was against public policy but failed to discuss the reason why, other than because of the obvious presence of fraud.

The present case presents a peculiar factual setting in that the proposed vote-buying consideration was conditional upon the approval of a majority of the disinterested stockholders after a full disclosure to them of all pertinent facts and was purportedly for the best interests of all Texas International stockholders. It is therefore necessary to do more than merely consider the fact that Jet Capital saw fit to vote for the transaction after a loan was made to it by *24Texas International. As stated in Oceanic Exploration Co. v. Grynberg, Del.Supr., 428 A.2d 1 (1981), a case involving an analogous situation, to do otherwise would be tantamount to “[d]eciding the case on ... an abstraction divorced from the facts of the case and the intent of the law.” 428 A.2d 5.

A review of the present controversy, therefore, must go beyond a reading of Macht v. Merchants Mortgage & Credit Co., supra, and consider the cases cited therein: Dieckmann v. Robyn, Mo.App., 162 Mo.App. 67, 141 S.W. 717 (1911); Brady v. Bean, 221 Ill. 279 (1921); Smith v. San Francisco, etc., 115 Cal. 584, 47 P. 582 (1897); and Cone v. Russell, 48 N.J.Eq. 208, 21 A. 847 (1891). There are essentially two principles which appear in these cases. The first is that vote-buying is illegal per se if its object or purpose is to defraud or disenfranchise the other stockholders. A fraudulent purpose is as defined at common law, as a deceit which operates prejudicially upon the property rights of another.

The second principle which appears in these old cases is that vote-buying is illegal per se as a matter of public policy, the reason being that each stockholder should be entitled to rely upon the independent judgment of his fellow stockholders. Thus, the underlying basis for this latter principle is again fraud but as viewed from a sense of duty owed by all stockholders to one another. The apparent rationale is that by requiring each stockholder to exercise his individual judgment as to all matters presented, “[t]he security of the small stockholders is found in the natural disposition of each stockholder to promote the best interests of all, in order to promote his individual interests.” Cone v. Russell, 48 N.J.Eq. 208, 21 A. 847, 849 (1891). In essence, while self interest motivates a stockholder’s vote, theoretically, it is also advancing the interests of the other stockholders. Thus, any agreement entered into for personal gain, whereby a stockholder separates his voting right from his property right was considered a fraud upon this community of interests.

The often cited case of Brady v. Bean, 221 Ill.App. 279 (1921), is particularly enlightening. In that ease, the plaintiff — an apparently influential stockholder — voiced his opposition to the corporation’s proposed sale of assets. The plaintiff feared that his investment would be wiped out because the consideration for the sale appeared only sufficient enough to satisfy the corporation’s creditors. As a result and without the knowledge of the other stockholders, the defendant, also a stockholder as well as a director and substantial creditor of the company, offered to the plaintiff in exchange for the withdrawal of his opposition, a sharing in defendant’s claims against the corporation. In an action to enforce this contract against the defendant’s estate, the Court refused relief stating:

“Appellant being a stockholder in the company, any contract entered into by him whereby he was to receive a personal consideration in return for either his action or his inaction in a matter such as a sale of all the company’s assets, involving, as it did, the interests of all the stockholders, was contrary to public policy and void, it being admitted that such contract was not known by or assented to by the other stockholders. The purpose and effect of the contract was apparently to influence appellant, in his decision of a question affecting the rights and interests of his associate stockholders, by a consideration which was foreign to those rights and interests and would likely to induce him to disregard the consideration he owed them and the contract must, therefore, be regarded as a fraud upon them. Such an agreement will not be enforced, as being against public policy. Teich v. Kaufman, 174 Ill.App. 306; Guernsey v. Cook, 120 Mass. 501; UPalmbaum [Palmbaum] v. Magulsky, 217 Mass. 306 [104 N.E. 746].” (emphasis added) 221 Ill.App. at 283.

In addition to the deceit obviously practiced upon the other stockholders, the Court was clearly concerned with the rights and interests of the other stockholders. Thus, the potential injury or prejudicial impact which might flow to other stockholders as a result *25of such an agreement forms the heart of the rationale underlying the breach of public policy doctrine.

An automatic application of this rationale to the facts in the present case, however, would be to ignore an essential element of the transaction. The agreement in question was entered into primarily to further the interests of Texas International’s other shareholders. Indeed, the shareholders, after reviewing a detailed proxy statement, voted overwhelmingly in favor of the loan agreement. Thus, the underlying rationale for the argument that vote-buying is illegal per se, as a matter of public policy, ceases to exist when measured against the undisputed reason for the transaction.

Moreover, the rationale that vote-buying is, as a matter of public policy, illegal per se is founded upon considerations of policy which are now outmoded as a necessary result of an evolving corporate environment. According to 5 Fletcher Cyclopedia Corporation (Perm.Ed.) § 2066:

“The theory that each stockholder is entitled to the personal judgment of each other stockholder expressed in his vote, and that any agreement among stockholders frustrating it was invalid, is obsolete because it is both impracticable and impossible of application to modern corporations with many widely scattered stockholders, and the courts have gradually abandoned it.”

In addition, Delaware law has for quite some time permitted stockholders wide latitude in decisions affecting the restriction or transfer of voting rights. In Ringling Bros., Etc., Shows, Inc. v. Ringling, Del. Supr., 53 A.2d 441 (1947), the Delaware Supreme Court adopted a liberal approach to voting agreements which, prior to that time, were viewed with disfavor and were often considered void as a matter of public policy. In upholding a voting agreement the Court stated:

“Generally speaking, a shareholder may exercise wide liberality of judgment in the matter of voting, and it is not objectionable that his motives may be for personal profit, or determined by whims or caprice, so long as he violates no duty owed his fellow stockholders.” (citation omitted)

The Court’s rationale was later codified in 8 Del.C. § 218(c), which states:

“(c) An agreement between 2 or more stockholders, if in writing and signed by the parties thereto, may provide that in exercising any voting rights, the shares held by them shall be voted as provided by the agreement, or as the parties may agree, or as determined in accordance with a procedure agreed upon by them. No such agreement shall be effective for a term of more than 10 years, but, at any time within 2 years prior to the time of the expiration of such agreement, the parties may extend its duration for as many additional periods, each not to exceed 10 years, as they may desire.”

Recently, in Oceanic Exploration Co. v. Grynberg, Del.Supr., 428 A.2d 1 (1981), the Delaware Supreme Court applied this approach to voting trusts. The Court also indicated, with approval, the liberal approach to all contractual arrangements limiting the incidents of stock ownership. Significantly, Oceanic involved the giving up of voting rights in exchange for personal gain. There, the stockholder, by way of a voting trust, gave up his right to vote on all corporate matters over a period of years in return for “valuable benefits including indemnity for large liabilities.” 428 A.2d at 5.

Given the holdings in Ringling and Oceanic it is clear that Delaware has discarded the presumptions against voting agreements. Thus, under our present law, an agreement involving the transfer of stock voting rights without the transfer of ownership is not necessarily illegal and each arrangement must be examined in light of its object or purpose. To hold otherwise would be to exalt form over substance. As indicated in Oceanic more than the mere form of an agreement relating to voting must be considered and voting agreements in whatever form, therefore, should not be considered to be illegal per se unless the object or purpose is to defraud or in some *26way disenfranchise the other stockholders. This is not to say, however, that vote-buying accomplished for some laudible purpose is automatically free from challenge. Because vote-buying is so easily susceptible of abuse it must be viewed as a voidable transaction subject to a test for intrinsic fairness.

V

Apparently anticipating this finding, plaintiff also attempts to cast the loan agreement as one seeking to accomplish a fraudulent purpose. As indicative of fraud, plaintiff points to the fact that no other warrant holder was given a similar loan to enable an early exercise of the warrants. However, despite this contention, I am satisfied that, based on the record, there is no evidence from which an inference of a fraudulent object or purpose can be drawn.

As to the other warrant holders who did not get a loan, they were merely the holders of an expectant and contingent interest and, as such, were owed no duty by Texas International except as set forth in the warrant certificates. FOLK, The Delaware General Corporation Law, Little, Brown (1972) § 155, p. 126. In any event, the record fails to show any evidence that Texas International’s ultimate decision to fund Jet Capital’s early exercise of the warrants was motivated and accomplished except with the best interests of all Texas International stockholders in mind.

VI

I therefore hold that the agreement, whereby Jet Capital withdrew its opposition to the proposed merger in exchange for a loan to fund the early exercise of its warrants was not void per se because the object and purpose of the agreement was not to defraud or disenfranchise the other stockholders but rather was for the purpose of furthering the interest of all Texas International stockholders. The agreement, however, was a voidable act. Because the loan agreement was voidable it was susceptible to cure by shareholder approval. Michelson v. Duncan, Del.Supr., 407 A.2d 211 (1979). Consequently, the subsequent ratification of the transaction by a majority of the independent stockholders, after a full disclosure of all germane facts with complete candor precludes any further judicial inquiry of it.

VII

Lastly, I consider defendants’ motion for summary judgment based on the allegation that the record fails to show any factual basis to support an allegation of corporate waste.

It is well settled in this state that waste of corporate assets is incapable of ratification without unanimous stockholder consent. Beard v. Elster, Del.Supr., 160 A.2d 731 (1960); Kerbs v. California Eastern Airways, Del.Supr., 90 A.2d 652 (1952); Gottlieb v. Heyden Chemical Corp., Del.Supr., 91 A.2d 57 (1952); Saxe v. Brady, Del.Ch., 184 A.2d 602 (1962); and Michelson v. Duncan, Del.Supr., 407 A.2d 211 (1979). These decisions, however, also hold that in an action challenging a transaction on grounds of corporate waste which is subsequently ratified by the stockholders, the burden of persuasion falls on the objecting stockholder “to convince the Court that no person of ordinary, sound business judgment would be expected to entertain the view that the consideration was a fair exchange for the value which was given” (citations omitted). Saxe v. Brady, 184 A.2d at 610. Because the present transaction was both approved by a disinterested committee of directors and ratified by a majority of the stockholders including a majority of the disinterested stockholders, plaintiff clearly carries the burden of persuasion as to this issue. Michelson v. Duncan, supra.

While defendants have compiled a strong record negating a claim of waste, plaintiff has only relied on his contention that the 5% interest rate on the loan from Texas International to Jet Capital constituted waste. Specifically, plaintiff claims that, because the 5% interest rate was merely equal to the dividends anticipated to be paid on the stock during the time period the warrants would have been outstanding *27if the early exercise of the warrants had not occurred, Jet Capital received a virtually interest free loan from the time of the exercise of the warrants until the original expiration date. Moreover, plaintiff contends that the loan was given to a controlling stockholder whose net worth precluded it from securing such financing elsewhere. As a result, this controlling stockholder was able to increase its holdings in Texas International at the expense of that company.

On the other hand, defendants contend that the terms of the loan were properly within the realm of business judgment and .the consideration which flowed to Texas International from the merger was invaluable. In essence, defendants contend that the merger permitted: expansion, diversification, increased efficiency, reductions in costs and minimized governmental regulation. In addition, as earlier indicated, the loan is claimed to have had a minimal impact on Texas International’s cash position because the money was immediately paid back into the company upon the exercise of the warrants. Moreover, it is urged that because the 5% interest rate was equal to the dividends which would have been paid, this further reduced the impact on Texas International’s cash position and is therefore viewed by defendants as a positive factor.

Nevertheless, although plaintiff’s claim of waste is barely supported by the record, I am reluctant to grant summary judgment on a question of corporate waste without giving plaintiff an opportunity to further develop his claim. In Michelson v. Duncan, supra, a decision in which the plaintiffs did nothing more than put the defendants on notice of a challenge based on corporate waste, the Delaware Supreme Court held:

“Claims of gift or waste of corporate assets are seldom subject to disposition by summary judgment; and when there are genuine issues of fact as to the existence of consideration, a full hearing is required regardless of shareholder ratification. See Kerbs v. California Eastern Airways, supra; Gottlieb v. Heyden Chemical Corp., supra. ‘The determination of whether or not there has been in any given situation a gift of corporate assets does not rest upon any hard and fast rule. It is largely a question of fact.’ Gottlieb v. McKee, Del.Ch., 34 Del.Ch. 537, 107 A.2d 240 at 243 (1954). In Saxe v. Brady, Del.Ch., 40 Del.Ch. 474, 184 A.2d 602 (1962), Chancellor Seitz stated ‘Where waste of corporate assets is alleged, the court, notwithstanding independent stockholder ratification, must examine the facts of the situation.’ (184 A.2d at 610). In Heyden this Court stated:

“An important question, which is not yet answered, is whether these services and these options can sensibly be deemed to be the subject of a fair exchange. This is obviously not a mere question of law. An issue of fact is raised, as to which, as yet, no evidence has been taken.” 33 Del.Ch. 177, 91 A.2d 57 at 59’.”

In view of this holding, I cannot conclude, at this time, that as a matter of law there was no waste of corporate assets.

VIII

In summary plaintiff’s motion for summary judgment on the grounds that the transaction before the Court was permeated by vote-buying and was therefore void or voidable is denied. Defendants’ motion for summary judgment on the grounds that plaintiff lacks standing to bring this suit or on the grounds that there is no factual basis for a claim of waste is denied.

IT IS SO ORDERED.

Norman L. Harvey, J.

This is a shareholder’s derivative action brought on behalf of Lin Broadcasting Corporation (LIN) by Louis J. Brecher who, at the time this action was *458commenced, owned 200 shares of LIN common stock. No party challenges his right to bring the action.

LIN was incorporated in Delaware in 1961. By December, 1968 it had become a publicly-held corporation with assets of approximately $55,000,000. Currently it holds licenses issued by the Federal Communications Commission (FCC) to operate 10 radio and 2 television stations. Defendant Frederic Gregg was the principal founder of LIN and served as LIN’s president from the time of incorporation until his resignation oh January 10, 1969. In addition, Gregg was a member of the board of directors from October, 1961 to March, 1969 and chairman from February, 1967 to March, 1969. As of January 10, 1969 Gregg owned approximately 82,000 shares of LIN common stock — the largest block beneficially owned by any single person or entity.

The defendants Clyde W. Clifford, Peter J. Solomon, David Steine, Joel M. Thrope, Thomas I. Unterberg and Lind Carl Voth were directors of LIN at all times relevant herein. Defendant Alan J. Patricof was a director of LIN from February 19, 1967 until January 10, 1969 at which time an earlier tendered resignation was accepted by the LIN directors. He did not participate in any of the activities complained of by the plaintiff.

The controversy centers upon a transaction between the defendant Gregg and the Saturday Evening Post Company (SEPCO) in which the latter bought Gregg’s 82,000 shares of LIN stock. The purchase price of the stock was $3,500,000, said amount being approximately $1,260,000 more than the market price on the date of sale. Plaintiff contends that SEPCO paid Gregg a premium for Gregg’s promise to resign immediately as president of LIN; bring about the election of SEPCO’s nominee as his successor to the presidency; bring about the immediate election of three SEPCO nominees as directors; and ultimately bring about an absolute numerical majority of SEPCO nominees to the board. Plaintiff contends that the acceptance of this premium amounted to a sale of corporate office, and therefore, was illegal.

Two specific contentions of the plaintiff are:

(1) That the corporation is entitled to receive $1,260,000 of the sale price paid to the defendant Gregg as a premium; and

(2) That because the remaining directors acquiesced in Gregg’s promise and actually did vote to elect nominees of SEPCO as president and as three of its directors they are *459liable, jointly with Gregg and severally, for the premium resulting from the sale.

A third contention will be stated and considered later in the decision.

Trial of the action was accomplished by the submission of certain exhibits which were agreed upon by all parties, the depositions of numerous witnesses, and answers to interrogatories. The court did not personally see or hear any of the witnesses when they gave their testimony.

Certain of the facts are undisputed. Sometime during the latter part of 1968 the defendant Frederic Gregg, Jr. and Martin Ackerman, then president of SEPCO, entered into negotiations for the purchase of the LIN stock owned by Gregg. Ultimately, an agreement was reached for the purchase of the stock by SEPCO for the total consideration of $3,500,000. In addition to that, Gregg agreed to relinquish certain rights that he had under an employment contract with LIN which included, among other things, stock options. The price of $3,500,000 was approximately $1,260,000 more than the then current price on the over-the-counter securities exchange in New York City.

Shortly after the agreement, defendant Gregg called a meeting of the LIN board of directors at which: defendant Alan Patricof s previously submitted resignation was accepted, thus creating a vacancy; the board voted to expand its size from 8 to 10 seats; the SEPCO nominees, Martin Ackerman, Alfred Driscoll and Milton Gould, were elected to fill the three vacancies; Gregg’s resignation as president was tendered and accepted; and Ackerman was elected as his successor.

Within a few weeks thereafter, LIN’s board of directors terminated Ackerman’s tenure as president and all SEPCO directors resigned. SEPCO then sued Gregg, LIN and others for a refund of the premium alleging that, as conditions of its purchase, it was promised that SEPCO’s nominee would be hired as president of LIN and be given a fair opportunity to supervise the management of its affairs; that SEPCO be given immediate minority representation on the board of directors and that best efforts be made to cause SEPCO to have majority representation on the board at an early date by seeking required approval from FCC. The complaint further alleged that the defendants breached the agreement by not permitting SEPCO’s nominee to the presidency an ample opportunity to manage the corporation. The complaint was dismissed at *460Special Term because of the illegality of the agreement. Mr. Justice Saypol’s opinion will be referred to later herein.

No evidence was introduced to establish that any of the director defendants, other than Gregg, was involved in the negotiations for the sale of Gregg’s stock nor that they received any benefit therefrom.

The bulk of the evidence introduced concerned the negotiations between Martin S. Ackerman, president of SEPCO, and the defendant Gregg for the purchase of Gregg’s stock. That evidence was conflicting as to the issue of the inducement for the payment of a premium. But, from all the evidence before it, the court concludes that the defendant Gregg and SEPCO agreed upon the purchase price of $3,500,000 for Gregg’s stock (which also would result in his forfeiture of substantial stock option rights) and that the inducement for payment of a price more than $1,200,000 above the price quoted in the over-the-counter market was Gregg’s promise to deliver effective control of LIN to SEPCO. Control was to be delivered by Gregg’s resignation of the presidency and the election of SEPCO’s nominees to the presidency and three directorships.

The court concludes as a matter of law that the agreement insofar as it provided for a premium in exchange for a promise of control, with only 4% of the outstanding shares actually being transferred, was contrary to public policy and illegal. The law as it pertains to these facts was succinctly stated by Mr. Justice Saypol in his determination of the motion previously referred to. (Brecher v Gregg, NYLJ, June 15,1970, p 16, col 1.)

"The subject agreement to purchase an office is against public policy and unenforceable in this State. The employment contract cannot be saved by severance since it is an integral portion of the agreement having an illegal purpose.

"It is not alleged that by virtue of the stock purchase plaintiff acquired control with which it could then install officers and directors of its own selection. It appears on the face of the complaint that the transaction had no semblance of actual or practical control; rather, the designation of president and minority board representation remained in the actual control of the defendants but was bargained away to plaintiff.

"As stated in Matter of Lionel Corp. (NYLJ, Feb. 4, 1964, Schweitzer, J, Sup Ct NY County): 'As early as McClure v *461 Law (161 NY 78), and as late as Essex Universal Corp v Yates (305 F2d 572), it is the law of this State that it is illegal to sell corporate office or management control by itself (that is, accompanied by no stock or insufficient stock to carry voting control).’ (Affd sub nom Matter of Caplan v Lionel Corp., 20 AD2d 301, affd 14 NY2d 679.) Indeed, the illegal profit belongs to the corporation (Gabriel Ind. v Defiance Ind., NYLJ, June 17, 1964, p 13, col 8; Sarafite, J., affd 23 AD2d 630).”

Clearly, the defendant Gregg must forfeit to the corporation any illegal profit derived from his sale of stock.

But, a much more difficult question to be resolved is the determination of the issue created by the contention of the plaintiff that the directors who voted for the election of SEPCO’s nominees are jointly and severally liable to account to the corporation for the illegal profits of Gregg. No specific precedent for this contention has been offered.

To determine this issue, it is necessary to fully understand the nature of the liability to his corporation incurred by a director or officer who sells his stock at a premium. It is a liability that arises because the director or officer is considered to be in the position of a fiduciary to the corporation.

"In a broad sense, the directors and officers of a corporation are its agents, and they occupy a fiduciary, or more exactly a quasi-fiduciary, relation to the corporation and its stockholders. [Equity Corp. v Groves, 294 NY 8, 60 NE2d 19; Pink v Title Guarantee & Trust Co., 274 NY 167, 8 NE2d 321; Manson v Curtis, 223 NY 313, 119 NE 559; Godley v Crandall & G. Co., 212 NY 121, 105 NE 818; Bosworth v Allen, 168 NY 157, 61 NE 163; Seymour v Spring Forest Cemetery Assn., 144 NY 333, 39 NE 365.] They are bound by all those rules of conscientious fairness, morality, and honesty in purpose, which the law imposes as guides for those who are under the fiduciary obligations and responsibilities, and they are held, in official action, to the extreme measure of candor, unselfishness, and good faith. They are bound to exercise the utmost good faith and loyalty in the performance of their duties, to be scrupulous in such performance, and to act at all times in the interests of the corporation and the stockholders, and not for personal benefit or advantage. Directors must always be free from fraud in their relations with their shareholders; fair dealing is imperative. Indeed, it is the view frequently and broadly taken that the officers and directors of a corporation are, in substance and in effect, trustees for the corporation *462and for its stockholders, it has been said that at least they occupy a position of partial trust. * * *

"For violation of their duty resulting in the waste of corporate assets, injury to its property, or unlawful gain to themselves, directors and officers are in fact liable to account in equity the same as ordinary trustees” (12 NY Jur, Corporations, § 717).

"It is a cardinal principle that a director or an officer of a corporation will not be permitted to make a private profit out of his official position; he must give to the corporation the benefit of any advantage which he has thereby obtained. The rule applies irrespective of the motive or good faith of the director or officer. * * * Where the president and director of a corporation was paid money by outside parties upon the condition that he procure their election as directors of the corporation with powers of control and management, such money was received by virtue of his office and from official acts and he must account to the corporation for it.” (12 NY Jur, Corporations, § 724.)

The sale of a director’s or officer’s shares can lead to a violation of such fiduciary duty in certain circumstances.

"Ordinarily, a director possesses the same right as any other stockholder to deal freely with his shares of stock and to dispose of them at such a price as he may be able to obtain, so long as he does not commit a fraud or violate his duty to the corporation. Apart from circumstances of bad faith or proof of injury to the corporation, a director who sells his stock above the current market quotations is not accountable to the corporation for any profit made on such sale.

"The sale of control of the corporation through a sale of his stock by a director or officer is not necessarily objectionable, so long as there is no fraud in the transaction or receipt of a special bonus or premium.” (12 NY Jur, Corporations, § 755.)

"A transaction in which directors or officers who own a majority of the stock of a corporation sell the stock and agree to, or resign so as to facilitate, the taking over of control by the purchasers may be legal, but such a transaction will be closely scrutinized for fraud. A director or officer can be compelled to account to the corporation for an improper sale of his stock: (1) where, in addition to the purchase price, he receives a bonus for relinquishing either his control or his office; (2) where, by a sale of his stock at a premium, he *463conspires fraudulently to turn over control to purchasers who mismanage the corporation; and (3) where, without adequate investigation, he negligently turns over control to purchasers who pay him a bonus for the sale of his stock, and the purchasers then proceed to loot the corporate assets.” (12 NY Jur, Corporations, § 756.)

The policy underlying these principles, as stated by Chief Judge Fuld, in affirming the liability of corporate officers who had traded in their own corporation’s stock at a substantial profit on the basis of inside information, and holding that such profits could be made the basis of an accounting due the corporation is that: "[D]amages * * * [have] never been considered to be an essential requirement for a cause of action founded on a breach of fiduciary duty * * * because the function of such an action, unlike an ordinary tort or contract case, is not merely to compensate the plaintiff for wrongs committed by the defendant but * * * 'to prevent them, by removing from agents and trustees all inducement to attempt dealing for their own benefit in matters which they have undertaken for others, or to which their agency or trust relates.’

"Just as a trustee has no right to retain for himself the profits yielded by property placed in his possession but must account to his beneficiaries, a corporate fiduciary, who is entrusted with potentially valuable information, may not appropriate that asset for his own use even though, in so doing, he causes no injury to the corporation. The primary concern, in a case such as this, is not to determine whether the corporation has been damaged but to decide, as between the corporation and the defendants, who has a higher claim to the proceeds derived from the exploitation of the information. In our opinion, there can be no justification for permitting officers and directors, such as the defendants, to retain for themselves profits which, it is alleged, they derived solely from exploiting information gained by virtue of their inside position as corporate officials. * * *

"Sitting as we are in this case as a court of equity, we should not hesitate to permit an action to prevent any unjust enrichment realized by the defendants from their allegedly wrongful act.” (Diamond v Oreamuno, 24 NY2d 494, 498-501.) (See, also, Bosworth v Allen, 168 NY 157.)

The remedy is an equitable one (Equity Corp. v Groves, 294 NY 8) and only available to the extent of actual profits *464realized by the defendant (Gabriel Ind. v Defiance Ind., 22 NY2d 405).

In summary, an officer’s transfer of fewer than a majority of his corporation’s shares, at a price in excess of that prevailing in the market, accompanied by his promise to effect the transfer of offices and control in the corporation to the vendee, is a transaction which breaches the fiduciary duty owed the corporation and upon application to a court of equity: the officer will be made to forfeit that portion of his profit ascribable to the unlawful promise as he has been unjustly enriched; and an accounting made on behalf of the corporation, since it is, of the two, the party more entitled to the proceeds.

Since there has been no showing that the actions of any directors other than Gregg either led to any pecuniary loss to the corporation or to the realization of any personal profit or gain to themselves, it follows that they cannot be held liable jointly, or severally, with Gregg for the payment of the premium over to the corporation.

In view of the fact that the court is charged with the duty to determine both the law and the facts, it must render a factual decision. There was no malfeasance or misfeasance demonstrated in the directors having voted to elect Messrs. Ackerman, Driscoll and Gould. That decision was as consistent with the future well-being and success of the corporation as the later vote to remove Ackerman. On the mere basis of hindsight, the court cannot inculpate these directors for what may or may not have been an unfortunate decision.

The third cause of action concerns itself with the following facts:

In March, 1968 LIN entered into a contract with Communications Industries Corporation (CIC) whereby LIN agreed to acquire radio station WJRZ from CIC. It was agreed that, should the FCC not approve the acquisition on or before February 14, 1969, either party could withdraw from the undertaking. In connection with the proposed acquisition, LIN deposited $250,000 in escrow to be paid to CIC if the transaction was consummated.

LIN’s original application for approval of its acquisition from CIC of radio station WJRZ was filed with the FCC on May 27, 1968. During the seven and one-half months prior to January 10, 1969, the FCC required both LIN and CIC to submit numerous addenda, including specific information with respect to the background of, and LIN’s arrangement with, an *465officer and major stockholder of WJRZ. LIN and CIC had responded to such FCC inquiries as late as January 10, 1969, the day the LIN board elected SEPCO’s nominees to office.

On January 15, 1969, the FCC requested an explanation with respect to rumors appearing in trade publications that SEPCO was "in the process of acquiring” control of LIN. By letter dated February 10, 1969, the FCC was informed that, while SEPCO "and related interests” did desire to obtain control of LIN "at some future time”, no change of control had resulted from the election of the SEPCO nominees or SEPCO’s purchase of Gregg’s stock, and no change in control would take place without prior FCC approval.

On February 17, 1969, CIC informed LIN that, since the FCC had failed to approve the transfer to LIN of the WJRZ license on or before February 14, 1969, it was exercising the option to cancel the contract. Litigation ensued over LIN’s right to return of its good faith deposit of $250,000. The litigation was ultimately settled with CIC receiving $45,000 and the remaining $205,000 being returned to LIN. The radio station was sold to a third party for substantially more than the price offered to LIN.

Plaintiff’s third contention is that the defendants are liable to the corporation because of a loss of bargain. He claims that the Gregg-SEPCO transaction blocked FCC approval of the purchase of radio station WJRZ.

The actionability of this "lost bargain” theory necessarily hinges on a showing of eventual success in the contractual endeavor; concomitant with a showing that the Gregg-SEPCO transaction, including the actions of the board of directors, was actionable as the proximate cause of the FCC’s failure to approve before its termination. (Union Car Adv. Co. v Collier, 263 NY 386; see, also, A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369; Egan Real Estate v McGraw, 40 AD2d 299.) There was practically no proof offered to support plaintiff’s contention. The court is completely unaware of the reason LIN officers or lawyers took 26 days to answer the January 15, 1969 inquiry of FCC. Neither does it have any knowledge of what transpired during the seven and one-half months from the time of the application until the Gregg-SEPCO deal. No violation of FCC regulations or policy has been brought to the court’s attention. To hold that the FCC would have approved LIN’s application on or before the February 14, 1969 deadline had it not been for the SEPCO transaction would be gross *466speculation. The third cause of action must be dismissed for failure of proof.

It is the decision of the court that the complaint be dismissed as to all defendants other than Gregg. It is the further decision of the court that the defendant account to the corporation for any profits made in his sale to SEPCO over and above that which he would have realized, had the sale been consummated in an arm’s length, over-the-counter transaction.

*544Staley, Jr., J.

Petitioners, as stockholders of Republic Corporation, have instituted a proceeding pursuant to the provisions of section 619 of the Business Corporation Law to invalidate the election of certain named directors of the corporation on the ground that their election on July 11,1963 was illegal. This is an appeal from an order entered May 21, 1964 dismissing the petition as legally insufficient.

Prior to July 11,1963 the Board of Directors of Republic Corporation was controlled by William Zeckendorf, Sr., and interests identified with him, who owned 237,698 shares of the common stock of Republic Corporation, which was approximately 9.7% of the total outstanding stock. The board, of directors consisted of 11 members and the Zeckendorf interests controlled 6 out of the 11. On July 11, 1963 the Zeckendorf interests entered into a written agreement for the sale of their stock to B. S. P. Company which provided for the delivery and payment for the stock on July 12, 1963. The corporation held a meeting of the board of directors on July 11,1963 and the six Zeckendorf directors resigned seriatim and, as each director resigned,- the remaining members of the board unanimously elected a B. S. F. Company nominee as substitute director in the place of the resigned director.

On July 12, 1964 B. S. F. Company paid for and received delivery of the 237,698 shares of stock at a purchase price of $11 per share, which price was substantially the market price although slightly higher. On July 27,1963 the petitioner Carter, as president of the corporation, made an interim report to the stockholders of the company disclosing the facts concerning purchase of stock by the B. S. F. Company and reported the election of the six new directors, naming them and referring to them as “ all men of outstanding executive ability in a wide range of industrial fields ”.

In the 1963 annual report of the corporation issued in the early part of 1964 the petitioner Carter again referred to the election of the six new directors in July of 1963. The annual meeting of the stockholders of the corporation was held on April 8, 1964 and, pursuant to the provisions of the by-laws which provide for staggered terms for directors elected to the board, three vacancies for directorships were to be filled at the annual meeting. In connection with the annual meeting to be held on April 8,1964, the corporation issued a notice of meeting with a proxy statement dated March 6, 1964 which set forth the stock ownership of B. S. F. Company totaling 290,045 shares or 11.82% of the total outstanding stock and further detailing the election of the six new directors on July 11, 1963 and stated *545that they u constitute a majority of the Board of Directors and represent a material change in the management and control of the corporation.” The proxy statement further named the nominees for election as directors at the annual meeting to be held on April 8,1964, two of whom were the nominees of B. S. F. Company elected on July 11, 1963. At the annual meeting all of the directors nominated for election were unanimously elected by the stockholders.

The appellants contend that the sale of stock to B. S. F. Company on July 11,1963 did not vest in B. S. F. Company a working control of the corporation and, therefore, the substitution of directors by nominees of B. S. F. Company and the transfer of control of the board of directors to such nominees was illegal and their election should be invalidated.

■Since 1961 the block of stock acquired by B. S. F. Company on July 11,1963 had represented working control of the corporation. The total outstanding shares of common stock of the corporation was 2,453,483. Even though for a period of years ownership of approximately 10% of the stock was sufficient to effect control of the board of directors, it cannot be said as a matter of law that such percentage would continuously be sufficient to maintain control. In Matter of Caplan v. Lionel Corp. (20 A D 2d 301, 303) this court held that the transfer of 3% of the outstanding stock of Lionel Corporation was insufficient to constitute a transfer of working control of the corporation and stated: ‘ ‘ The underlying principle is that the management of a corporation is not the subject of trade and cannot be bought apart from actual stock control (McClure v. Law, 161 N. Y. 78). Where there has been a transfer of the majority of the stock, or even such a percentage as gives working control, a change of directors by resignation and filling of vacancies is proper ”.

When a situation involving less than 50% of the ownership of stock exists, the question of what percentage of ownership of stock is sufficient to constitute working control is likely to be a matter of fact, at least in most circumstances. Section 619 of the Business Corporation Law provides for hearing the proofs and allegations of the parties in a proceeding brought pursuant to that section and, if the instant proceeding had been timely brought, the proper procedure to determine the issues would be to hold a hearing to determine if ownership of stock represented by the respondents constituted a working control of the corporation.

The conduct of the corporation in apprising its stockholders of the transfer of control of the board of directors on July 11, 1963 by means of the interim report of July 27,1963; the annual *546report distributed in early 1964; and the notice of meeting and detailed proxy statement dated March 6, 1964, adequately and fairly brought to their attention the manner in which control had been transferred and the fact that such control would be continued by the election of Rynberk and Corrington, the nominees of B. S. F. Company at the annual meeting on April 8, 1964. There was no fraud or concealment and those two directors were elected at that meeting without protest.

Under these circumstances no stockholder can claim to have been deceived or misled by the change of control of the board of directors which took place on July 11, 1963 and the failure of the petitioners to act within a reasonable period of time and subsequent to the annual stockholders’ meeting is sufficient to support a dismissal of their petition.

Section 619 of the Business Corporation Law endows the court with broad equitable powers to direct a new election of directors where the election under review is “so clouded with doubt or tainted with questionable circumstances that the standards of fair dealing require the court to order a new, clear and adequate expression of the security holders’ will.” (Matter of Wyatt v. Armstrong, 186 Misc. 216, 220.)

The stockholders’ indorsements of the B. S. F. Company’s nominees at the annual meeting with full knowledge of all the facts attending their original election establish a clear and adequate expression of the stockholders’ wishes.

Accordingly the order appealed from dismissing the petition and denying the temporary relief sought by the petitioners should be affirmed, on the law and the facts, with costs to the respondents-respondents.

Bkeitel, J. P., Eager and Steuer, JJ., concur.

Order, entered on May 21, 1964, dismissing the petition and denying the temporary relief sought by petitioners, unanimously affirmed, on the law and on the facts, with $20 costs to respondents-respondents.

GENERAL NARRATIVE

LEVAL, District Judge.

Brascan Ltd. (“Brascan”) is a Canadian publicly held company whose 26,100,000 common shares are held by some 50,000 stockholders and are traded on the Toronto, Montreal, London and American Stock Exchanges.

In late 1978 Brascan announced the sale of its principal subsidiary, an electric utility in Brazil, for $380 million (U.S.) cash. Shortly thereafter Edper Investments Ltd. (“Edper Investments”), a privately held Canadian venture capital company, became interested in acquiring Brascan shares. Ed-per Investments made some purchases in late 1978 and early 1979. In March, 1979 Edper Investments joined with Patino, N.V. (“Patino”), a privately held Netherlands company, to create Edper Equities Ltd. (“Edper”), a corporate entity formed for the purpose of attempting to obtain either control, or a major portion, of Brascan shares. Edper is the principal defendant in this action. At the end of March, 1979 Edper owned approximately 5% of the outstanding Brascan shares.

Edper approached Brascan on April 5 with a proposal for a friendly acquisition. The next day the Brascan board resolved to make a tender offer for all the outstanding shares of F. W. Woolworth Co. (“Woolworth”). Edper’s overtures were rebuffed.

In the days which followed, Edper embarked on an intensive examination of Brascan’s position. Edper concluded that an acquisition of Woolworth by Brascan would be detrimental to Brascan’s interests. Several courses of action were considered by Edper with a view to acquiring a dominant stake in Brascan. Among these were an offer on the Toronto Stock Exchange for a controlling interest in Brascan shares, conditioned on Brascan’s abandoning its offer for Woolworth stock and purchases of Brascan’s shares on the American Stock Exchange (the “AMEX”). Edper also considered disposing of its interest in Brascan in view of the Woolworth offer. Edper’s Toronto conditional offer was abandoned April 20 when the Ontario Securities Commission (“O.S.C.”) denied permission to proceed. A few days after the O.S.C.’s decision, Edper began to give more serious consideration to purchases over the AMEX. At a meeting on April 29 a tentative decision was made to proceed in this fashion. Edper’s initial objective was to increase its holding to 10%, for three reasons. First, a 10% holder is entitled under Section 103(1) of the Canada Corporations Act to cause a stockholders meeting to be summoned. Second, Edper believed that with a position of this size it might induce Brascan’s management to take its opposition seriously and drop the Woolworth offer. Third, Edper thought it needed more stock in order to carry more weight in expressing its views at a hearing.which the New York Attorney General had set for May 10 on the Brascan Woolworth offering. However, no firm decision to purchase Brascan shares on the AMEX was made until the early morning of April 30.

During the period already discussed, nothing which Edper had stated or done was false, misleading, manipulative or violative of any law.

On April 30, Edper, through, Balfour Securities Co. (“Balfour” or “Balfour Securities”), a New York broker, purchased in excess of three million Brascan shares on *776the AMEX. That evening, in response to requests from the O.S.C. and the Toronto Stock Exchange, Edper issued a press release identifying itself as the purchaser. Answering a press inquiry on that release, an Edper representative said that Edper did not then plan to buy more Brascan shares. The statement was accurate when made and reflected a decision made by Edper’s management after trading closed on April 30. This statement was published the morning of May 1 in the Wall Street Journal.

On the morning of May 1 Edper’s management reconsidered their decision, recognizing that additional purchases of Brascan stock were necessary to protect their investment. Observing that Brascan’s management was undeterred by Edper’s April 30 acquisitions and hearing that more stock was available at prices comparable to those of the prior day, Edper decided to resume purchasing. Without issuing a further public statement, Edper reentered the market and on May 1 again acquired more than three million shares of Brascan on the AMEX.

During April, Edper had occasionally consulted with James Connacher, a Canadian broker who was knowledgeable about Bras-can shares, about the possibility of Edper’s acquiring a major position in Brascan shares. On April 29 at Edper’s request, Connacher accompanied Price, an Edper man who was sent to New York to execute Edper’s purchasing strategy, and gave Price help and advice concerning the selection of a broker, negotiating commissions and the hedging of foreign exchange in order to make payment.

During April 30 and May 1, Connacher and his firm, Gordon Securities, acting independently of Edper, contacted between 30 and 50 large (mostly institutional) shareholders of Brascan and, as broker for these holders, brought to the market a large percentage of the stock purchased by Edper on those two days. Gordon Securities also purchased Brascan shares for its own account in Canada and resold them to Edper on the floor of the AMEX.

On the evening of May 1 Brascan obtained an ex parte temporary restraining order in Part I of this court, barring Edper, inter alia, from exercising stockholders’ rights with respect to any of its shares and from making any further purchases. A hearing was held on May 16,17 and 18 on Brascan’s motion for a preliminary injunction. Briefs were filed on May 21 and argument was held May 22.

Jurisdiction, Venue and Relief Sought.

Brascan alleges violations of Sections 10(b), 13(d), 14(d), and 14(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78j(b), 78m(d), 78n(d), and 78n(e), and moves for a preliminary injunction barring all defendants, other than Balfour Securities, Gordon Securities Inc., Gordon Securities Limited and James Connacher, from acquiring any further Brascan shares; soliciting any proxy or other authorization or agreement to vote Bras-can shares; voting any Brascan stock which, they now own; or exercising any incidents of ownership with respect to the Brascan stock they own as a means of affecting Brascan’s management. Brascan also seeks an order directing Edper to divest itself of all Brascan stock which it has purchased on April 30 and May 1, 1979.

Jurisdiction of this action and venue in this District lie under Section 27 of the Exchange Act, 15 U.S.C. § 78aa.

The Parties and Others Involved.

Plaintiff Brascan is a publicly held corporation organized and existing under the laws of Canada with its principal place of business located in Toronto, Province of Ontario, Canada. Plaintiffs Brascan Holdings Inc. (“Brascan Holdings”) and Brascan U.S.A. Inc. (“Brascan U.S.A.”) are organized and existing under the laws of Delaware, with their principal places of business located in New York, New York. Brascan Holdings is a wholly-owned subsidiary of Brascan and Brascan U.S.A. is a wholly-owned subsidiary of Brascan Holdings. Both were formed for the purpose of facilitating the making of a tender offer by. *777Brascan for all the outstanding shares of common stock of Wool worth.

Defendant Edper is a Canadian corporation with its principal place of business in Toronto, Canada. Edper was formed in late March, 1979, for the purpose of acquiring effective control of Brascan. Defendant Edper Investments Ltd. and defendant Patino, N.Y. are privately held venture capital companies, and are the sole shareholders of Edper. Defendants Peter and Edward Bronfman are directors and shareholders of Edper Investments. Defendant J. Trevor Eyton is a director of and legal counsel to Edper. Jack Cockwell is treasurer of Edper Equities and executive vice president of Edper Investments. Timothy Price is vice president of both Edper Equities and Edper Investments. Jaime OrtizPatino is a director of Edper Equities. He is also a director of Patino. Patrick Keenan is president of Edper. He is also president, chief executive and a director of a Patino company. Frederick McCutcheon is a Toronto stockbroker. He is also a director of both Patino and Edper.

Defendant Balfour Securities is a securities dealer which transacts business on the American Stock Exchange. Jay Goldsmith is the president of Balfour. A. G. Becker & Co. (“Becker”) is a clearing broker for Balfour.

Defendant Gordon Securities Ltd. (“Gordon Securities” or “Gordon”) is a brokerage firm with its main office in Toronto, Canada. It also maintains branch offices in Montreal and Calgary. Its wholly-owned subsidiary, defendant Gordon Securities, Inc., has an office in New York City and transacts business on the AMEX. Defendant James Connacher is President of Gordon Securities Ltd.

Detailed Findings of Fact.

Edper Investment’s initial purchase of 50,000 Brascan shares was made in late December, 1978, after Brascan had announced the sale of its principal subsidiary, an electric utility in Brazil (“Light”), to the Government of Brazil for $380 million (U.S.). The purchases were made for investment and in anticipation of either a cash distribution by Brascan of the proceeds of the sale of Light or an offer by a third party, attracted by the cash, to purchase Brascan shares at a premium over the market.

In early January, Price of Edper Investments indicated to Connacher of Gordon Securities that Edper Investments was seriously looking at Brascan as a possible acquisition candidate. On or about January 15, 1979, Gordon purchased 100,000 shares of Brascan stock for an Edper company. On or about February 15, 1979, Connacher and a research analyst from Gordon Securities, David Dorian, met with Cockwell and Price of Edper Investments. The principal focus of the meeting was a discussion between Cockwell and Dorian concerning their respective analyses of the value of Brascan shares. Connacher also told Cockwell who were some of the large Brascan shareholders. Toward the end of February, Connacher’s firm purchased 650,000 Brascan shares for Edper Investments.

In January, 1979, Eyton and Keenan had brief discussions relating to the possibility of Edper Investments and Patino investing jointly in Brascan shares. These initial contacts resulted in a meeting between representatives of Edper Investments and Patino on February 20, 1979, at which time Edper Investments proposed that the two groups participate together in a bid for control of Brascan. Another meeting at which this subject was discussed was held on February 27, 1979. On that date Patino also commenced purchasing Brascan shares. On March 26, 1979, an arrangement between Edper Investments and Patino was formalized and Edper was created as a jointly owned vehicle, owned % by Edper Investments and Vs by Patino, for carrying out acquisitions. By that date, Edper Investments owned 800,000, and Patino 460,000 Brascan shares. This amounted to approximately 5% of Brascan’s outstanding common stock, which was contributed to Edper.

On March 30, 1979, at Eyton’s request, Brascan’s investment banker in Canada arranged for Edper representatives to meet *778with Moore, Chairman of the Brascan Board, on April 5, 1979.

At the April 5 secret meeting, the Edper representatives informed Moore of Edper’s holdings in Brascan and that Edper was considering making a bid for effective control of Brascan. At that time, Edper was contemplating making a bid through the facilities of the Toronto Stock Exchange, and was hoping for Brascan’s endorsement.1 Edper offered Brascan assurances with respect to managerial continuity and the like. Moore noted that it was not the board’s policy to recommend to shareholders offers for less than all of the outstanding shares, but stated that his Board was to meet the next day. Edper requested a response after the Board meeting and was told it might expect response in the afternoon of April 6.

The Brascan Board convened on April 6. At that meeting, it resolved to make a tender offer for all the outstanding shares of Wool worth’s common stock.2 That afternoon, Eyton delivered a letter on behalf of Edper to the Brascan Board Meeting (Exhibit 5). The letter confirmed Edper’s interest in Brascan, stating that Edper was considering making a bid for 45% of the outstanding Brascan shares at $27 Cdn. per share.

On April 9, 1979, having received no response from Brascan, Eyton contacted Bras-can’s Canadian counsel at 7:45 a. m. to read him the text of a release which Edper proposed to issue concerning its contemplated offer to purchase in Canada 11.7 million shares of Brascan stock. Immediately thereafter, the press release was made available to the financial press. The press release, in part, stated:

“Edper Equities Ltd. . . . announced today it is considering making an offer to purchase 11.7 million Class A common shares of Brascan Limited at the price of Cdn. $28 per share. Edper noted that it presently holds approximately 1.3 million Class A common shares so that, on completion of a successful offer, the aggregate holding would amount to approximately 13 million Class A common shares representing approximately 50% of the outstanding voting shares.” (Exhibit 6A).

It further announced that any bid by Edper would be conditioned upon no action being taken by Brascan management which would effect a material change in the affairs of Brascan.

Later that morning, Brascan publicly announced its proposed tender offer for all the outstanding common stock of Woolworth. At about noon that day, Brascan’s Canadian counsel called Eyton to advise that Bras-can’s management did not consider Edper’s offer to be in the best interests of Brascan or its shareholders.

Edper then proceeded to obtain as much information as it could secure in an effort to evaluate the Woolworth offer. Keenan was knowledgeable about Woolworth, and was in a position to give immediate advice about what the Woolworth acquisition would mean to Brascan. By April 10, Ed-per had in its possession a report on Woolworth prepared by The Wertheim Group, as well as information found in financial publications and other sources available from the financial community concerning Woolworth. In addition, Edper discussed Woolworth with individuals who were know*779ledgeable about the retail industry. Cock-well of Edper prepared a cash flow analysis in order to establish the effect of the proposed Woolworth transaction on the cash flow of the combined enterprises. Edper concluded that the Woolworth acquisition would reduce the intrinsic value of Brascan shares by an amount in excess of $10.00 per share and produce a negative combined cash flow.

On April 10, 1979, Edper published two press releases. The first, issued at noon (Exhibit 7) stated that Edper was considering whether or not to proceed with its contemplated offer to purchase 11.7 million shares in view of Brascan’s announcement of the proposed Woolworth tender offer. The release stated that such an acquisition involving borrowings of $800 million would effect a “material change” in the affairs of Brascan, “particularly so when the Brascan offer for Woolworth was apparently going to be vigorously resisted.” The release concluded that a decision whether to proceed would be made later that day.

At 9:00 p. m. Edper issued a second press release announcing that it would not be proceeding with its offer in view of the Woolworth offer (Exhibit 8). The release stated that Edper was “now assessing its position as one of Brascan’s major shareholders holding something over 5% of its outstanding common shares”, that a successful Woolworth bid “would convert Bras-can from a highly liquid company . to a debt-burdened company” and that “the acquisition of Woolworth by Brascan would have an immediate negative impact on Brascan’s consolidated cash flows. . On this basis, Edper considered that the Woolworth transaction was not in the best interest of Brascan or its shareholders.” The release also indicated that a number of major Brascan shareholders had expressed their concerns and that Brascan’s management was giving little consideration to the interests of its shareholders. Edper noted that Brascan management had not sought shareholder approval of either the sale of Light or the Woolworth acquisition. Edper commented that Brascan shareholders felt that the Woolworth transaction “would have the effect of precluding Edper or any other person from making a bid for the outstanding Brascan shares at a premium over their market price.” This release also concluded by stating Edper’s view that the Brascan offer for Woolworth would be vigorously resisted.4

During the week of April 9, following Brascan’s announcement of its offer for Woolworth stock, the Edper group held several meetings to discuss the various alternatives available to them.

The agendas for the meetings held by the Edper group the weeks of April 9 and 16 listed, as topics of discussion and as tasks to be allocated, contact with Brascan shareholders. Edper’s contacts with the shareholders of Brascan was confined in large part to an exchange of views on the advisability of the Woolworth offer. There is no evidence that at any point prior to April 30 Edper discussed with Brascan shareholders the availability of their Brascan stock for possible sale.

During the week of April 16, Edper began to consider seriously, from among the alternatives available to it, the making of a “conditional” offer for 11.7 million shares of Brascan stock over the facilities of the Toronto Stock Exchange, such an offer to be conditioned upon the abandonment or failure of the Woolworth offer. Under Ontario law, the making of such an offer, required specific approval of the Ontario Securities Commission, to which Edper applied on April 17.

On April 19, a hearing was held before the Ontario Securities Commission. Edper’s application was opposed by Brascan management and one other Brascan shareholder. The following day, April 20, the Commission denied Edper’s application because *780of its conditional nature, and Edper issued a press release announcing that fact. In the release Edper “stressed it would continue to pursue other avenues to have the Woolworth acquisition abandoned” (Exhibit 17).

On April 20 and 23, key members of the Edper group met to consider what course of action Edper should then take. Numerous alternatives were discussed, including: the making of an unconditional offer; the making of a conditional offer in the United States, Great Britain or in the provinces of Canada (where regulatory approval was not required); the making of an unconditional offer with paper or other securities (that would have the same effect as a “Woolworth condition”); a stock exchange block offer in Canada, and private arrangements with Brascan shareholders. Purchases over the AMEX were briefly discussed but this alternative was not given prominence at that time. The group discussed the number and price of shares that would be involved in the possible courses of action open to it, various opinions were expressed, but no conclusions were reached. Also considered (though not listed on the agenda) was the possibility of Edper selling its Brascan shares. The Edper group considered whether it should prepare a press release explaining its present posture, and decided not to do so.

On April 23, Edper contacted Connacher to arrange a meeting the next morning. On April 24, and again on April 25, Connacher met with Price, McCutcheon and Cockwell. At these meetings, the Edper group discussed the various alternatives that were being considered, and told Connacher that they thought he might be able to provide assistance in connection with two alternatives — purchases on the American Stock Exchange and the making of a conditional offer for Brascan shares in the United States. In connection with possible purchases on the floor of the AMEX, Edper sought Connacher’s advice on the selection of an American broker; the appropriate commission; dollar conversion; and currency hedging problems. The group discussed how many Brascan shares might be bought at various times and what the prices might 'be. Connacher was asked if he would be available to go with Price to New York on April 29 to assist in either setting up the mechanics of purchasing over the AMEX if Edper decided to do so or to introduce Price to investment bankers in New York if Ed-per decided to make a conditional offer in the United States. There was no talk of compensation to Connacher. He was to perform these advisory services on a friendly unpaid basis. Edper informed Connacher that it was considering utilizing the firm of Balfour Securities in the event that it decided to purchase shares over the AMEX and asked Connacher to contact Jay Goldsmith, the President of Balfour, to see whether he would be available in New York the following week. An employee of Gordon Securities contacted Goldsmith for that limited purpose later that week.

Also on April 24, Edper investigated further the possibility of purchasing Brascan stock over the London Stock Exchange. On April 26 and 27, McCutcheon met with Ackroyd & Smithers, jobbers on the London Stock Exchange, to discuss the mechanics of purchasing over the London Stock Exchange and the availability of Brascan stock on that exchange.

Since the week of April 9, Edper had been pressuring Brascan’s management, to no avail, to either meet with Edper to discuss the Woolworth offer or to call a shareholders’ meeting. On April 24, Brascan’s management informed its stockholders that the Brascan annual meeting, previously scheduled for May 23, 1979, would be deferred to June 26, 1979 or to an even later date. On the evening of April 29, 1979, after Connacher and Price had already left for New York, Messrs. Keenan, MeCutcheon, Eyton, Cockwell and Bronfman met. Prior to the convening of the meeting, Ed-per had still not resolved which of the several available alternatives it was going to pursue and work had been continuing on a number of fronts up to that time. McCutcheon had been looking into purchases in London; Greenshields, a Canadian investment banker, had been talking on Edper’s behalf to lawyers about a paper-type offer *781in'Canada free from tax problems; Edper’s counsel was working on an unconditional offer; Edper’s printers were printing an unconditional offer; Edper was talking to National Trust about getting a shareholders list in order to be able to send out a circular offer in Canada; and Edper was working with a mailing house to facilitate the mailing of a circular offer in Canada.

The initial purpose behind the meeting on April 29 was to provide an update for the group. However, various reports were made at the meeting which lent a sense of urgency to the situation. The Patino group reported rumors circulating in Europe about competing bids for Brascan. Noranda Mines was mentioned as a possible suitor through a defensive stock swap. The Patino board of directors had met on April 26 and 27, at the Hague and had resolved that more Brascan shares should be purchased.

In addition, Brascan had announced it was postponing its annual meeting and Moore had said that, if the Wool worth deal was aborted, he would pursue alternative proposals, which Edper construed to be further defensive measures.

The conclusion of the April 29 evening meeting was that Edper should acquire more shares in order to secure the 10% necessary under Canadian law to compel a shareholders’ meeting, to have a greater impact upon Brascan management, and to obtain a better reception at the hearing of the New York Attorney General which was scheduled for May 10 to investigate Bras-can’s offer for Wool worth. The group discussed paying as high as $25 (Cdn.), per share. It was provisionally decided to buy shares the next day on the American Stock Exchange, subject to sleeping on it and reviewing the decision in the morning. No firm decision was made as to the amount of stock to be purchased. The group discussed issuing a press release, but decided that it would not do so unless required by a regulatory body.

At that meeting, McCutcheon was authorized to initiate purchases of up to 200,000 shares on the London Stock Exchange the next morning in line with the previous close on the American Stock Exchange. He did not think that a great number of shares would be available there. His instructions were to “go gently” and to “check back” if a great number of shares became available. Due to the difference in time zones, a decision to buy on the London Exchange could not wait until the morning of the following day. McCutcheon had to place his orders in the very early morning hours of April 30— Toronto time.

Price and Connacher flew to New York on April 29. Although nominally a vice-president of Edper, Price did not have decision making authority. Furthermore he had not been extensively involved in Ed-per’s planning of its Brascan acquisitions. Price had some experience in stock market activity and was friendly with Connacher. Price was sent to New York to carry out Coekwell’s instructions in negotiating terms with a broker, placing orders as directed, and setting up the mechanics of the transactions.

After checking in at the Waldorf, Price telephoned Goldsmith of Balfour Securities and arranged to meet with him the next morning for breakfast.

Shortly after the tentative decision to purchase on the American Stock Exchange was reached in Toronto, on April 29, Cock-well telephoned Price to inform him of the tentative decision and to tell him that a final decision would be made the next day. Price told this to Connacher.

April 30

At about 4:30 a. m. on April 30, McCutcheon placed an order with Ackroyd & Smithers to purchase 100,000 Brascan shares on The London Stock Exchange at up to $21 (U.S.), a price approximately equivalent to the closing price of Brascan stock on the American Stock Exchange the preceding Friday. By 9:00 a. m., 15,000 shares had been purchased. No further purchases were made that day on the London Exchange, pursuant to McCutcheon’s *782instructions that purchasing cease at 9:00 a. m. New York time.5

At 7:30 a. m. Cockwell instructed Price to proceed with the planned breakfast meeting with Goldsmith. Goldsmith met with Connacher and Price, and agreed, subject to confirmation with his clearing broker Becker, to handle purchases for Edper on the AMEX for a commission of five cents per share. Price informed Goldsmith that Ed-per was considering purchasing one million Brascan shares. Goldsmith told this to Becker and reported back approval to broker the deal at the agreed upon rate of commission.

After the breakfast meeting, Connacher and Price went to Gordon’s offices in New York. At some time prior to the opening of the market, Connacher called Gordon’s offices in Toronto to indicate that Balfour would be buying Brascan stock on the floor of the AMEX on behalf of Edper, but informed the personnel of Gordon not to discuss that with anyone.

Sometime after 9:00 a. m. Price was authorized by Cockwell to place an order with Balfour for one million shares of Brascan at the best price up to $25 (Cdn.) (217/s U.S.). Between 9:30 and 9:45 a. m., Price informed Connacher that he had a mandate to purchase up to one million shares. As the market opened, Price instructed Goldsmith to purchase Brascan stock at $2lV4 (U.S.), and soon raised the bid to 21V2. Balfour was able to purchase only approximately 28,000 shares at these prices. Price held his bid at 21V2, and no more stock was available that morning.

Between 10:15 a. m. and 10:30 a. m. Price said to Connacher that if three million shares were available, he believed Edper might be willing to buy them at a premium. Connacher contacted large shareholders of Brascan who were clients of Gordon Securities and instructed Gordon personnel to do the same. Connacher and his salesmen contacted between 30 to 50 institutional shareholders and 10-15 individual shareholders of large blocks of Brascan shares. Total Brascan shareholders numbered more than 50,000.

The message conveyed by Connacher and the Gordon' people to the large Brascan shareholders was a uniform one: that if 3 to 4 million shares were offered at $26 (Cdn.) ($22% U.S.), Edper might purchase them. Throughout April 30 and May 1, the Gordon people were careful to state that there was no assurance that the transaction would occur. There is no evidence that the shareholders contacted were told any time at which such a transaction would take place or any time limit within which they must reply. The shareholders contacted by Gordon were highly professional investors. A few large shareholders and investment bankers contacted Gordon on their own and were given the same message conveyed to other shareholders.

These findings concerning Connacher and Gordon Securities are applicable to both April 30 and May 1. In contacting shareholders on those days, Connacher and Gordon did not act at the instructions of, or as a representative of, Edper. To the contrary, Connacher and Gordon acted independently as a sellers’ broker because it was in their financial interest to do so. It is true there was a good deal of communication between Connacher and Price, often in the nature of Connacher informing Price of the volume that was shaping up on the sell side. Such communication between buyers’ and sellers’ representatives is normal since it serves the mutual interest of all the parties in seeking to bring about a mutually advantageous transaction. Edper’s managers and decision makers in Toronto, on the other hand, unlike Price, were quite unaware of Connacher’s activities. While they no doubt assumed he would be doing a stockbroker’s business and participating in this opportunity to earn lucrative commissions by soliciting sellers of Brascan shares, they had no communication with him and no awareness of his activities beyond the *783advice as to mechanics he had volunteered to furnish to Price.

Shortly after noon on April 30 in Toronto, Cockwell heard further confirmation that Noranda Mines Ltd. and Brascan were planning to swap substantial shares of stock in a joint defensive move and that Noranda would go into the market to buy substantial shares of Brascan.

Edper decided to increase the size and price of Edper’s bid to three million shares at $26 Cdn. (22% U.S.) or better. Price was so instructed.

Connacher told Price he believed approximately 1.5 million shares might be available if Edper placed an order at 22%. At approximately 2:45 p. m. Price placed an order with Balfour for 2V2 million Brascan shares at 22%. Price told Connacher he had placed this order.

Balfour’s floor representative found very little stock available below a price of 22%. He bought what there was at lower prices and increased the bid to 22% for over 2 million shares. Shortly after Balfour received Edper’s buy order, Gordon, which by then had accumulated some two million shares for sale, approximately 1.7 million of which was available from its clients, placed an order to sell 2 million shares at 22%.

At 3:08 Edper’s broker Balfour purchased 2.4 million shares in one print at 22%, of which 1.8 million came from Gordon, the rest from other brokers. Later that afternoon, Price instructed Balfour to buy 500,-000 more Brascan shares at 22% and Balfour did so.

By the close of the day on April 30, Edper had purchased a total of 3,104,800 Brascan shares on the AMEX. Of these shares, approximately 2,100,000 were sold by Gordon, for its own account or on behalf of its customers.

In the late afternoon, Edper representatives in Toronto received calls from the Ontario Securities Commission and the Toronto Stock Exchange requesting that Ed-per issue a press release and announce the amount of its purchases of Brascan shares. When the Edper group met later that afternoon, the consensus reached was that Edper had purchased more than enough shares to reach its immediate objectives of calling a shareholders’ meeting, influencing Bras-can’s management and giving weight to its presentation at the New York Attorney General’s hearing. The Edper group decided not to purchase any additional Brascan shares. Price was authorized to return to Toronto.

At 5:00 p. m. Edper issued a press release (Exhibit 31), announcing its purchases, its total holdings in Brascan shares and reiterating its determination to oppose Brascan’s plan to acquire Wool worth. The release itself contained no reference to Edper’s intention not to purchase additional Brascan shares.

Following issuance of this release, Eyton spoke to representatives of the Ontario Securities Commission and the Toronto Stock Exchange and told them Edper would not be making further purchases. Eyton also made the same comment in response to one or more inquiries from the press. On May 1 the Wall Street Journal reported:

“Edper said it doesn’t currently plan to buy more Brascan shares.” (Court Ex. 1).

May 1

McCutcheon had participated on April 30 in Edper’s decision to raise the bidding price to 22%. He left Edper’s offices at 3:30 P.M. to go home and was unaware of the later decision to stop buying. Accordingly he rose once again shortly after 3:00 a. m. on Tuesday, May 1, and put in his order to London to buy up to 200,000 shares, this time at a price of $22% (U.S.) or better. His London brokers purchased and confirmed 132,200 at this price by 9:00 A.M. New York time, when his London buying ceased. McCutcheon did not learn of the previous evening’s decision to stop buying until he arrived at Edper’s offices around 9:30 a. m.

Edper’s strategists met at 9:30 in Toronto to assess their position. Moore of Brascan had announced earlier that morning that Edper’s April 30 purchases would not dissuade Brascan from proceeding to acquire *784Woolworth. Patino was extremely unhappy with Edper’s position. He expressed the view that Edper had incurred a tremendous risk without accomplishing anything. He urged additional buying. Price, who had returned to Toronto that morning, was advised by Connacher’s call, that Connacher had additional customers interested in selling sizeable blocks at 22%.

Edper decided to resume purchasing and to seek 1 million shares if they could be had at the previous day’s prices. Price told Connacher Edper was interested in 1 million shares without exceeding 22%.

Price gave Goldsmith an order to purchase Brascan shares at 22JA or better. Very little was available. Price then put in a bid at 22V2. By 11:45 Goldsmith had purchased approximately 110,000 shares of Brascan.

Connacher and members of his firm contacted their customers in the manner previously described and made purchases for Gordon’s account on the floor of the Toronto Stock Exchange in an effort to accumulate more shares which Connacher hoped Edper would buy. Connacher advised Price that there was a lot of stock available. As the morning went on, the Edper group in Toronto decided to bid for as much as 3 million shares. Price placed an order with Balfour for two million shares at 22% or better. A few minutes later Goldsmith of Balfour advised Connacher by telephone that he had received an order to bid for two million shares.

By 12:15 p. m. Balfour had bought 2 million shares (900,000 of which were sold by Gordon). Soon thereafter, Edper gave Balfour an order to purchase an additional one million shares at 22% or better and later for another 250,000 shares.

Around 1:00 p. m. Goldsmith told Price that he would like to tell his floor trader to stop buying so he could get an accurate count of what he had purchased. Price agreed. After that time Edper made no further purchases. During the course of the trading that day Balfour purchased for Edper approximately 3,200,000 Brascan shares. Of this number approximately 1,550,000 were purchased from Gordon Securities or its customers.

Since 5:00 p. m. on the afternoon of May I, Edper has been under a restraining order of this court prohibiting it from exercising stockholder’s rights on any of its stock and prohibiting further purchases.

CONCLUSIONS OF LAW

I. Liability under Rule 10b-5.

Rule 10b-5, 17 C.F.R. § 240.10b-5, provides in relevant part, that it shall be unlawful “for any person, directly or indirectly. by the use of . any facility of any national securities exchange, . (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading ... in connection with the purchase or sale of any security.” Bras-can argues that beginning in early April and in any event as early as April 20, 1979, Edper issued a series of confusing and misleading public statements, and failed to correct misleading impressions created by such public statements, with the result that the acquisitions of April 30 and May 1 on the American Stock Exchange were in violation of Rule 10b-5.

I find no basis for the charge with respect to Edper’s conduct occurring prior to May 1, 1979. Edper’s releases in early April correctly stated its position with respect to Brascan. On April 9 it announced an intention to consider making an offer for II. 7 million shares of Brascan at $28 a share. Hard on the heels of Edper’s announcement, Brascan publicly announced on April 9 its intention to make a tender offer for all of the shares of Woolworth. Accordingly, the next day Edper issued a new release to the effect that it would have to reconsider its plans announced the prior day by reason of Brascan’s aspirations to acquire Woolworth. Subsequently Edper announced its application to the Ontario Securities Commission to permit a conditional offer for Brascan’s shares which would be *785conditioned upon Brascan’s not proceeding with the Woolworth acquisition. When the Ontario Securities Commission refused to permit such an offer to proceed because of its conditional nature, Edper announced the fact that the plan had not been approved and stated that it had “no specific plans at [that] moment to proceed further with an offering for Brascan shares.” Edper went on to state that “it would continue to pursue other avenues to have the Woolworth acquisition abandoned” by Brascan, and in the April 20th as well as in earlier press releases made arguments to the effect that Brascan’s acquisition of Woolworth was not in the best interests of Brascan’s shareholders. Edper made no further public statements until the evening of April 30, 1979.

I find that none of the aforementioned statements made by Edper were in any way false, misleading or otherwise within the scope of Rule 10b-5. While they may have reflected changing positions, this was because they accurately documented Edper’s changes of position in response to Brascan’s offer for Woolworth and the actions of the Ontario Securities Commission. They were not confusing or misleading within the meaning of Rule 10b-5.

Brascan seeks to draw support from a memorandum apparently prepared on April 11, 1979. This memorandum captioned “Timing” was apparently prepared by an attorney associated with Eyton’s law firm. The opening paragraph contains the following words “Press Release — April 10, 1979— desired reaction, market down”. Brascan contends that these words document an intention on Edper’s part to drive down the market in Brascan shares by its April 10 press release. Eyton, who was questioned about the document, testified that it meant something quite different. He said that the words “desired reaction” were words used in several instances in Edper’s memoranda or publications and that they referred to the hope that Brasean’s dissatisfied shareholders would pressure the management to abandon the Woolworth plan. The words “market down” simply referred to the fact that the market for Brascan shares was down and did not indicate any causal relationship between Edper’s press release and the latter phenomenon. The item is somewhat confusing. Its author was not called as a witness. Brascan through this document has not sustained any burden of showing fraudulent or manipulative activity or intent.

Brascan also alleges that the agendas of several Edper meetings during April, showing as items for discussion the maintaining of periodic contact with representatives of Woolworth, showed that Edper was operating in an illicit and manipulative relationship with Woolworth. The proof showed the contrary. There were a few brief and innocuous contacts with Woolworth. These were rapidly terminated on advice of counsel. These items continued to appear on the meeting agendas apparently only because the preparer of the agendas made a practice of incorporating all items which had appeared on the previous agenda.

Brascan argues that the public statement made on April 20 to the effect that Edper had no specific plans at that time to proceed with an offering for Bras-can shares was either fraudulent and deceptive when made, or at least became so very soon when a specific plan was developed to acquire shares on the American Stock Exchange. This contention is unconvincing. It is my finding that those words on April 20 correctly represented Edper’s position. Edper went on during the next ten days considering the possibility of a variety of alternative courses of action which were discussed at several successive meetings. The options being discussed included an unconditional offer in the event that the Woolworth plan should be abandoned, an offer including the Woolworth condition in the United States and the United Kingdom (this being the offer which had been prohibited in Toronto), an unconditional offer without the Woolworth condition “but providing paper or other securities with the same effect as the Woolworth condition”, a Toronto stock exchange block offer, an offer on the American Stock Exchange, and private arrangements with shareholders. It *786was not until April 29 that Edper’s managers resolved a strong preference for an American Stock Exchange acquisition although this had been emerging as the preferred course during explorations of the various alternatives during the week. And it was not until the morning of April 30 that a firm intention was developed to plunge into large scale acquisitions over the American Stock Exchange. (In these, as in other findings, I rely in part on the testimony of Jack Cockwell, who I found to be a thoroughly credible witness and completely honest and forthright in his business dealings). I find no basis for the suggestion that any of the prior activity constituted a violation of Rule 10b-5.6

This brings us up to the events after the close of business on April 30 and during the day on May 1. During the trading day on April 30 Edper acquired more than 3 million shares of Brasean stock, mostly at a price of 22% $U.S. Edper’s managers met together after the close on April 30 and decided that for the time being they had accomplished their near range objectives as explained above, and would purchase no more stock.

At that time Edper, at the request of the Ontario Securities Commission and the Toronto Stock Exchange, issued a press release (Exh. 31) concerning the day’s acquisitions, breaking its silence of ten days. Later that evening Eyton received a telephone call from the Toronto Dow Jones representative and, in response to the journalist’s questions, said that Edper had no intention to make further purchases. This representation was made in good faith and accurately represented Edper’s intentions at that time.

Brasean argues that Edper’s resumed purchases on the London Exchange which were ordered by McCutcheon at 4:30 A.M. Toronto time, together with Edper’s resumed large scale buying on the American Stock Exchange on the following day, demonstrate that the late April 30 statement denying intention to acquire more stock was false and fraudulently designed to soften the market. The evidence does not support this contention. McCutcheon who was handling the London buying had been present in the Toronto offices during the afternoon of the 30th at the time when continued buying was authorized at stated prices. He left the office and went home around 3:30 and was not present or privy to the 5:00 P.M. decision to stop buying. He was also unaware until 9:30 the next morning of Eyton’s public statement that no further buying would take place. McCutcheon arose at 3:00 a. m. to resume his purchases on the London Exchange in accordance with the strategy established the previous day which he did not know had been later countermanded.

Nor is there any justification for Bras-can’s attempt to attribute sinister and deceptive motives to the manner in which the London buying was carried out. McCutcheon’s instructions, which he followed, were to “go easy” in London and not to bid aggressively, so as not to raise the price. He was also instructed to cease buying at 9:00 A.M. Brasean contends that the latter instruction was given so that the New York market would be unaware of the London buying. The argument is fanciful. For quite some time now communications technology has been sufficient to permit New Yorkers at the time of the opening of the *787market to be well aware of what happened in the London market during the previous six hours. .The reason McCutcheon was to stop buying at 9:00 New York time is simple and logical. Edper did not want to be bidding against itself.

The instructions to “go easy” in London do not have any of the sinister or manipulative character which Brascan seeks to attribute to them. They are the product of a normal, intelligent buying strategy. The London market was a thin market, meaning that there was not a large amount of Brascan stock to be acquired there. Aggressive buying or attempts to acquire large quantities in London would have driven the price of Brascan stock quite high without acquiring any significant amount of stock. Potential New York sellers on seeing the high London prices would then have been inclined to demand higher prices for their stock. There is as yet no law governing the securities markets which requires a buyer to handle his bids in a manner which will insure that he has to pay the highest possible price for what he wants to buy. See General Time Gorp. v. Talley Industries, Inc., supra, at 164.

Nor does the large scale resumed purchasing on the American Stock Exchange on Tuesday, May 1, demonstrate falsity in the April 30 statement. Edper changed its mind on May 1 for three reasons. First, Moore, the Chairman of Brascan, made known that Brascan had every intention to pursue the Woolworth acquisition. Apparently Edper’s April 30th buying had not been of sufficient size to deter the Brascan management. Second, Edper learned that there may be a substantial volume of additional stock available at the same price of $26 Cdn. ($22% U.S.) Third, Jaime OrtizPatino, a principal director of the Patino interests, upon his arrival in Toronto from Europe that morning, expressed great dissatisfaction with Edper’s position because in his estimation Edper had exposed itself to tremendous risk by sinking a large amount of capital into the Brascan investment without having acquired a sufficiently substantial position to effectuate its policies. Patino urged resumption of large scale buying and, particularly in view of the apparent availability of additional stock, and Bras-can’s intransigence, his partners agreed with him. Accordingly, Edper changed its mind and undertook another big day’s buying. No consideration was given to issuing any further press release.

Edper then proceeded on May 1 to buy another three million shares mostly at 22%, which had been the prevailing price of the day before.

Having undertaken to announce publicly its massive acquisition of April 30, and its intention to make no further purchases, I believe that Edper’s resumption of large scale acquisitions on May 1 without announcing to the public a change from its so recently announced intentions could constitute an omission “to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading . .” under Rule 10b-5. The April 30 statement denying further acquisition intentions could have the effect of making Brascan shareholders feel that they had missed their chance to sell at the best prices and make them eager to dispose of their stock before the price fell any further. Given the circumstances, the April 30 statement became “misleading” on May 1 when Edper’s intentions changed and a further statement was “necessary in order to make the statements made . . . not misleading.” Edper omitted to make such further statements. Given the importance of the volume of Edper’s buying, the issue of its intentions was “a material fact”. See TSC Industries v. Northway Industries, Inc., 426 U.S. 438, 449, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976); Joyce v. Joyce Beverages, Inc., 571 F.2d 703, 707 n. 6 (2 Cir. 1978). Accordingly, the elements which appear on the face of Rule 10b-5 have been made out.

This leads to the question of scienter. I find that Edper’s omission occurred with knowledge, but not with any intention to defraud or deceive. Edper was of course aware that it had made the April 30 statement. It was also aware that it undertook *788to buy on May 1. Had its managers thought about the question they would have been aware that the actions of May 1 were in conflict with the statement of April 30 and that these circumstances might result in making the Brascan stock cheaper. I note in passing that with respect to the May 1 London purchases there was not even awareness on McCutcheon’s part of the pri- or statement or its conflict with his May 1 actions.

Despite the knowledge that Edper did have or should have had concerning this misleading statement, I do not find that the omission on May 1 was motivated by any desire to deceive the public or to manipulate the condition of the stock market. How Edper would have dealt with the problem, had it confronted it specifically, is difficult to guess. It was eager to avoid making public statements of any kind during its program of stock exchange acquisitions, and it made the April 30 statement only because requested to do so by the officials of the Ontario Securities Commission and the Toronto Stock Exchange. In the statement of intentions informally given to a Dow Jones reporter, Eyton had gone beyond the authorized press release which had been discussed ¿t the late afternoon meeting. I do find that throughout the events which were the subject of the hearing Edper’s managers conducted themselves scrupulously, fairly and with good faith efforts to observe the requirements of law. I believe these observations are applicable to Edper’s state of mind in its omission to correct the April 30 statement.

This raises the troublesome issue, what degree of scienter is necessary to justify an action for an injunction under Rule 10b-5 where the effect of the injunction would be to protect the stockholding public from the further effect of a misleading statement. There is clear law to the effect that a damage action under Rule 10b-5 will not lie in the absence of proof of scienter — which the Supreme Court defined in Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976), as a “mental state embracing intent to deceive, manipulate or defraud,” id. at 193, n. 12, 96 S.Ct. 1381, n. 12, and as “knowing or intentional misconduct,” id. at 197, 96 S.Ct. 1375.7 It has also been held recently in this Circuit that fraudulent intent is not necessary where injunctive relief is sought by the Securities Exchange Commission.8 What is not clear is the question whether and to what extent scienter is required when injunctive relief is sought by a private party to prevent future harm from the misleading statement.

I need not reach definitive resolution of that issue at this stage of a motion for a preliminary injunction. For under the second branch of the Sonesta International Hotel’s test,9 all that is needed, together with other factors discussed below, is a “sufficiently serious questions going to the merits” to make it a fair ground for litigation and a “balance of hardships tipping decidedly toward the party requesting the preliminary relief” together with irreparable harm. I find that that test is narrowly met under these circumstances and that a tipping of the equities may well justify some form of injunctive relief designed to protect Brascan shareholders from the possibility of being misled by the continuing effect of the April 30 statement.

II. Liability under the Williams Act.

A. The filing requirements of Section 13(d) and 14(d).

Brascan’s first contention with respect to the Williams Act is that Edper, from the time it had acquired more than 5% of the stock of Brascan in the early part of 1979, was in violation of § 13(d) of the Exchange Act by virtue of its failure to file *789statements required therein, and that this violation was compounded by Edper’s failure to file the statements required by § 14(d) before making its purchases on April 30 and May 1. This contention requires little discussion. Sections 13(d) and 14(d) are not applicable to all securities but apply only to the equity securities of companies which are registered pursuant to § 12 of the Exchange Act. Brascan’s shares are not registered pursuant to § 12. Bras-can is a foreign issuer whose securities are not listed on any national securities exchange in the United States. Its shares are admitted to unlisted trading privileges on the American Stock Exchange, and are exempt from Section 12(g) under the provisions of Rule 12g3-2. The SEC appearing as amicus at the preliminary injunction hearing confirmed that the provisions of §§ 13(d) and 14(d) were not applicable to Brascan’s shares., Rule 12f~4 does not, as plaintiffs argue, mandate a different conclusion.

B. The anti-fraud provisions of Section 14(e) of the Exchange Act.

The anti-fraud provisions of Section 14(e) are drawn in terms virtually identical to those of Rule 10b-5, but the two rules operate in different contexts. Rule 10b-5 applies if the prohibited conduct occurs “in connection with the purchase or sale of any security”; Section 14(e) applies if the conduct occurs “in connection with any tender offer . . . .”

Accordingly, the omission on May 1 to correct the misleading impression created by the April 30 announcement which was found arguably violative of Rule 10b-5 might also have violated Section 14(e) if Edper’s buying on April 30 and May 1 constituted a tender offer. Since the purposes of the Williams Act differ from those of Rule 10b-5, it is possible that upon a finding of a violation of Section 14(e), a different scope of remedial relief might be available than that appropriate under Rule 10b-5. Accordingly, the question must be considered.

I find that Edper’s conduct did not constitute a tender offer within the meaning of the Williams Act.

In fact, Edper’s conduct had very little similarity to what is commonly understood as a tender offer and what was described as a tender offer in the context of the hearings leading to the passage of the Williams Act. Edper did not engage in widespread solicitation of stockholders. Indeed, it scrupulously avoided any solicitation upon the advice of its lawyers. Its purchasing was not contingent on a minimum fixed number of shares being offered, it did not put out an offer at a fixed price and the form of the transaction did not provide for tenders by the selling shareholders to be held for some period of time by the purchaser or a depositary, as is customary in tender offers. What Edper did was to acquire a large amount of stock in open market purchases, bidding cautiously so as to avoid bidding up the price of the stock to excessive levels unless there was large volume available at such prices. This is not a tender offer, even if a large volume of stock is accumulated in such fashion. See Kennecott Copper Corp. v. Curtiss Wright Corp., 584 F.2d 1195, 1206 (2d Cir. 1978).

Brascan argues that Edper made Connacher its agent so that all of Connacher’s and his firm’s activity in lining up potential sellers is attributable'to Edper in determining whether or not Edper engaged in a tender offer. I do not find this contention supported by the evidénce. It is true without question that Connacher had some connection with Edper and assisted Edper in certain respects. A week prior to Edper’s large market acquisitions, it had consulted Connacher (because he was known to be well informed concerning Brascan stock), as to his opinion of the feasibility of acquiring a large number of Brascan shares. Indeed, earlier in January and February it had employed Connacher as a broker in acquiring blocks of Brascan stock. On April 29 and 30, Edper obtained Connacher’s assistance in setting up the mechanics for American Stock Exchange transactions. He helped Price negotiate a brokerage commission with Balfour, and he advised Price as to *790how to handle questions of foreign currency exchange, hedging and mechanisms for making payment in connection with large purchases. He was prepared to introduce Price to New York investmént bankers in the event that Edper chose a route other than open market purchases. But in his solicitation of customers who might be interested in selling, he was simply not acting at the instructions of, or in any way as agent for, Edper.

Of course Connacher and Edper necessarily had interests in common. A seller’s broker always has interests in common with the buyer. If the buyer does not buy, the seller’s broker will not earn his commission. Thus, if Connacher as a seller’s broker were capable of rounding up a large volume of shares for sale at a price that Edper was willing to pay, Edper’s objectives would be satisfied and Connacher would make money. That did not make Connacher Edper’s agent for the solicitation of sellers’ shares.

Even if Connacher were deemed to have been Edper’s agent in the solicitation of shares for sale, still the transaction would not constitute a tender offer within the meaning of the Williams Act. All that Connacher and his firm did was to scout between 30 and 50 large institutional holders of Brascan stock, plus about a dozen large individual investors, to collect a large block for Edper to purchase at a price agreeable to both sides of the transaction. He and his firm did this in the conventional methods of privately negotiated block trades. Such privately negotiated block trading is done on a daily basis in the U.S. securities markets without anyone’s ever suspecting that what is being practiced might be a tender offer. In the recent Kennecott case, supra, this Circuit refused to construe tender offers under the Williams Act as covering this sort of conduct.

A small number of District Court cases11 have held that the Williams Act should be deemed applicable to such large scale accumulations. The general thrust of the reasoning is that since the Williams Act was designed to remedy certain problems often found in tender offers, and since similar problems are to be found in other forms of stock accumulation, the Williams Act should be deemed to cover such other forms of stock accumulation even though they are not what is conventionally understood as a tender offer.

There are serious problems with this form of statutory interpretation. First of all the legislative history of the Williams Act shows that it was passed with full awareness of the difference between tender offers and other forms of large scale stock accumulations. Statements by Senator Williams, the proponent of the bill and by SEC Chairman Manuel Cohen at the legislative hearings specifically advert to the fact that tender offers are distinguishable from other forms of large scale stock accumulation including privately negotiated transactions.12 Indeed, the provisions of the Williams Act itself acknowledge those distinctions since it provides for different consequences where an initial accumulation is acquired by tender offer as opposed to where it is acquired by other methods. There can be no question that Congress regulated what it wished to regulate and chose not to regulate what it did not wish to regulate.

Further the regulatory scheme established by Congress in the Williams Act is incompatible with its application to a program of market purchasing. As the Court of Appeals pointed out in the Kennecott case, the provisions of Sections 14(d)(5), 14(d)(6) and 14(d)(7) are unworkable when applied to a program of acquisition which includes stock market purchases. (See also Rule 10b-13.) The consequence of bringing such large scale open market and privately negotiated purchases within the scope of the Williams Act would be to rule, in effect, that no large scale acquisition program may *791be lawfully accomplished except in the manner of a conventional tender offer. While this may be a sensible legislative provision (and may be implicit in the 35 offerees formulation set forth in the ALI’s proposed Federal Securities Code, see Section 299.68) there is nothing in the legislative history or the text of the Williams Act which suggests that it intended to bring about such consequences.

The Securities Exchange Commission, at this Court’s request, submitted a brief amicus curiae. The Commission takes no position as to whether the acts of Edper constituted a tender offer, but lists eight factors which authorities have considered in determining whether acquisitions constitute a tender offer under the Williams Act.13 The SEC refrains from specifying which of the eight factors or how many must be met or how clearly before an acquisition will be considered a tender offer. I have doubts as to whether this view constitutes either a permissible or a desirable interpretation of the statute. As to permissibility, I have some question whether it expands the scope of the statute beyond what Congress can reasonably be understood to have intended, depending how many and which factors are deemed necessary. I believe it is not desirable because the application of so vague a test would introduce a crippling uncertainty in an area in which practitioners should be entitled to be guided by reasonably clear rules of the road. The consequences of having purchased on the open market where a court would later determine on the basis of so unpredictable a test that the provisions of Section 14(d) should have been respected could well be catastrophic beyond reason. Since purchasers could not reasonably assume such open-ended risks, the practical consequence of adopting such an interpretation would be that large scale acquisitions can only be accomplished by the method of conventional tender offers and, as noted above, this is not a permissible reading of the Williams Act.

But more important for purposes of this decision, I find that even if the Commission’s eight criteria represented the authorized interpretation of the Williams Act, Edper’s actions, even as supplemented by Connacher’s, do not sufficiently meet these criteria to come within the definition of a tender offer.

The first criterion calling for “active and widespread solicitation of public shareholders” is clearly not met. The solicitations were directed to only approximately 50 of Brascan’s 50,000 shareholders, each of the 50 being either an institution or a sophisticated individual holder of large blocks of Brascan shares.

The third criterion calling for “a premium over the prevailing market price” is met, but only to a slight degree. Edper was unable to purchase large amounts at 2IV2. Its broker, Balfour, did not encounter sizeable blocks until it went as high as 22%. The price at which it accomplished its major volume, 22%, was only % of a point above what any purchaser would have had to pay for any significant volume.

Criterion number four that “the terms of the offer are firm rather than negotiable” was not met. Edper, Gordon, and the sellers were feeling their way to find a level at which large volume purchasing could be done. The fact that Gordon spoke to potential sellers during the morning of the likelihood of a price of $26 Cdn. (22% U.S.) did not represent a firm bid. I find that it represented Connacher’s well educated guess as to where a deal might be put together based on his knowledge of the *792market and of the buyer’s and sellers’ desires. He and his traders repeatedly denied to their customers the existence of any firm bid.

The fifth criterion, “whether the offer is contingent on the tender of a fixed minimum number of shares” is met only to a slight degree. It is true that Edper was not interested in bidding up the price too high without acquiring a large number of shares in doing so. And it is true that Connacher advised his customers that he didn’t believe a transaction would go through unless sufficient volume were achieved. But these conditions were general, fluid and negotiable. They were not fixed as part of the terms of any offer to purchase shares.

The sixth condition, “whether the offer is open only for a limited period of time” is not met. Since there was no open offer, there was certainly no assurance that any offer would remain open for any period of time. Nor was there any statement to the effect that an offer temporarily available would soon disappear. What was said to the potential sellers by Gordon was that a buyer was interested in accumulating a large volume. Thus the situation did not carry with it the kind of potential pressure which, coupling a high premium with the threat that the offer will disappear as of a certain time, places an offeree under pressure to decide. That is the kind of pressure which the Williams Act was designed to alleviate, by providing information on which to base a decision. That was not present here.

I find that the seventh criterion, “whether the offerees are subjected to pressure to sell their stock” was not met. The offerees were experienced professionals, in most cases institutional portfolio managers. Even assuming that such professional investors can be susceptible to “pressure” in the sense in which the Williams Act is concerned, no such pressures were applied.

Finally, the eighth criterion, “whether public announcements of a purchasing program . . . precede or accompany a rapid accumulation” was not met. Edper had made some public announcements in early April when it was contemplating differently structured programs of acquisition. It announced its application on April 18 to the Ontario Securities Commission for permission to make a conditional circular offering. When permission was refused on April 20, Edper announced the refusal to the public and indicated that it had no specific further plans at that time. No further public statement was made by Edper until the close of business on April 30.

In short, the only one of the SEC’s eight criteria which is clearly and solidly met is number two, that “the solicitation is made for a substantial percentage of the issuer’s stock.” While one might have no disagreement with legislation which imposed pre-acquisition disclosure requirements, comparable to those required by § 13(d), whenever a purchaser intended to acquire by any means a large specified percentage of any publicly held stock, that is not what the Williams Act now requires. It is not in my view within the power of a court to so rewrite its provisions.

III. The Scope of Relief.

Having found a single instance of unintentional misleading of shareholders, resulting from a failure to correct a prior statement which changed intentions could have rendered deceptive, it remains to consider the appropriate scope of relief under Rule 10b-5.

Brascan has shown no injury to itself and no entitlement to injunctive relief for its protection (as opposed to the protection of its shareholders). The justification for permitting Brascan, the issuer, to maintain this action is that the issuer was in the best position to protect the interests of its shareholders from further deception. It is the interest of the shareholders which the injunctive relief may properly protect, at least in the absence of a showing that the issuer has been harmed by the violation of Rule 10b-5. See Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937 at 947-48 (2d Cir. 1969).

*793As to the shareholders, no violation or injury of any kind has been shown with respect to sellers of stock acquired by Edper prior to the close of business on April 30. Accordingly, there is no warrant for the grant of any injunctive relief against Edper concerning its exercise of full shareholders’ rights as to those shares. As to stock acquired on May 1, the omission to correct the statement of April 30 might have resulted in bringing a lower price to the selling shareholders of May 1. If so, their only injury is monetary. The continuation of an injunction against Edper prohibiting its exercise of ownership rights over those shares acquired on May 1 would in no way cure any harm which might have been suffered by the May 1 selling stockholders. A correction of the misleading aspect of the statement, would not have induced selling shareholders to hold on to their stock so as to preserve their voting rights. And, in any event, since May 1, Brasean stock has actively traded well below the May 1 market price. From this, it can be inferred that there are no Brasean shareholders who were prevented by higher market prices from reconstituting the position they had before they sold on May 1. The open market has. offered them better relief than rescission. Accordingly, I can find no basis in Edper’s May 1 omission for the grant of injunctive relief which would restrict Ed-per’s rights of ownership as to the May 1 stock. If May 1 sellers were injured in the price they received, they can seek compensation by a damage action, see Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S.Ct. 2069, 45 L.Ed.2d 12 (1975), assuming they would be able to prevail in showing the necessary scienter (which I have not found). Whether or not they can prevail in such a damage action, their position would in no way be improved by the grant of injunctive relief against Edper.

The next class to be considered is the remaining shareholders of Brasean (the potential offerees of any further bidding), and the general investing public. In retrospect it is in their interest alone that the injunctive relief granted on May 1 was justified. The proper purpose of injunctive relief in this situation is only to protect the marketplace and the holders of Brasean stock from further deception as a result of the failure to correct the April 30 statement. Holders of Brasean stock after May 1 might well have been deceived as to the value of their stock by reason of their incorrect belief that Edper had withdrawn from the market. Their protection does not require that Edper be barred from making further acquisition of Brasean stock. The balance of the equities requires only thát Edper set the record straight and disabuse the shareholders of the misleading effects of the April 30 statement before doing so. See Sonesta Hotels, supra.

Given the innocent nature of the misleading, Edper’s undoubted willingness to make the appropriate corrections and the ease and speed with which this can be accomplished, I find no basis for granting any injunctive relief.14 The preliminary injunction is therefore denied. And the temporary restraining order of May 1 is hereby dissolved, with exception of the provision forbidding further purchases, which shall be dissolved promptly upon Edper’s application demonstrating that it has made a public statement, correcting any misleading impression which may remain from the statement of April 30.

One final observation is appropriate. In Talley Industries, supra, Judge Friendly noted that in allowing a corporation to enjoin “manipulation of its stock, . '. courts must act both with speed and with caution lest such actions become vehicles for management to thwart” events which may be in the true interests of the stockholders. In this case Brascan’s management obtained an ex parte temporary restraining order which deprived its 30% shareholder of the exercise of shareholders’ *794rights. The order has remained in effect for nearly a month by reason of Brascan’s allegations of pervasive fraud which it now appears were without foundation. A principal purpose in Edper’s increasing its shareholdings on April 30 was to be able to oblige Brascan’s management to call a stockholders’ meeting at which holders of Brascan stock would be able to vote on the desirability of the Woolworth acquisition. Management had not only refused Edper’s earlier request for a shareholders’ meeting, but had gone further and postponed the previously scheduled annual meeting.

Edper, furthermore, contends that it may have been irreparably harmed by the duration of its disfranchisement. It has made an enormous investment in Brascan. It contends that the value of its investment will be seriously diminished if Brascan proceeds with the Woolworth acquisition, and that it has been unjustifiably prevented from exercising its stockholder’s right to vote on the matter. Without expressing any opinion of any kind on the desirability of the Woolworth acquisition for Brascan, I am strongly of the view that Brascan’s shareholders should not be precluded by management from expressing themselves on so important a question. If, after the lifting of this restraining order, Edper, as a 10% holder, proceeds to make its demand for a shareholders’ meeting, I would think it incumbent on management not to oppose, obstruct or delay the convening of such a meeting.

SO ORDERED:

OPINION

CHANDLER, Chancellor.

TABLE OF CONTENTS

I. FACTUAL & PROCEDURAL HISTORY.1181

A. Intermedia investigates strategic alternatives. .1181

B. Digex appoints a Special Committee. .1183

C. WorldCom enters the fray. .1184

D. The deal changes. .1184

E. The Special Committee’s morning caucuses .. .1185

F. The Intermedia hoard meeting. .1186

The Digex hoard meeting. .1186

Procedural History.1187

II. STANDARD FOR A PRELIMINARY INJUNCTION .1187

1188 III. THE CORPORATE OPPORTUNITY CLAIM.

1188 A. Summary of the Arguments.

1189 B. Legal Analysis .

1189 1. Why Digex had no “interest or expectancy” in a WorldCom-Digex deal.

1192 2. Did defendants breach their duty of loyalty in negotiating the World-Com-Intermedia deal? .

8. Are the defendants estopped from completing a WorldCom-Interme-dia deal?. ^ 05 t — 1 7 — 1

4. Is this a Revlon ease?. lO 05 t — t 7 — t

IV. SECTION 208 CLAIM. Oi i-H 7 — 1

A. Does the 85% exemption apply to WorldCom? . 05 7 — I 7 — i

B. Is this Claim CJ 7 — 1

C. Was the § 203 Waiver Entirely Fair to the Digex Shareholders? O C'J 7 — (

1. Fair Dealing. C* C'J 7 — t

2. Fair Price. t — 1 C'J 7 — 1

V. THREAT OF IRREPARABLE HARM AND BALANCING OF THE POTENTIAL HARM.1214

VI. CONCLUSION.1216

This is my decision on plaintiffs’ motion to preliminarily enjoin the proposed merger between defendants WorldCom, Inc. (“WorldCom”) and Intermedia Communications, Inc. (“Intermedia”), the controlling shareholder of Digex, Inc. (“Digex”).1 *1180Plaintiffs, minority shareholders of Digex, seek either of two alternative forms of relief: (1) an order enjoining the defendants from consummating the Agreement and Plan of Merger dated September 1, 2000, (the “merger”), or (2) an order enjoining the Digex board’s waiver of 8 Del. C. § 203. Intermedia’s shareholders are tentatively scheduled to vote on the proposed merger on December 18, 2000.

The allegations in plaintiffs’ consolidated complaint are founded on two distinct legal theories. Plaintiffs’ first theory is that defendants usurped a corporate opportunity that (allegedly) fairly belonged to Digex by preventing Digex’s sale to the highest bidder. Plaintiffs’ second theory is that the Digex board, more specifically the four interested Digex directors, breached a fiduciary duty when they voted to waive the protections afforded Digex by § 203 of the Delaware General Corporate Law (“DGCL”).

At the outset it is important to recognize the highly unusual circumstances surrounding the pending request for injunc-tive relief. The plaintiffs have asked, in the context of a preliminary injunction, for relief that is both prospective and retrospective. Specifically, the plaintiffs seek either a preliminary injunction against the future consummation of a merger (via a claim of usurpation of corporate opportunity) or, alternatively, a preliminary decision that declares invalid or ineffective a past act of the Digex board to waive the protections afforded under 8 Del. C. § 203.

For the reasons discussed more fully below, the plaintiffs have not persuaded me that they have a likelihood of success on the merits of their corporate opportunity claim. On the other hand, they have shown a likelihood of success on the merits of their § 203 claim. In the course of analyzing the merits of the § 203 claim, however, it becomes abundantly clear that no injunctive order is necessary to protect plaintiffs from a future act or decision that threatens immediate irreparable harm. That is because the § 203 claim is based on a past decision or action from which the harm has already occurred. Any injury based on the § 203 claim has resulted not from pending action, but from action past — by the faithless acts of the four In-termedia directors who voted to waive § 203’s protections. There is no prospective harm that could be avoided by the application of a preliminary injunction. Thus, any relief must be remedial, rather than injunctive. The Court’s determination that plaintiffs have a likelihood of success on their § 203 claim means that the parties to the merger — Intermedia and WorldCom — must decide whether to proceed with that transaction knowing that this Court has preliminarily determined that Digex’s § 203 waiver will not likely be effective in the circumstances of this case. For this reason as well, no basis exists for injunctive relief based on the § 203 claim, because the plaintiffs’ ultimate success on the merits of that claim will have the practical effect of restoring to the Digex minority shareholders the protection to which they were entitled under § 203.

Notwithstanding the unusual posture in which the request for injunctive relief is presented to the Court, I will address the application in the typical fashion of a motion for a preliminary injunction. In Part I of this Opinion I set forth the factual and procedural history relevant to the resolution of plaintiffs’ motion. Part II describes the applicable standard for preliminary injunctive relief. In Part III, I address plaintiffs’ corporate opportunity *1181claim, while Part IV considers plaintiffs’ alternative § 203 claim. Part V considers the irreparable harm and balance of the equity prongs of the preliminary injunction standard. Finally, Part VI sets forth my conclusions.

I. FACTUAL AND PROCEDURAL HISTORY2

A Intermedia investigates strategic alternatives

Intermedia and Digex are both Delaware corporations. Intermedia is an integrated communications provider delivering local, long distance, and enhanced data services, principally to business and governments. Digex provides managed web hosting and application hosting services primarily to large corporate clients. In-termedia has held a controlling interest in Digex since July 1997. Following public offerings in August 1999 and February 2000, Intermedia now owns 52% of Digex’s outstanding stock which represents approximately 94% of the voting power of all of Digex’s outstanding stock.3

During the time periods relevant to this case, Digex’s board of directors had eight members, five of which — David C. Ruberg, Robert M. Manning, Philip A. Campbell, John C. Baker, and George F. Knapp— were also officers or directors of Interme-dia.4 The interested directors stood to personally profit tremendously upon a sale of Intermedia, but to profit very little, or not at all, upon a sale of Digex.5 The remaining three directors — Jack E. Reich, Richard A. Jalkut, and Mark K. Shull— were not affiliated with Intermedia.

Digex is well positioned in one of the hottest segments of the technology sector — web hosting. Intermedia, however, is in poor financial condition.6 Since early 1999, Intermedia has been considering strategic options to maximize the value of both itself and Digex, including the possible sale of itself or its various holdings. This effort continued in earnest in June 2000, following the NASDAQ downturn. At this time, it was apparent to Intermedia that it would be difficult to arrange financing to fund Digex and Intermedia on a long-term basis, a prospect that threat*1182ened the survival of both corporations. Thus, on June 29, Intermedia hired Bear Stearns & Co. (“Bear Stearns”) to explore all possible strategic alternatives.7 On this same day, Intermedia informed the Digex board that it planned to explore the feasibility of a sale of its equity interest in Digex. On July 11, Intermedia issued a press release announcing that they had retained Bear Stearns to explore Interme-dia’s strategic alternatives with regard to Digex, including the possible sale of In-termedia’s ownership position in Digex to another company.

In July, Bear Steams approached WorldCom about potential strategic alternatives concerning Intermedia and Digex. A deal involving Intermedia presented an opportunity for WorldCom on two fronts. First, Intermedia has a presence in the Competitive Local Exchange Carrier (CLEC) market and WorldCom could acquire these CLEC assets. Second, through Digex, WorldCom could expand its presence in the critical web-hosting arena.

WorldCom was not the only potential suitor for Intermedia approached by Bear Stearns. During July and August, Bear Stearns contacted thirty likely suitors for Intermedia or Digex, received expressions of interest from thirteen, sent confidentiality agreements to ten, and received executed non-disclosure agreements from, and sent materials to, six.8 Ultimately, three suitors emerged: Exodus Communications Inc. (“Exodus”), Global Crossing, Ltd. (“Global Crossing”), and WorldCom.

Though Global Crossing was involved up until the end,9 WorldCom would prove to be the successful suitor.10 As early as July 17, a junior member of WorldCom’s corporate development team prepared a presentation analyzing four possible alternative transactions among WorldCom, Digex, and Intermedia. On or about August 2, the corporate development department put together a formal presentation package concerning opportunities in the web hosting field, including a detailed discussion of In-termedia and Digex — together and individually — as potential acquisition targets for WorldCom. During this same period, WorldCom was also negotiating a possible joint venture in the web hosting arena with Global Crossing, but these talks ended when WorldCom discovered that Global Crossing had simultaneously been negotiating a three-way merger with Intermedia and Digex. By the end of August, World-Com had focused on Intermedia and Digex.

*1183 B. Digex appoints a Special Committee

The directors of Intermedia and Digex understood from the beginning of this process undertaken by Bear Stearns that conflicts of interest might arise between the two companies. Put simply, Digex was a rapidly growing company that was extremely attractive to potential suitors. As stated above, Intermedia had severe financial problems. In fact, as of August, Intermedia’s equity holdings in Digex exceeded Intermedia’s total market capitalization. Intermedia and its banker, Bear Stearns, had three possible avenues before it. Intermedia could sell itself, could sell its holdings in Digex, or could sell part or all of both companies.

If Intermedia sold itself (which, of course, would include its majority stake in Digex), Intermedia’s shareholders stood in a position to reap a substantial premium on their shares, largely due to the acquirer’s presumable desire to obtain control over Intermedia’s “crown jewel,” Digex. This was especially true with regard to Intermedia’s officers and directors, who, as discussed above, stood to profit tremendously from a sale of Intermedia. In contrast, Digex’s shareholders stood to gain comparatively little under this possibility, at least in the short term, other than a new controlling shareholder.

If Intermedia sold part or all of its Digex holdings, Intermedia could expect a significant payoff to fund its own operations, but Intermedia’s shareholders, and especially its officers and directors, would not personally benefit to the extent they would if Intermedia itself were sold. Under this possibility, Digex shareholders could expect to reap a significant premium if Intermedia sold its holdings to an acquirer who decided to then tender for all outstanding Digex shares.

These various options and possibilities clearly presented the potential for conflicts of interest for the interested Digex directors, both due to their dual directorships and their direct, personal financial interests in any potential transaction. Thus, on July 26, 2000, the Digex board of directors appointed a special committee (the “Special Committee”) comprised of two of the three independent Digex directors — Jalkut and Reich. Their role was “to participate in the transaction process and make recommendations to the full board of directors on matters where there could be a perceived conflict of interest between Intermedia and Digex.”11 The Special Committee had its own legal counsel, James Clark of Cahill Gordon & Rein-del (“Cahill”), and its own financial advis-ors, Credit Suisse First Boston (“CSFB”). The Special Committee appeared to have authority. In the end, however, the Special Committee could not stop Intermedia’s decision to sign an agreement on September 1 to merge with WorldCom, even though the Committee believed other potential transactions were better for Digex.

The true extent of the Special Committee’s authority was evident as early as August, before WorldCom came on the scene. The Special Committee was involved primarily with the Exodus transaction during July and August. On August 21 the Special Committee arrived at the Digex board meeting prepared to vote on an Exodus transaction, but learned when it arrived that such a transaction would not be presented for a vote.12 Instead, the Special Committee learned that negotiations were underway with Global Crossing.

*1184 C. WorldCom enters the fray

Although WorldCom had conducted internal evaluations regarding a possible transaction with either Intermedia or Digex as early as July, these evaluations did not result in any action until August 30. On that day, WorldCom began to seriously consider a bid for control of Digex. Almost exactly forty-eight hours would elapse between WorldCom’s first contact, a call from its banker to Bear Stearns late on August 30, and the Intermedia board’s approval of the WorldCom-Intermedia merger late in the afternoon on September 1.

Those forty-eight hours began on August 30 between 6:00 and 7:00 p.m. when Scott Miller of Salomon Smith Barney & Co. (“Salomon”), WorldCom’s bankers, called Andrew Decker of Bear Stearns with an expression of interest to acquire Digex at $120 a share or more. Miller told Decker that WorldCom would outbid anyone for Digex. After speaking with In-termedia’s negotiators, Decker informed Miller that WorldCom would have to move quickly. WorldCom did just that. Through various phone calls that evening, WorldCom decided to send a due diligence team to New York the following day in order to negotiate a transaction. Sutcliffe sent a draft merger agreement, which was only for a direct acquisition of Digex, to WorldCom’s counsel, Cravath, Swaine & Moore (“Cravath”).13 Late in the evening of August 30, around 11:00 p.m., Ruberg telephoned each of the Special Committee members and informed them that World-Com had offered $120 per share for Digex.

Global Crossing still had an outstanding offer at this point and was working toward a September 1 signing. On the morning of August 31, Sutcliffe and Decker told Global Crossing that there was another suitor for Digex — WorldCom. Global Crossing decided not to bid against WorldCom but continued working toward its September 1 target.

The WorldCom due diligence team arrived at Sutcliffe’s office in New York on August 31, sometime shortly after noon. There, they met with various senior executives from Digex and discussed numerous operational issues regarding Digex. At one point, William Grothe, Vice President of Corporate Development for WorldCom, Sutcliffe, Ruberg, Decker, and another Bear Stearns representative met separately to discuss Intermedia’s concern that the transaction was not moving quickly enough. These men testified that both before and during this private meeting, the only deal that was being discussed was WorldCom’s direct acquisition of Digex.14

D. The deal changes

After this private meeting, Bernard Eb-bers, WorldCom’s President, and Grothe had several phone conversations. Grothe testified that at about 5:00 p.m. on August 31, Ebbers told him that WorldCom was going to purchase all of Intermedia rather than Digex.15 In the late afternoon of August 31, Ebbers called and left a message for Decker, who returned the call at about 6:00 p.m. A series of calls ensued. First, Decker spoke with Ebbers and Scott Sullivan, WorldCom’s CFO. During this call, Ebbers asked Decker if it were possi*1185ble for WorldCom to leave Digex outstanding as a public company and buy Interme-dia.16 Decker consulted with Intermedia and then called Ebbers to inform him that Intermedia would entertain an offer at $89 a share in WorldCom stock. Ebbers conditionally approved an acquisition of In-termedia at $39 a share in WorldCom stock.17 Sutcliffe notified Clark, legal counsel to the Special Committee, of the change, and Clark informed the Special Committee. Ruberg informed Shull, Digex’s President and CEO, and Timothy Adams, Digex’s CFO. Clark and Sutcliffe had several phone conversations that evening regarding the Special Committee’s “belief or fear” that Intermedia had manipulated WorldCom’s interest from Digex to Intermedia.18 Sutcliffe denies such manipulation.19

During the night and morning of August 31-September 1, Intermedia and World-Com negotiated the merger and World-Com conducted abbreviated due diligence of Intermedia. Sutcliffe suggested that WorldCom should make a tender offer for the Digex public shares, but WorldCom refused.20 Also during these negotiations, WorldCom first expressed its interest in receiving the waiver of § 203 from the Digex board. Intermedia agreed to seek this waiver, but requested, and received in return, an agreement to amend the Digex certifícate of incorporation to require independent director approval of any material transaction between WorldCom or its affiliates.21 On September 1, Sutcliffe asked Grothe to be sure to address the Special Committee’s possible fear that Intermedia had caused WorldCom to shift its interest from Digex to Intermedia.22

E. The Special Committee’s morning caucuses

Up until this point, the Special Committee had not been intimately involved with the proposed WorldCom-Digex transaction. Until the late evening of August 31, the Special Committee had been led to believe WorldCom was buying Digex. Now, the Committee members knew the deal had changed and, once again, it had changed without their consultation. This had happened just the morning before at the August 31 Digex board meeting, when the Special Committee members were informed, much to their surprise, that the Global Crossing-Digex transaction had been changed to a WorldCom-Digex transaction.

Thus, on the morning of September 1, the Special Committee, Jalkut and Reich, met with their lawyer, Clark, and Shull and Adams, for a breakfast meeting around 7:00 a.m. to discuss their options. Specifically, they asked Clark for his legal opinion regarding the validity of the switch to the WorldCom-Intermedia merger that was currently being negotiated from the *1186Digex sale they preferred. Clark responded that they could not force WorldCom to make a bid for Digex itself.23 Clark also stated that he believed that legal opinion was divided on the applicability of § 208.24 Clark had concerns both about the process, especially the circumstances surrounding the mid-stream switch from a Digex to an Intermedia deal, and about whether the Special Committee had been kept fully informed.25

Shull, Jalkut, and Reich devised a strategy of proposing a mini-auction at the Digex board meeting later that day because they all believed the proposed WorldCom-Intermedia transaction was the worst of the three possible deals for Digex.26 Shull admits, however, that he saw some concrete benefits to Digex of a WorldCom-Intermedia merger, including the availability of WorldCom’s global network and facilities.27

Next, the Special Committee met with Ruberg who reported the sequence of events culminating in WorldCom’s offer for Intermedia. According to Jalkut, Ru-berg assured the Special Committee that the deal was in the best interests of both Intermedia and Digex.28 No mention was made during this meeting of the § 203 waiver issue.

Finally, the Special Committee met with its financial advisors, CSFB, in order to prepare for the Digex board meeting later that day. During the time when the Special Committee was meeting with their financial advisors at CSFB’s New York offices, Ebbers of WorldCom had a 45-minute telephone conversation with Jalkut and Reich, as Clark had requested.29 Ebbers explained the reasons why WorldCom had changed the deal. Ebbers also explained that WorldCom intended to keep Digex public. Grothe spoke to Shull and Adams in a separate call, also arranged by Clark. Grothe reiterated WorldCom’s intention to keep Digex public. Around 1 p.m. Jalkut and Reich left CSFB’s offices to go to Bear Stearns, where the Intermedia meeting was in progress. Immediately following the Intermedia meeting, the Digex board met.30

F. The Intermedia board meeting

The Intermedia board also met on the morning of September 1 to discuss the proposed WorldCom transaction. Following their discussion of the need for a § 203 waiver by Digex, the Intermedia board meeting was adjourned and Reich, Jalkut, and Shull, as well as the Special Committee’s advisors, were invited into the room for a meeting of the full Digex board. The interested directors of Digex, who had been in the room for the Intermedia meeting, remained, as did Bear Stearns, for the Digex meeting.

G. The Digex board meeting

Sutcliffe informed the Digex board that Intermedia had considered the WorldCom and Global Crossing proposals and determined that the WorldCom proposal was better for Intermedia. CSFB presented its findings to the entire board. CSFB concluded that the WorldCom deal was the *1187worst for Digex.31 None of the directors asked any questions regarding CSFB’s conclusions.

As had been planned at the breakfast meeting, Jalkut proposed a mini-auction of Digex, ie., that a decision on the World-Com transaction be deferred for approximately three days to allow CSFB to solicit best and final offers from WorldCom, Exodus, and Global Crossing, as well as to determine whether any other potential bidders existed. After some discussion, the proposal was defeated by a vote of four to three. The three disinterested directors voted in favor of the auction and the four interested directors voted against any step that would delay the WorldCom transaction.

The Digex board then turned its attention to the § 203 waiver. The debate, however, was brief and truncated, with discussion limited to the issue of who should vote on the waiver. Clark argued that due to the clear conflicts of interest faced by the interested directors, they should abstain from the vote. Sutcliffe asserted that he saw no reason to prevent the interested directors from participating. Sutcliffe would later testify that, “I discussed with [the interested directors] or reminded them that in voting on anything as a Digex director, they had to disregard entirely their relationship with Intermedia and had a fiduciary obligation to act only in the best interest of Digex and all of its shareholders.”32 The Special Committee was never asked for a recommendation on this conflict. After some discussion regarding whether or not the interested directors should vote, it was decided that all board members should vote. As noted above, it appears from the record that Clark and Sutcliffe disagreed about whether it was appropriate for the interested Digex directors to vote on the § 208 waiver. It is far less clear whether the Digex directors themselves engaged in any discussions along these lines.33 The vote, once again, was four to three, with only the interested directors — Ruberg, Manning, Campbell, and Baker — voting in favor of the § 203 waiver. After the Digex board members voted on the § 203 waiver, the Intermedia board reconvened, received Bear Stearns’ oral fairness opinion, and approved the Intermedia merger with WorldCom.

H. Procedural History

Following the public announcement on September 5, 2000, of the proposed merger between Intermedia and WorldCom, Digex stockholders filed a series of class and derivative stockholder suits. Ultimately, all of the actions were consolidated into this single action and WorldCom was joined as a party defendant. On October 2, 2000, this Court granted plaintiffs’ motion for expedited proceedings. Thereafter, the parties engaged in expedited discovery, including the production of documents, numerous depositions, and the filing of legal memoranda. Plaintiffs’ motion for a preliminary injunction was argued before the Court on November 29. At the Court’s request, the parties filed supplemental memoranda regarding the § 203 issue on December 4.

II. STANDARD FOR A PRELIMINARY INJUNCTION

This matter is presently before the Court on plaintiffs’ motion for a preliminary injunction. When seeking a *1188preliminary injunction, a plaintiff must demonstrate a reasonable probability of success on the merits and that some irreparable harm will occur in the absence of the injunction. Furthermore, in evaluating the need for a preliminary injunction, the Court must balance the plaintiffs need for protection against any harm that can reasonably be expected to befall the defendants if the injunction is granted. When the former outweighs the latter, then the injunction should issue.34

As I noted earlier, the plaintiffs assert two different legal theories in this action. First, they argue that the defendants have breached their fiduciary duties and usurped a corporate opportunity that belonged to Digex and its shareholders. Second, the plaintiffs contend that the defendants breached the fiduciary duties they owed to Digex and its shareholders by voting to waive the protections afforded by § 208. I turn first to the corporate opportunity theory.

III. THE CORPORATE OPPORTUNITY CLAIM

Delaware Courts employ the following test to determine whether a corporate opportunity has been usurped by a fiduciary. The corporate opportunity will be found to have been usurped:

If there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, [and that opportunity] is ... in the line of the corporation’s business and is of practical advantage to it, is one in which the corporation has an interest or a reasonable expectancy, and, by embracing the opportunity, the self-interest of the officer or director will be brought into conflict with that of his corporation .... 35

It is with this test in mind that I will evaluate the plaintiffs’ claim that the defendants have usurped a corporate opportunity belonging to Digex.

A. Summary of the Arguments

The plaintiffs argue that they satisfy all elements of the test for the usurpation of a corporate opportunity and, thus, there is a likelihood that they will succeed on the merits at trial. The opportunity that plaintiffs insist they had was an “expectancy” in selling their Digex shares to a buyer for approximately $120.00 per share.

That expectancy, the plaintiffs urge, was created by Intermedia’s alleged promise that any deal Intermedia brokered would include a sale of the Digex minority shareholders’ shares. As the argument goes, the defendants breached their fiduciary duties when the Intermedia-affiliated Digex directors allegedly steered WorldCom away from a Digex deal and towards an Intermedia deal.36 When a WorldCom-Intermedia deal originally arose, plaintiffs argue that the interested directors had several courses of action available that would have avoided such a breach. For instance, “they could have refused to discuss with WorldCom anything other than *1189an acquisition of Digex, or they could have conditioned any acquisition of Intermedia on WorldCom’s agreement to make a tender offer for the minority shares of Digex.” 37 The import of this, urge plaintiffs, is that “when WorldCom asked Intermedia for a price at which WorldCom could acquire Intermedia, Intermedia was not permitted to name its price and make an agreement with WorldCom without informing Digex’s Special Committee and affording it an opportunity to negotiate with WorldCom on behalf of Digex.”38

The defendants respond to these contentions with three primary arguments. First, they argue that there was no corporate opportunity to usurp because “In-termedia owns an absolute majority of Digex’s voting rights and equity. Intermedia is entitled to sell or refuse to sell its Digex stock solely in its own interest; it is entitled to vote its shares in its own interest; and, neither the Digex board nor its shareholders can sell Digex without Interme-dia’s consent.”39 The second argument the defendants make is that they acted properly and mindful of their fiduciary duties at all relevant times. Thus, because the defendants were entirely candid with the Digex board and because WorldCom approached Intermedia as the controlling shareholder rather than Digex itself, there can be no breach of the duty of loyalty. Finally, and tangentially related to the first argument, defendants contend that the Digex minority shareholders had no power to insist that Intermedia, as controlling shareholder, permit Digex to conduct an “auction” to sell itself to the highest bidder.

B. Legal Analysis

For the reasons discussed below, I conclude that Digex, as a corporation, had no legally cognizable “interest or expectancy” in a WorldCom-Digex deal. Thus, the plaintiffs will not be able to prove an element of the corporate opportunity doctrine and are unlikely to succeed on the merits. Moreover, while the behavior of certain actors in this corporate drama does not paint a picture of model director behavior, I cannot conclude, on the limited factual record before me, that the defendants’ conduct was undertaken in bad faith. Because I am deeply skeptical that the plaintiffs will be able to produce evidence at trial to prove their currently unsupported suspicions, I am not persuaded that plaintiffs have a reasonable probability of success on the merits of their corporate opportunity claim.

1. Why Digex had no “interest or expectancy” in a WorldCom-Digex deal.

A claim that a director or officer improperly usurped a corporate opportunity belonging to the corporation is a derivative claim.40 Here, it is helpful to distinguish between a derivative and an individual claim.

As a general matter, it may be said that, where the substantive nature of the alleged injury is such that it falls directly on the corporation as a whole and collectively, but only secondarily, upon its stockholders as a function of and in proportion to their pro rata investment in the corporation, the claim is derivative in nature and may be maintained only on behalf of the corporation... .Conversely, where the complaint describes a *1190special and distinct injury inflicted directly on rights of individual stockholders traditionally regarded as an incident of their stock ownership, the action is individual (or class) in nature, and any ensuing recovery or other relief runs directly to the stockholders. In other words, derivative actions are those that seek relief for injuries done to the corporation, while individual or class claims are those that seek to rectify harm inflicted directly upon the individual rights of stockholders.41

With this distinction in mind, the claim that the defendants usurped a corporate opportunity must necessarily constitute an “injury” to the corporation and thus be a derivative claim.42

Here, the plaintiffs contend that the defendants, by allegedly steering WorldCom away from a Digex deal and towards an Intermedia deal, appropriated an opportunity that belonged to the plaintiffs. That opportunity was the ability to sell Digex to the highest bidder.

The opportunity the plaintiffs identify, however, is not an “interest or expectancy” of Digex the corporation qua corporation. Rather, the purported opportunity is that of the Digex shareholders to sell their Digex shares to the highest bidder. Thus, the perceived corporate opportunity is not really a corporate opportunity at all, but more closely resembles an individual opportunity of the shareholders. Because the opportunity the plaintiffs identify was not one in which Digex as a corporation had an “interest or expectancy,” plaintiffs do not have a reasonable likelihood of success on such a claim.

The present case also is strikingly similar to Thorpe v. CERBCO, Inc., 43 a case cited by both parties as supporting their respective positions. In CERBCO, the Supreme Court held that where a majority shareholder of a corporation can block any unacceptable transaction, the corporation cannot take advantage of the opportunity to enter into an unsanctioned transaction and, thus, there is no opportunity that fairly belongs to the corporation.44

George and Robert Erikson were directors, officers, and controlling shareholders of CERBCO, Inc. While the Eriksons owned 24% of CERBCO’s total equity, they exercised effective voting control with 56% of the total votes. They were also two of the four directors on CERBCO’s Board.

CERBCO, as a holding company, owned voting control of a subsidiary, Insituform East, Inc. (“East”). A third party approached the Eriksons in their capacity as directors and officers45 of CERBCO to discuss the possible purchase of the subsidiary East. The Eriksons, however, steered the third-party towards buying their controlling interest in the parent CERBCO as a way to gain control of the subsidiary East. Thorpe, a CERBCO shareholder, filed a derivative suit claiming that the Eriksons had diverted from CERBCO the opportunity to sell East to the third-party. Thus, as is quite plain, in many respects the facts of CERBCO are similar to those here.46

*1191The Court of Chancery, following a trial, found that the Eriksons violated their duty of loyalty to CERBCO. “Despite finding this breach,” however, “the Chancellor held that the plaintiffs would not be awarded damages since the defendants’ actions were wholly fair.”47 The Chancellor found that the Eriksons could not be penalized for their breach because they could veto any proposed transaction under 8 Del. C. § 27148 and, thus, the plaintiff suffered no damage.

The Supreme Court, in addressing the issue of the corporate opportunity, found that:

In this case, it is clear that the opportunity was one in which the corporation had an interest. Despite this fact, CERBCO would never be able to undertake the opportunity to sell its EAST shares. Every economically viable CERBCO sale of stock could have been blocked by the Eriksons under § 271. Since the corporation was not able to take advantage of the opportunity, the transaction was not one which, considering all the relevant facts, fairly belonged to the corporation.49

The Court went on to find that the “ § 271 rights, not the breach [of the duty of loyalty], were the proximate cause of the nonconsummation of the transaction. Accordingly, transactional damages are inappropriate.” 50

I understand the Supreme Court’s holding in CERBCO to require a finding that, while majority shareholders may breach their duty of loyalty on similar facts, the powers inherent in the majority status generally preclude a plaintiff from claiming that a corporate opportunity has been usurped where the majority shareholder could have blocked the transaction in any event. This is so because no “interest or expectation” fairly belonged to the corporation since the majority could block the transaction at any time.

The same reasoning leads to the same result in this case. Just as the Eriksons could block CERBCO’s efforts to sell the subsidiary East, so Intermedia may block any undesirable transactions involving its subsidiary Digex.51 Of course, CERBCO teaches that this power, held by the controlling shareholder, is not without limit. As is discussed more fully below, the exercise of that power is always constrained by the duty of loyalty.

In some respects this case is clearer than CERBCO because here the complaining parties, Digex and its shareholders, are totally removed from the transaction between WorldCom and Intermedia. No Digex shares will change hands and, presumably, Digex’s preexisting relationship with Intermedia will be the same. Intermedia would merely have a new owner.

Because the defendants could block proposed transactions involving the sale of Digex, it seems unlikely that Digex and its shareholders could have a legally cognizable interest or expectancy in a WorldCom-Digex deal. In the absence of such a protectable interest, plaintiffs have no rea*1192sonable probability of success on the merits of their corporate opportunity claim.

2. Did defendants breach their duty of loyalty in negotiating the WorldCom-Intermedia deal?

In the context of the corporate opportunity claim, plaintiffs appear to rely upon two distinct theories as to how the defendants breached their fiduciary duties. First, they contend defendants breached the duty of loyalty by usurping a corporate opportunity, a claim which (as already mentioned) stands little chance of success. Second, they argue that the recent decision in McMullin v. Beran52 requires a finding that the defendants breached their fiduciary duties by not conducting “a Revlon auction for Digex.”

As to this second theory, Thorpe v. CERBCO again is instructive. There the Supreme Court separated the consideration of whether the defendants usurped a corporate opportunity and whether they breached their duty of loyalty. Since I have already addressed the corporate opportunity aspect of the argument, I now turn to the duty of loyalty aspect.

The CERBCO Court found the Eriksons had breached their duty of loyalty to CERBCO. How the CERBCO Court reached that conclusion will guide this Court in determining whether the defendants have breached a duty of loyalty owed to the plaintiffs.

In CERBCO, the third party approached the Eriksons, in their capacity as officers and directors, about the potential purchase of the subsidiary, East. The Eriksons, however, immediately steered the third-party towards purchasing their controlling block of CERBCO in order to gain control of East.53

The Eriksons never informed the other CERBCO board members of this interest in the subsidiary East, but did inform them of the proposed sale of the Eriksons’ stock. In fact, a member of the CERBCO board later specifically asked the Eriksons whether there had been any interest in a purchase of East. “The Eriksons denied that [the third-party] had ever made such an offer, and had [they] done so, the Erik-sons indicated that they would likely vote their shares to reject it.”54

Ultimately, it was this lack of candor that led both the Chancellor and the Supreme Court to find that the Eriksons had breached their duty of loyalty.55 To reach this result, the Court applied the following analysis:

The shareholder vote provided by § 271 does not supercede the duty of loyalty owed by control persons, just as the statutory power to merge does not allow oppressive conduct in the effectuation of a merger. Rather, this statutorily conferred power must be exercised within the constraints of the duty of loyalty. In practice, the reconciliation of these two precepts of corporate law means that the duty of a controlling shareholder/director will vary according to the role being played by that person and the stage of the transaction at which the power is employed.56

In applying this analytical framework, the Court decided that since the Eriksons were approached in their capacities as directors of CERBCO, their loyalties should have been to the company. To satisfy their duty to act in good faith, the Erik-*1193sons should have informed the CERBCO board of the interest in East and CERB-CO should have been able to explore that interest “unhindered by the dominating hand of the Eriksons.”57

The Court recognized that “[t]he Erik-sons were entitled to profit from them control premium and, to that end, compete with CERBCO but only after informing CERBCO of the opportunity. Thereafter, they should have removed themselves from the negotiations and allowed the disinterested directors to act on behalf of CERB-CO.” 58 Finally, “[w]hile the Eriksons did have a duty to present that opportunity to CERBCO, they had no responsibility to ensure that a transaction was consummated.” 59

Thus, if one compares the Eriksons’ behavior to that of the defendants here, I must consider whether the defendants adequately disclosed any potential interest or proposal to Digex and provided Digex a reasonable opportunity to act. If the defendants did not act in that manner, it may well suggest that they breached a duty of loyalty to Digex’s minority shareholders.

To answer this question, one must focus on the events that occurred between August 30, 2000, and September 1, 2000.60 Viewing those events objectively, it appears that Digex, through its officers and non-interested directors, was apprised of the status of the various proposed transactions at all times. Despite preliminary posturing and expressions of general interest in the preceding months, the time frame at issue was compressed into a matter of a few days. The evidence indicates that WorldCom was interested in Digex and had considered various ways to gain control of it. Among those options was either a purchase of Digex itself or of Intermedia to gain control of Digex.

On August 30, WorldCom representatives contacted the bankers that were assisting Intermedia in exploring its options, two of which were either selling itself or selling its “crown jewel,” Digex. World-Com was told that a purchase of Digex would require an offer of upwards of $120.00 per share. WorldCom was not deterred and began due diligence. World-Com was aware that it was working to beat a September 1, 2000 deadline. Digex representatives were immediately notified of this new interest. Thus, at this point, Digex, through its representatives, was aware of WorldCom’s initial interest in the company.

Sometime on August 31, however, WorldCom decided that a purchase of In-termedia was more desirable than a purchase of Digex because of the significant cost savings. WorldCom made a preliminary inquiry into what price Intermedia would seek, and was told that it could purchase Intermedia for $39.00 per share. As WorldCom found this initial term agreeable, it decided to shift its due dili*1194gence to consider a purchase of Intermedia with consummation of the deal the following day. Shortly after the change in the deal, the Digex officers and non-interested directors were informed of the change. Thus, within a very short time, Digex had notice that it was no longer the focus of a WorldCom deal.

These’ facts are not in serious dispute. Viewed in light of CERBCO’s analysis, they lead me to conclude, although provisionally, that the defendants did not breach their duties of loyalty to the plaintiffs at this juncture in the negotiation process. Digex had notice of WorldCom’s interest from the beginning, although it had been assured by Intermedia’s representatives that any negotiated sale of In-termedia’s majority interest in Digex would seek to include an offer for the minority public shareholders. Moreover, Digex apparently was notified of World-Com’s change of heart within a short time of the switch. At this point, I do not find persuasive the plaintiffs’ contention that the deal was a fait accompli merely because there had been a preliminary agreement as to price. Although I recognize that an effort by Digex to revive a World-Com-Digex deal may have been futile considering Intermedia’s stance, the defendants only had to give fair notice of the opportunity to Digex. In these circumstances, I do not think it likely that plaintiffs can show the Intermedia defendants, as a controlling stockholder, had a duty to see that a particular transaction involving Digex was consummated.

Nor does the defendants’ behavior approach the egregiousness of the Eriksons. Unlike CERBCO, Digex knew of World-Com’s initial interest from the beginning. Moreover, defendants made no attempt to conceal the fact that the deal had changed. As this Court found in another case with analogous facts:

Although we encourage directors to aspire to ideal corporate governance practices, directors’ actions need not achieve perfection to avoid liability. Directors must adhere to the minimum legal requirements of the corporation law. Although the defendants failed to act as a model director might have acted, for the above reasons and on the undisputed facts I conclude, as a matter of law, they did not breach a legal duty.61

Based on my review of the mostly undisputed evidence at this juncture, I conclude that plaintiffs have not demonstrated a reasonable likelihood of success on the merits of their breach of the duty of loyalty claims.

3. Are the defendants estopped from completing a WorldCom-Intermedia deal?

An additional matter I must address is an argument that the plaintiffs raise in their reply brief — that the defendants should be estopped from agreeing to a sale of Intermedia.62 The gist of the argument is that Intermedia promised Digex and its shareholders that any transaction Interme-dia pursued would necessarily involve the concomitant purchase of the minority interest in Digex.

This argument takes its genesis from Intermedia’s early expressions that it needed to complete some kind of deal to rectify adverse financial conditions. To that end, Intermedia issued a press release in July, 2000, stating that it had “retained Bear Sterns to explore strategic altema- *1195 fives with regard to Digex, including the possible sale of Intermedia’s ownership position in Digex to another company.”63 The plaintiffs also point to the board minutes from a June 29, 2000, board meeting for the proposition that Intermedia promised that any deal it sought would include Digex’s minority shareholders. The passage they highlight states: “Responsive to a question from one of the directors, Mr. Sutcliffe indicated that it was Intermedia’s present intention to require from any proposed purchaser of Intermedia’s equity interest in Digex an undertaking to make a comparable offer available to the public stockholders of [Digex].”64

The plaintiffs’ arguments on this issue, and the supporting evidence they rely upon, demonstrates their fundamental misunderstanding of Intermedia’s intentions. This misunderstanding, perhaps, explains in part the catalyst for this litigation. The record evidence, however, does not fairly support such a broad reading of Intermedia’s intentions. Intermedia clearly expressed its intention that if it sold its majority stake in Digex, it would seek a comparable deal for the minority shareholders. This is the sum and substance of the evidence on this point at this preliminary stage of the proceeding, and it cannot be understood (at least not yet) as promising anything more or anything less. One certainly cannot read the evidence as legally obligating Intermedia to secure a transaction for the Digex minority shareholders when Intermedia sells itself. Moreover, based on the limited available evidence at this juncture, one could not reasonably conclude that Intermedia made a blanket promise that any deal it considered would necessarily involve a deal for the Digex minority. Given the state of the record, plaintiffs’ estoppel theory does not appear reasonably likely to succeed on the merits.

4. Is this a Revlon case?

Although presented awkwardly and belatedly, I will address plaintiffs’ argument that “[t]he individual defendants breached their fiduciary duties under Revlon.” 65 It is a well-known principle of Delaware corporate law that the decision in Revlon v. MacAndrews & Forbes Holdings, Inc. 66 requires a board to maximize the value to all shareholders when a sale of control of the business is inevitable.67 Plaintiffs insist that a sale of Digex was inevitable and that an auction was required to be held to that end, in accordance with Revlon. For several reasons, I also believe this version of the corporate opportunity claim enjoys little likelihood of succeeding on its merits.

First, plaintiffs’ so-called Revlon claim is not properly before the Court. Several plaintiffs asserted Revlon claims in their original complaints, but all of these claims were voluntarily dropped when the consolidated class and derivative complaint was filed. Thus, no properly alleged Revlon claim exists for this Court to consider.

Second, even if such a claim were properly alleged, it would have little likelihood of success. Revlon and its progeny address the policy concern that minority shareholders are particularly vulnerable when a proposed transaction will result in a change of control in their corporation.68 *1196This concern by the courts stems from the concept that “[w]hen a majority of a corporation’s voting shares are acquired by a single person or entity, or by a cohesive group acting together, there is significant diminution in the voting power of those who thereby become minority stockholders.” 69

In this case, however, no “change of control” is proposed regarding Digex. The Digex minority existed before the proposed merger and it will not change under the proposed transaction. What will change is the ownership of Digex’s majority shareholder, Intermedia.70

Finally, it is important to recognize that any effort to sell Digex in a Revlon-style auction would appear to be futile.71 As Vice Chancellor Lamb observed in Odyssey Partners, L.P. v. Fleming Co., Inc.:72 “Revlon duties do not arise where the directors do not have the power to control the terms on which a sale of the company takes place.” Where, as here, a majority shareholder can block proposed transactions involving a sale of control, the courts will not require a board of directors to engage in a futile exercise, even though the board continues to owe requisite fiduciary duties to its shareholders.73 This claim thus has little chance of ultimate success.

To summarize, it does not appear that the plaintiffs’ direct and related claims— that the defendants usurped a corporate opportunity allegedly belonging to Digex— have a reasonable probability of success on the merits. First, Digex had no “interest or expectancy” in a WorldCom-Digex transaction that fairly belonged to it. Second, the evidence suggests that Digex was informed of WorldCom’s initial interest in evaluating a purchase of Digex. It does not appear that that matter was concealed from Digex by the defendants. In addition, Digex, through its representatives, was notified that WorldCom’s interest had switched to purchasing Intermedia. Third, it does not appear that the evidence would support a conclusion that the defendants made an enforceable “promise” that in any event the Digex minority shareholders’ interests would be purchased. Nor does the record indicate that the Interme-dia defendants made unequivocal statements that all of Digex would be sold. *1197Finally, Digex had no power to compel its majority stockholder, Intermedia, to sell Digex in a Revlon-style auction.

Accordingly, I am not persuaded that plaintiffs have demonstrated a reasonable likelihood of success on the merits of the various claims they have made under the rubric of the corporate opportunity theory.

IV. SECTION 203 CLAIM

In their second claim, the plaintiffs argue that the interested Digex directors breached their fiduciary duties by causing Digex to improperly waive § 203 of the DGCL. Specifically, the plaintiffs assert that because the waiver was accomplished by the vote of the four Intermedia-affiliat-ed Digex directors, and against the vote and advice of the three independent Digex directors, the vote must be judged under the entire fairness standard. Plaintiffs contend that the defendants have failed to meet this standard.

I first turn to the operative statute. The applicable provisions of § 203 read as follows:

(a) Notwithstanding any other provisions of this chapter, a corporation shall not engage in any business combination with any interested stockholder for a period of 3 years following the time that such stockholder became an interested stockholder, unless:

(1) prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or

(2) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer.74

As is clear on its face, once an entity becomes an “interested stockholder,” § 203, subject to certain exemptions, prohibits business combinations between a Delaware corporation and that shareholder for a period of three years.75 There is no dispute between the parties that World-Com will become an interested shareholder in Digex as a result of the merger and that WorldCom intends to enter into transactions with Digex where the prohibitions of § 203 would apply absent an exemption. As a result, although WorldCom believes that it would come within the statutory exemption provided by § 203(a)(2) for interested stockholders holding 85% or more of the “voting stock” of the corporation, WorldCom also sought the additional certainty that would come with a § 203(a)(1) waiver agreed to by the Digex board of directors. WorldCom was not content to rely merely on the 85% shareholder exemption because it recognized that the application of the § 203(a)(2) exemption in situations involving “super-voting rights” has not been definitively ruled upon by the Delaware courts. There is also no dispute that the Digex board voted to waive the protections afforded by § 203. Instead, the plaintiffs contend that the vote to *1198waive § 208 amounted to a breach of fiduciary duty.

The defendants make three arguments that the § 203 waiver did not constitute a breach of fiduciary duty and therefore will not support preliminary injunctive relief. First, defendants contend that § 203 will not prohibit a future business combination between Digex and WorldCom because even if the waiver was invalid, WorldCom still is exempt from § 203 because it will possess over 85% of the Digex voting power. Second, the defendants assert that the plaintiffs are asking for an advisory opinion because no business combination has yet been presented to Digex and, therefore, this dispute is not ripe for adjudication. Third, the defendants argue that the § 203 waiver was, in any case, entirely fair to the Digex shareholders.

A. Does the 85% exemption apply to WorldCom?

The facts are undisputed by either party that upon the completion of the merger, WorldCom will possess well over 85% of the voting power of Digex but well under 85% of the number of outstanding voting shares of Digex.76 The three year waiting period imposed by § 203, the Delaware anti-takeover statute, does not apply where “upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time that the transaction commenced” excluding certain shares for the purposes of determining the number of shares outstanding.77 The interpretation of the term “voting stock,” therefore, lays directly at the center of this dispute whether § 203 limitations would apply to WorldCom absent the waiver.78 Simply put, if “85% of the voting stock” refers to voting power, WorldCom would be exempt from § 203. If “85% of the voting stock” refers to the number of shares held in the corporation as a percentage of its outstanding number of shares, then World-Com would need to rely on the vote of the Digex board to waive its § 203 protections.

The primary support for the defendants’ reading of the term “voting stock” is found in § 212(a) of the DGCL. Section 212(a) states in relevant part:

If the certificate of incorporation provides for more or less than 1 vote for any share, on any matter, every reference in this chapter to a majority or other proportion of stock shall refer to such majority or other proportion of the votes of such stock.79

Based on § 212(a), the defendants assert that ownership of “voting stock” under § 203 must be measured by the voting rights of that stock rather than the number of shares of that stock entitled to vote, where, as here, the certificate of incorporation provides for a class of stock with super-voting rights.80

*1199There are problems, however, with this admittedly straightforward reasoning. First, § 203 includes a definition of the term in question, “voting stock.” Where a statute specifically defines an operative term in a definitional section, a court will be bound by that definition and shall not resort to another statute to interpret that term.81 Second, the interpretation presented by defendants is not at all clear upon analyzing the language and context in which the term “voting stock” is used in § 203(a)(2). Section 203(c) defines “voting stock” and limits that definition strictly to use of that term within § 203 in stating:

As used in this section only, the term: ... (8) “Voting stock” means, with respect to any corporation, stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity.82

Under this definition, for purposes of determining whether a shareholder has acquired the 85% figure of § 203(a)(2), the Legislature effectively excluded any need for an interested shareholder to acquire outstanding non-voting shares or shares of stock that have a limited right to vote for the election of directors.83 Similarly, voting debt instruments are not included in the 85% calculation.84 The Legislature did not signify that “voting shares” referred to the voting interest, not the equity interest, held by those shares.

The language of § 203(a)(2) itself can be interpreted to attest to the equity interest, not the voting power, interpretation of “voting shares.” The statute explicitly states that as part of the 85% of voting stock calculation, one must determine “the number of shares outstanding” excluding certain specified shares.85 This is significant. The statute does not contemplate the number of votes outstanding. In calculating whether an interested stockholder has reached the 85% threshold, § 203(a)(2) directs the Court to divide a number representing the interest held by the interested shareholder by the number of shares outstanding. The number representing the interest of the interested shareholder must therefore also be expressed in terms of the number of shares, not votes, controlled if this calculation is to make any sense. If, instead, the statute intended for us to divide the number of votes held in shares owned by the interested shareholder by the outstanding number of votes (that is, to calculate the “voting power” of the interested shareholder), the statute would properly direct us to exclude certain shares for the purposes of calculating the outstanding number of votes. The statute therefore seems to place the emphasis in the term “voting stock” on the term “stock” and not the term “voting.”

Generally, where a statute is unambiguous, there is no reasonable doubt as to the meaning of the words used and the Court’s role is then limited to an application of the literal meaning of the words.86 Where, however, a statute is ambiguous *1200and its meaning is not clear, the Court must rely upon its methods of statutory interpretation and construction to arrive at a meaning.87 If a statute is reasonably susceptible to different conclusions or interpretations, it is ambiguous.88 The fundamental rule in interpreting an ambiguous statute is to ascertain and give effect to the intent of the Legislature.89

The legislative history of § 203(a)(2), although ultimately unclear, strongly suggests that those contemplating the adoption of the statute believed they were talking about an economic equity percentage, not a voting power percentage. Section 203 received an unprecedented amount of scrutiny before its adoption.90 Beginning on November 19, 1987, the initial discussion draft of the proposed § 208 was distributed throughout the country and widely circulated among attorneys, academics, corporations, pension funds, federal officials, and others interested in developments in Delaware corporate law.91 In all, more than 150 comment letters were received from sources as varied as members of the Securities and Exchange Commission (“SEC”), the Federal Trade Commission, corporate law academic departments, corporate law practitioners, stockholders, as well as other individuals with vested interests in takeover activity.92 In a further attempt to broaden the scrutiny of § 203, the Delaware Bar Association opened its deliberations to the public and sought public comment. These discussions surrounding § 203 received wide national press coverage.93 Upon signing the bill putting § 203 into law, then-Governor Michael Castle stated that § 203 was “the product of the most intense debate that I can remember in 20 years in government.”94

There are several sources to consider in attempting to appraise the true legislative intent and purpose behind § 203.95 The *1201Legislature itself included a basic summary of the intent of § 203 in the Synopsis to House Bill 396, which was eventually adopted as § 203:

Section 203 is intended to strike a balance between the benefits of an unfettered market for corporate shares and the well documented and judicially recognized need to limit abusive takeover tactics.96

Among the comments and submissions considered by the Legislature before the adoption of § 203, two members of the Council of the Corporation Law Section of the Delaware Bar Association submitted a report to the Delaware General Assembly concerning the proposed § 203. The report lists six principal advantages of the statute. Among these advantages, the authors noted that:

The statute creates a balance between offeror on one hand and shareholder body on the other. The offeror has the seven outs. The shareholders can insist upon a price which is sufficiently good to take out 85% of their number. The stockholders are given bargaining strength through their board of directors who will negotiate for them in a takeover situation. The only way that stockholders can act effectively as a group to negotiate with an offeror is through their board of directors elected by them. They cannot take effective action independently or even as a group.97

This language strongly suggests that the members of the Corporation Law Section of the Delaware State Bar Association interpreted “85% of the voting stock” to refer to the number of shares, not votes, owned by an interested shareholder. This language also emphasizes the crucial role directors must play in protecting the interests of shareholders during a possible change of control.

The intense debate over § 203 in part centered on § 203(a)(2). Specifically, the 85% shareholder exemption was one of the most disputed provisions in the entire statute and received a tremendous amount of scrutiny. Among the most vociferous opponents of the 85% shareholder exemption (originally set at 90%) was then-SEC Commissioner Joseph Grundfest. In a series of letters and testimony before the Delaware Legislature, Commissioner Grundfest objected to the 85% exemption because of the unreasonably onerous burden he believed this requirement would place on tender offers.98 According to Grundfest, after an investigation by the SEC’s Office of the Chief Economist, he was “aware of no case in which a tender offer obtained more than *120290% of the target’s shares despite management opposition.”99 In a subsequent letter, Grundfest argued to lower the then 90% threshold based on a table consisting of data showing “the number of shares tendered as a percentage of the shares not already owned by the bidder.”100 On the other side in this debate, Martin Lipton of the firm Wachtell, Lipton, Rosen & Katz, argued that even the 90% exemption level would create a “barn-door size exception” to § 203 and that it would “be a rare situation where a tender offer will not attract 85% of the target’s non-management stock.”101 Apparently in response to the concerns expressed by Grundfest and others, the recommended bill ultimately lowered the percentage exemption from 90% to 85%.102

Goldman and McNally’s report to the Delaware General Assembly directly took on the issue of the proper percentage exemption:

Question: Should the one transaction acquisition percentage be lowered from 85% to 80%?

Answer: No. The statute is designed to defend against the inadequate offer for all stock. If an offer is a good one, it should obtain 85% of the stock of the company. This is particularly so where the proposed statute eliminates from the 85% figure stock owned by director-officers and by employee stock plans. The Corporate Law Council and section of the Bar Association believe that 80% is too easy to attain. Moreover, other states having this type of law have no percentage out.

The votes required by Section 203 have been carefully calculated to provide the least intrusive measure possible that will still allow the statute to limit the abusive takeover tactics to which it is directed. Thus, Section 203 permits an acquiror to go forward with a business combination within three years if he acquires 85% of the stock because that should require him to make his best offer as the way to maximize his chances of success. Anything less than his best offer will jeopardize that success.

The 85% threshold is set at that level because there is evidence that less-than-full-price, coercive tender offers are frequently able to obtain stock tenders of 80% or better. Thus, unless Section 203 set a greater than 80% threshold requirement, it would not preclude the very evil it seeks to prevent.

... [As an example of how the statute shall work,] if insiders hold no stock, the acquiror must obtain 85% of the stock outstanding, but if insiders held 10% of the stock, then the acquiror must obtain only 75.5% of the total stock outstanding (i.e., 85% of the 90% not held by insiders).103

The comments and interpretations of those involved in the public debate of § 203(a)(2)’s 85% exemption imply that these individuals believed that the 85% figure referred to the percentage of equity that agreed to tender, not of the voting *1203power held by those shares. After an extensive search, the Court has been unable to find any reference to the concept of “voting power” in any of the numerous comments and statements that were put forward during the debate. Rather, both sides only argued on what should be the appropriate percentage of post-tender ownership required to exempt an interested shareholder from the § 203 prohibitions.

As this debate over the 85% threshold exception evidences, § 203(a)(2) was crafted with the procedures of tender offers in mind. The primary policy motivation behind this statute was to deter potential acquirers from using two-tiered highly leveraged tender offers.104 The main argument in support of any percentage exemption was that if an offer successfully attracted such a significant percentage of the voting shareholders of a corporation, then the tender offer must be a good one.105 In conducting a tender offer, the number of votes a given share possesses at the time of the decision to tender does not figure into the percentage of shares that have decided to tender although the number of votes may determine an acquirer’s ability to elect directors and direct corporate policy.106 The primary policy reason to provide the 85% exemption was to allow tender offerers an exemption from § 203 if their offer was sufficiently attractive to such a high percentage of the outstanding shares of the corporation. The situation presented here defeats that intent.

To demonstrate this point, let us assume that a certain hypothetical shareholder acquires 40% of the equity of a firm through a tender offer aimed specifically at certain super-voting shares of that company. Through these super-voting shares, this equity stake translates into voting power of 90%. Thereby, that shareholder has in no way made an offer that is attractive to a majority of the firm’s outstanding equity, but defendants would have this Court believe that this shareholder has satisfied the exemption. This is exactly the type of behavior the statute is meant to apply to and prevent.

Now, push this hypothetical closer to the facts at hand. Let us instead assume that a hostile takeover bid is able to entice 52% of the outstanding shares of a company to accept an initial tender offer. Further, assume that that 52% equity stake represents 94% of the voting power of the *1204target corporation. Would the hostile acquirer be exempt under § 203(a)(2) and therefore able to effect a second step squeeze-out using whatever financing the acquirer chooses? The Court suspects that the answer to that question would be a resounding no. Similarly, WorldCom’s desire to circumvent the prohibitions of § 203 with its 94% voting power while its equity interest in Digex is well below the 85% threshold most likely contradicts the policy concerns that animated the statute.

*1203(f) Finally, it does not prevent an interested stockholder from entering into a business combination if he obtains the consent of two-thirds of the disinterested owners of voting stock.

*1204Defendants counter this policy argument with one of their own. Essentially, the defendants argue that this could not possibly be the proper policy intention behind the 85% exemption because, following that same logic, an “interested shareholder” would only reach the 15% threshold if that shareholder owns 15% of the outstanding economic equity of a corporation and not merely 15% of the outstanding voting power of the corporation. The defendants assert that this would have major implications for shareholders everywhere and it is not at all what the Legislature intended. Using the example of a hypothetical shareholder who owns 10% of the equity of a corporation yet controls 51% of its voting power, the defendants argue that, to be consistent, that shareholder could not be considered an interested shareholder subject to § 203 even though she could enter into transactions and determine corporate policy. The defendants posit that interpreting “voting shares” in terms of equity, and not voting, would therefore render the statute powerless towards this hypothetical shareholder. But I think the defendants choose to ignore the implications of their hypothetical to the present case— where this difference between the equity interest and the voting interest of World-Com in Digex similarly presents the potential for abuse. Defendants assert that their hypothetical shareholder would circumvent, and effectively “gut,” the statute. In a very practical sense, the position taken by the defendants in this case may have already accomplished that task.

For present purposes though, let us continue to assume that the legislative record and policy motivations on the issue of the 85% exemption actually provide no definitive answers in instances involving super-voting stock. The Court notes, however, that although the legislative record arguably may not speak directly to the subtleties of the “voting stock” issue, the possibilities presented by super-voting stock were clearly within the purview of the debate surrounding the drafting and adoption of § 203. Before the adoption of § 203, a number of Delaware corporations had begun to experiment with defensive techniques based on “scaled voting” in which voting power decreases in proportion to increased equity ownership107 and “tenure voting” which keys voting power to the duration of ownership.108

Moreover, super-voting rights are certainly not a new invention under Delaware law and were well known and understood by those drafting and commenting on § 203 before its adoption. The DGCL has long recognized that, with respect to corporations authorized to issue stock, voting rights of that stock may be varied by the certificate of incorporation as between classes and as between series within a class. Thus, the right to vote certain shares may be denied entirely, may be limited to certain matters, more or less *1205than one vote may be given to the shares of any class or series, and the separate vote of a class or series may be required as a prerequisite to specified corporate actions.109 All of these voting right possibilities existed at the time of the adoption of § 203. Nevertheless, it appears that the Legislature left open many potential questions regarding the application of § 203. In the words of one set of commentators soon after the enactment of the statute, “[w]hile § 203 should not directly affect such voting arrangements, certain aspects of those arrangements may present interesting interpretive challenges under § 203 .... Does § 212(a) apply to § 203?”110 The authors, like the Delaware Legislature, apparently left that unanswered question for the Delaware courts to decide.

Irrespective of the final answer to the question of what is the proper interpretation of “85% of the voting shares” in § 203(a)(2), there is no dispute that this is a close question of Delaware law where strong arguments have been put forward by both sides. In particular, the strength of the § 212(a) related definition seems to be belied by the policy rationales and the legislative intent behind the statute. Moreover, the language of the statute itself simply offers no definitive answers.

Further, as will be discussed in more depth in Part IV, B, immediately below, the Court has not been convinced that this defense is legally ripe. Rather, a decision on WorldCom’s qualification for the 85% shareholder exemption would be purely advisory at this point in time.

Given the difficulty and complexity of this legal issue, there is no question that the § 203 waiver had redundant value to WorldCom. WorldCom, as well as In-termedia and Digex, were all advised by able legal counsel regarding the applicability of § 203 and these attorneys disagreed on the proper interpretation. Perhaps more importantly, based on this disagreement, as well as the recognition of each lawyer in this matter who advised any of the parties on the applicability of § 203, there was no way to definitively know at the time of the waiver vote whether WorldCom actually would qualify for the 85% exception. This alone is enough for this Court to conclude that the waiver had value and granted some degree of bargaining leverage to Digex. The directors of the Digex board, regardless of the ultimate applicability of § 203 to WorldCom after the completion of this merger, had a fiduciary obligation that fully applied to them during the vote to grant WorldCom a waiver of the prohibitions contained in § 203.

B. Is This Claim Ripe for Adjudication?

The defendants next argue that until WorldCom actually proposes a “business combination” within three years after the closing of the merger, there will be no threatened injury and no claim to analyze. This argument mischaracterizes the plaintiffs claim. In reference to the discussion immediately above, the defendants make a strong case that, in fact, their initial defense regarding the applicability of § 203 is not ripe for analysis at this point in time. That is, even if the Court could come to a conclusion regarding WorldCom’s qualification for the 85% exemption, a decision on that argument presented by the defendants would be purely advisory. The plaintiffs do not challenge any conduct by WorldCom that is governed by § 203 though. Rather, the plaintiffs have asserted a fiduciary duty claim, not a statutory *1206claim, against the interested directors of Digex. For the reasons stated below, I find that this claim is ripe and not hypothetical.

In determining whether a given claim is indeed ripe,

a practical evaluation of the legitimate interest of the plaintiff in a prompt resolution of the question presented and the hardship that further delay may threaten is a major concern. Other necessary considerations include the prospect of future factual development that might affect the determination to be made; the need to conserve scarce resources; and a due respect for identifiable policies of the law touching upon the subject matter of the dispute.111

Here, the plaintiffs’ claim concerns the vote to waive the protections offered by § 203, a vote that has already occurred. All the facts relevant to this vote occurred in the past and left the full factual record in its wake.

Regardless of how § 203 will apply to WorldCom in the future, there is no dispute that the waiver was a negotiated term, referenced in the merger agreement itself, and had value to all parties concerned in the transaction. A resolution of this matter is of the utmost importance to all of the parties as the merger moves toward receiving the approval of Interme-dia’s shareholders and the closing presumably soon thereafter. The Court also notes that corporate fiduciaries must be given clear notice of what conduct is and is not allowed.112 This claim is clearly ripe and not simply hypothetical.

C. Was the § 203 Waiver Entirely Fair to the Digex Shareholders?

On its face, § 203 does not bar interested directors from participating in a vote to approve a transaction in which an entity becomes an interested stockholder.113 Nevertheless, directors must at all times abide by their fiduciary duties owed to the shareholders of the corporation.114 When the directors of a Delaware corporation appear on both sides of a transaction, the presumption in favor of the business judgment rule is rebutted and the directors are required to demonstrate their “utmost good faith and the most scrupulous inherent fairness of the bargain.”115

Where a director holds dual directorships in the parent-subsidiary context, there is no dilution of this obligation to demonstrate the entire fairness of specific board actions.116 Thus,

... individuals who act in a dual capacity as directors of two corporations, one of whom is parent and the other subsidiary, owe the same duty of good management to both corporations, and in the absence of an independent negotiating structure, or the directors’ total abstention from any participation in the matter, this duty is to be exercised in light of what is best for both companies.117

*1207Here, the § 203 waiver decision must be analyzed under the rubric of entire fairness as all four votes to waive the protections were made by directors who not only sat on both the boards of Intermedia and Digex, but also possessed substantial direct, personal financial interests in the proposed transaction.118 The waiver by the Digex board therefore demands careful scrutiny, as the defendants bear the burden of establishing entire fairness.119

As often summarized in our caselaw, the concept of entire fairness has two basic components, fair dealing and fair price.120 Fair dealing concerns how the board action was initiated, structured, negotiated, and timed. Fair dealing asks whether all of the directors were kept fully informed not only at the moment in time of the vote, but also during the relevant events leading up to the vote while negotiations were presumably occurring. Fair dealing also asks how, and for what reasons, the approvals of the various directors themselves were obtained.121 Fair price relates to the economic and financial considerations of the proposed decision, including any relevant factors that affect the intrinsic or inherent value of a company’s stock.122 The entire fairness test is not simply a bifurcated analysis of these two components, fair dealing and fair price.123 The Court shall examine these two aspects as well as any other relevant considerations in analyzing the entire fairness of the waiver as a whole.

1. Fair Dealing

In attempting to satisfy their burden, the defendants point to several factors to illustrate that the process leading up to the § 203 waiver vote was characterized by fair dealing. The defendants contend that there was complete candor between the interested directors and the independent Digex directors. The defendants point out that the Special Committee, along with its own lawyers and bankers, had participated in the Exodus and Global Crossing negotiations, had been immediately briefed on all developments in the Intermedia-World-Com negotiations, and had been given access to WorldCom prior to the Digex board meeting through phone calls with Ebbers and Grothe. The defendants additionally claim that every member of the Digex board, including the independent directors, “had all the information in In-termedia’s possession regarding each proposed transaction.”124

As a starting point, the Court will briefly describe in chronological order the events in question from the perspective of the independent Digex directors. At midday August 30, Digex seemed headed into a three-way merger with Global Crossing and Intermedia. At 11:00 p.m. on August 30, Ruberg called each of the Special Committee members to inform them that WorldCom had offered $120 a share for Digex. At this point, Global Crossing was continuing to work towards a September 1 signing in its deal with Intermedia and Digex. In either case, Digex stood in an enviable position. Perhaps more importantly though, considering how things turned out, there was no reason to discuss the applicability of § 203 at this point in time with respect to either transaction.125

*1208At around 7:00 p.m. on August 31, the Special Committee was informed that (i) Intermedia, not Digex, would be sold to WorldCom, and (ii) the Global Crossing transaction was effectively dead as that company would not raise its bid in competition with WorldCom and that Intermedia preferred the WorldCom transaction. The independent directors immediately suspected manipulation of the WorldCom offer by Intermedia and began to search for ways to drive the-deal back to including a bid for some or all of Digex’s outstanding public shares. Overnight, the independent directors were informed of negotiations between WorldCom and Intermedia over the waiver of § 203.

On the morning of September 1, the independent directors at last were allowed direct contact with WorldCom, their prospective controlling shareholder who had requested'the § 203 waiver. These phone calls occurred, however, not only after the price and structure of the WorldCom-In-termedia deal had been agreed upon, but also after the terms of the § 203 waiver had been settled between the interested directors and WorldCom during the preceding night. Further symbolizing the extent of the control that the interested directors maintained over all negotiations with WorldCom concerning the § 203 waiver issue, these phone calls respectively between Ebbers of WorldCom and Jalkut and Reich of Digex and then Grothe of WorldCom and Shull and Adams of Digex came only after Clark, Digex’s legal counsel, requested them. Also on the morning of September 1, the independent directors received both the advice of legal counsel on the possible applicability of § 203 and the opinion of their financial advisors regarding the benefits of each prospective deal. In the very short time they had before being called into the Intermedia board meeting to hold the Digex board meeting, the independent directors considered their options.

At the Digex board meeting, the Special Committee’s legal counsel informed the entire board of his opinion that the interested directors should not participate in the § 203 waiver vote. This advice was rebutted by counsel for the interested directors, and ultimately ignored. Later, without any debate whatsoever on the merits of the waiver or the applicability of the statute, the full Digex board voted to grant the waiver by a divided vote of four interested directors for and three independent directors against. In total, there simply was no meaningful participation by any of the independent Digex directors in the negotiations leading to the § 203 waiver, the terms of that waiver, or the vote itself.

Several other conclusions immediately emerge from the facts of this matter when meshed together with the defendants contentions and justifications. First, regardless of whether the Special Committee actually had all the information possessed by Intermedia in its negotiations with World-Com over the § 203 issue, the four interested directors controlled the flow of all information from WorldCom to the independent Digex directors during the hectic negotiating period from the evening of August 30 to the morning of September 1.

Second, given that WorldCom first sought the waiver of § 203 during the negotiations that took place solely between WorldCom and Intermedia during the night of August 31-September 1 and that the vote at the Digex board meeting occurred at most roughly twelve hours later, all of the Digex directors learned about WorldCom’s demand for the § 203 waiver only hours before the vote granting that waiver. To make matters worse, because the interested directors were also directors of Intermedia, they could not even devote the little time they had before the board vote to considering their options as Digex directors and negotiating solely in the in*1209terests of Digex. Rather, they had to spend much, if not most, of their time considering and negotiating the terms of the merger from the perspective of In-termedia, the actual participant in the deal with WorldCom.

Third, in regards to the waiver of § 203, there is almost no evidence of any direct negotiations between any of the parties over this provision in the deal. From the little that seems to have occurred, these negotiations took place during the night of August 31-September 1 between the interested directors, Sutcliffe, and the World-Com representatives. The waiver appears to have been agreed to, in part, in exchange for an amendment to the Digex certificate of incorporation that would require the approval of independent directors of any material transaction between WorldCom and Digex after the merger.. The record is silent as to exploration by the interested parties of any other options available to Digex. That is, as it appears that WorldCom insisted on the waiver, did any of the interested directors attempt to withhold this request in order to see what WorldCom might offer to Digex in return? Or, did the directors request concessions in addition to the certificate amendment that might benefit Digex or Intermedia? Or, as the plaintiffs assert, did the interested directors simply agree to this condition in the interests of getting the deal between Intermedia and WorldCom done and only subsequently add the provision to the merger agreement concerning the certificate amendment to create the appearance of consideration for the § 203 waiver? These facts remain unclear. It is crystal clear though that the independent directors, at the time of the negotiation over the § 203 waiver, had absolutely no role whatsoever.

This lack of any involvement by the Special Committee is particularly remarkable because Intermedia continues to assert that the Special Committee was created by Digex, specifically by the interested directors, “to evaluate the fairness to the Digex public shareholders of any transaction which involved the sale of [Interme-dia’s] Digex stock and to participate in any such transaction.”126 As the discussion of the corporate opportunity claim above describes, the Special Committee had no legal authority to directly block Interme-dia’s decision to sell its shares in Digex. The § 203 waiver negotiation, however, is exactly where the Special Committee should have been most relevant in this whole process. But this is precisely the point at which the Special Committee is missing in action — not through any failure of its own, but as a result of the control by the conflicted directors over the process. Weinberger’s, suggestion of either an “independent negotiating structure” or “total abstention” is not to be taken lightly.127 The mere involvement in, or even control over, the waiver negotiations by the interested directors does not, by itself, end this inquiry into the entire fairness of the decision to grant the waiver. But there is a strong role under Delaware law for meaningful independent director committees.128 Although this Special Committee may have been created with precisely this role in mind, it certainly was not permitted to act in keeping with this role.

The defendants also argue that the vote itself was the result of fair dealing. The interested directors recognized that the time frame within which the Digex directors needed to make a decision on the § 203 waiver was quite short. They claim that this deadline was dictated by the deadline placed by Global Crossing on its *1210proposal. This assertion of a compressed timetable is a key component in the defendants’ argument that the negotiations simply did not allow for a more thorough analysis of the issues at hand, including the § 203 waiver. At the base of this contention, defendants maintain that the WorldCom deal had to be signed by the end of the day on September 1 because Global Crossing had imposed a deadline on its proposed deal of 5:00 p.m., September 1. I remain somewhat perplexed, however, as to how the Global Crossing deadline could have any affect from the perspective of a Digex director once it appeared that Intermedia preferred to do a deal with WorldCom.

The defendants actually state that, at the time of the § 203 waiver vote, each Digex director knew that:

(1) Intermedia could not, and would not, approve a sale to Exodus ... (2) the WorldCom offer was more beneficial to Intermedia than the Global Crossing proposal, and therefore Intermedia would not approve the latter; (3) Global Crossing had declined to make a further bid against WorldCom and had placed a 5:00 p.m. deadline on its existing offer; and, (4) WorldCom had expressed its intention to keep Digex public and refused all requests that it tender for the Digex public shares.129

Since Intermedia would not allow a sale to either Exodus or Global Crossing given the offer made by WorldCom, the 5:00 p.m. Global Crossing deadline should have been of little or no consequence in comparison to the decision to waive the anti-takeover protections afforded by § 203 and any efforts to use its leverage to explore whether WorldCom would consider a partial or full tender offer for the outstanding Digex shares. Clearly, Interme-dia wanted to complete a deal with World-Com as soon as possible. As the facts illustrate, Intermedia placed time pressure on WorldCom throughout the negotiations, not the other way around, due to the presence of Global Crossing’s offer. I see no reason why such time pressure was placed on Digex to agree to the waiver.

By the time of the Digex meeting when the vote to waive § 203 was undertaken, the Digex board’s role had been vastly simplified over the preceding two days. On August 30, the Digex board was confronted with the sale of the corporation and all the attendant analysis that goes along with that process. On September 1, however, the only issue of any consequence before the Digex board was the rather discrete issue of whether to waive the protections afforded by § 203. Independent director Jalkut proposed that a decision on the WorldCom transaction be delayed three days to allow CSFB time to solicit best and final offers from Exodus, Global Crossing, and WorldCom. That proposal was defeated by a vote of four to three. The Digex board then discussed the § 203 waiver, but the discussion was limited to who should be allowed to vote on the waiver, nothing more. Except for the disagreement of counsel on this participation issue, described above, there was absolutely no discussion whatsoever of the effect, purpose, or applicability of § 203 to World-Com. The vote proceeded (four to three) and the waiver was granted.

The defendants suggest that the independent directors had decided before the meeting to vote against the waiver and therefore any discussion on the merits of the waiver would have been pointless. All I can say is I certainly hope that the interested directors thought through and decided their votes before the Digex board meeting. Based on the record of what was discussed at the meeting, or rather the complete lack thereof, if any of the directors based their vote on anything that *1211occurred at the board meeting, I doubt that the waiver vote could even pass the most deferential business judgment review.130 Clearly, every individual in that room had come to a conclusion concerning their vote based on reasons wholly apart from anything said during the meeting. Further, considering that the four interested directors carried the vote and were faced with a clear conflict of interest, the effect of which the two present legal counsel had just discussed and disagreed over, it is very difficult to understand why the directors themselves did not engage in any substantive discussion of the waiver during the Digex board meeting given their particular circumstances.

In sum, as to whether the waiver can bo described as the result of fair dealing, the independent directors, even if we assume that they were kept fully up to date of all material information regarding the merger negotiations, were kept powerless to affect the waiver decision in any meaningful manner. The interested directors not only participated in the negotiations, they controlled them. They also denied an independent negotiating structure involving the independent directors from participating in the WorldCom negotiations over the § 203 waiver. The powerlessness of the independent directors extended to their ability to vote down the proposal to waive § 203’s applicability to WorldCom. Further, there appears to have been little substantive discussion or negotiation of the waiver by the interested directors with WorldCom and no discussion of the waiver with the independent directors. All of these factors are framed by the intense time pressure placed on Digex by its corporate parent to get the WorldCom deal done as quickly as possible regardless of any consideration of the applicability or effect of the § 203 waiver on Digex after the merger, or the bargaining leverage that the Digex board might have at that moment against not only WorldCom, but Intermedia as well. I therefore conclude that it is not reasonably likely that defendants will be able to satisfy the fair dealing prong of the entire fairness analysis.

2. Fair Price

Defendants assert that the “price” of the waiver was fair. They point out that as a result of the WorldCom-Intermedia merger, Digex (i) would gain WorldCom’s commitment to fully finance Digex’s business plan and its contemplated capital expansion even before the closing; (ii) was freed of Intermedia’s oppressive debt covenant restrictions; and (iii) would receive the benefit of WorldCom’s strong financing capacity, sales force, data centers, and strong internet presence. Moreover, as noted above, WorldCom agreed to an amendment of Digex’s certificate of incorporation whereby any future material transaction between WorldCom and Digex must be approved by independent Digex directors. The defendants further contend that at the time of the vote, each Digex director knew that there were certain constraints on Digex’s ability to negotiate freely with any of its potential suitors, including WorldCom, because of Interme-dia’s desire to do a deal with WorldCom and WorldCom’s refusal to negotiate any further over Digex.

Each interested director has offered individual reasons why each of them felt justified in his vote to waive the protections afforded by § 203. Campbell speaks at length in his deposition of his belief that the WorldCom-Intermedia merger would be good for the Digex minority shareholders.131 He also explained that he voted for *1212the merger because, “we had an opportunity before us ... which was, in my opinion, very good for all parties and that we ought to take it before [letting] this thing go any further and deteriorate so that all parties would be in some way further harmed.”132 In response to a question asking what Digex received in return for the waiver of § 203, Campbell responded that, “what they received was a new partner with all of the advantages thereof. They received the opportunity to amalgamate their assets in a reasonable period of time to create more shareholder value. And they did that within the constraint that was very similar to the § 203 constraint, where the disinterested shareholders of any future World-Com/Digex amalgamation would need to opine that it was fair in all respects.”133

In explaining why he voted in favor of the waiver, Ruberg stated, “if the board of Intermedia was going to accept the World-Com deal, looking at that as a Digex board member, I wanted to grant the maximum business flexibility to the acquiring parent to make Digex as successful as possible.” 134 Ruberg also states that he did not discuss these thought processes with anyone and, though he did not know all of the legal ramifications of § 203, he knew that “it’s a hell of a lot easier to take something and get a yes or no from independent board members than it is to get a yes or no from two-thirds of the minority stockholders.” 135

Baker states that he was “very comfortable” with the WorldCom transaction “from the standpoint of a Digex director.”136 In his deposition, Baker discusses the benefits to Digex of the proposed merger. This discussion, similar to the comments made by Campbell in his deposition, focuses on the benefit Digex will receive from having such a financially strong parent in WorldCom.137

Finally, Manning states that he believed, as a Digex director, that the merger was good for Digex in the long run and in the short run.138 Therefore, he chose to vote in favor of the waiver. He also notes that he was aware of his conflict of interest but took account of this conflict and voted according to the interests of Digex alone.139 He laid out at his deposition several factors on which he based his conclusion that the merger was good for Digex.140 These factors include removing the crippling burden of Intermedia’s debt from Digex and supplying Digex with substantial web hosting facilities. In addition, Manning states that he believed that the addition of the independent director approval provision to the Digex certificate of incorporation was an adequate protection for the Digex minority shareholders.141

Before I turn to the specifics of this fan-price analysis, it is important to emphasize exactly what was being negotiated and voted upon before the Digex board. The discussion needs to focus on the substance *1213of the vote, namely, the waiver of § 203 and all the negotiations and contemplations related thereto. Although the attractiveness of WorldCom as a prospective corporate parent in place of Intermedia obviously enters into the analysis, the Digex board was not expressly voting on whether to accept WorldCom’s merger proposal. As defendants themselves argue, Digex had little practical control over who would become its new parent. That decision ultimately lay with Intermedia as the controlling shareholder. Rather, the decision put before the Digex board was simply whether or not to grant WorldCom the § 203 waiver. That is, was whatever Digex was being offered for this waiver worth the granting of the waiver and could Digex negotiate for more?

The trade put before the Digex board was simple: waive § 203 and give up the protections granted by the terms of the statute in exchange for a stronger corporate parent who had much to offer, the certificate amendment, and the end of the burdensome relationship with Intermedia. Was this the best deal available? Because of the manner in which the negotiating process was handled, it is impossible to say. Perhaps Digex could have extracted something more from WorldCom, perhaps not. It is clear, however, that Digex had little to lose and should have felt no immediate time pressure to make a decision that would continue to affect the public shareholders of Digex for up to the three years following the merger.

The plaintiffs do not dispute that World-Com is a good fit in many respects, vastly superior to Intermedia in many ways, or that Digex strongly desired to be rid of Intermedia's restrictive presence. But given Intermedia’s admittedly poor financial condition, the independent Digex directors believed that, inevitably, Interme-dia would have to sell part or all of its stake in Digex if Intermedia was to remain solvent. Time, therefore, was strongly on the side of Digex. Further, the certificate amendment is of some value to the Digex minority, but clearly it is not worth the same as the § 203 waiver, or WorldCom would not have insisted on the waiver in the first place.

As to the specific justifications offered by the interested directors, there is thorough discussion throughout of the reasons why WorldCom was perceived as such a strong choice to become the new controlling shareholder of Digex. But there are few substantive reasons given for their decision to waive § 203 at the point in time that the vote occurred. Campbell testified that he believed WorldCom might pull the deal if Intermedia deferred its decision.142 It is unclear what basis Campbell had for this belief beyond mere intuition. World-Com itself stated at oral argument that it had not directly confronted this question and therefore had no answer. Ruberg argued that the waiver was actually in Digex’s best interests in order to grant WorldCom as much unfettered flexibility as possible.143 If this is the case, one must question why Digex would ever possibly need to rely on § 203 to prevent World-Com from entering into certain transactions with it. Baker’s reasons for supporting the waiver seem to be similar to Campbell’s. Manning, in addition to several of the arguments put forward by his co-directors, also emphasizes the certificate amendment as an adequate protection for the Digex minority shareholders, a group whose interests supposedly were best represented by the Special Committee.144

*1214Additionally, it is interesting that several of the interested Intermedia directors referenced the concepts of long-term and short-term shareholder value in their deposition testimony.145 Beyond examining these views given the recent history of the Digex stock price since the announcement of the WorldCom-Intermedia merger (and recognizing that hindsight is 20/20), I note that in the present merger and acquisition climate, these same individuals, as directors of Intermedia, were quite definitive about their overriding concern for short term shareholder value. Although the Court understands the reasons behind this point of view,146 it is at least ironic that a similar set of considerations did not animate these same directors when, as Digex directors, their focus suddenly became long-term shareholder value.

In concluding this analysis of entire fairness, it appears that the only entity that really stood to lose should the Digex board decide to further analyze § 203 and vote to at least delay the grant of the waiver by a day or two was Intermedia, not Digex. The behavior of the interested directors in controlling both the negotiations and vote over the § 203 waiver surely demonstrates, in a compelling fashion, that the waiver really did present Digex with bargaining leverage against Intermedia and WorldCom. This leverage simply was not used — could not be used — because of the decision of the interested directors. In the unique circumstances here, this conduct by directors acting with a clear conflict of interest is difficult to justify and would not seem appropriate. I conclude preliminarily that the defendants are not reasonably likely to meet their burden as to the entire fairness of the Digex board’s decision to waive Digex’s § 203 protections and, therefore, that plaintiffs have demonstrated a reasonable probability of success on the merits of their § 203 claim.

V. THREAT OF IRREPARABLE HARM AND BALANCING OF THE POTENTIAL HARM

The plaintiffs have established a likelihood of success on the merits of their claim that the defendants breached their fiduciary duties in waiving the protections afforded by § 203. Now I must consider whether the plaintiffs will suffer irreparable harm if no injunction is ordered as to that claim.147 I conclude that the plaintiffs have not adequately established an immediate threat of irreparable harm as to the § 203 waiver decision and, for that reason, I must deny their request for preliminary injunctive relief.

As noted at the outset of this Opinion, this case has presented the Court with an unusual request for injunctive relief on the § 203 waiver decision. The request for injunctive relief that would have followed had the plaintiffs convinced this Court of the likelihood of success on the corporate opportunity claim presents the more typical situation where preliminary injunctive relief may be appropriate. That is, the plaintiffs asked this Court to issue an injunction to prevent the closing of the In-termedia-WorldCom merger, an event that has not yet occurred, in order to prevent the clear monetary-based irreparable harm that otherwise would have be*1215fallen the minority shareholders of Digex had the merger been allowed to close without their opportunity to sell their shares of Digex at a premium. That is a paradigmatic example of a threatened harm for which an injunction is uniquely tailored— an impending transaction threatening a party with harm in the future which a Court may prevent pending a full hearing, via injunctive relief.

In stark contrast, the § 203 waiver decision does not present that typical injunction situation. Here, the plaintiffs have essentially asked the Court, via an injunction, to invalidate the September 1, 2000, vote by the Digex board to waive the applicability of § 203. This unusual procedural posture — where a party seeks an injunction long after the action threatening harm has been taken — presents two problems. First, the relief the plaintiffs request is final; it is all the relief to which they would be entitled following a full trial on the merits. It is an extraordinarily rare event for a party to obtain the equivalent of final relief at a provisional stage of the proceedings.148

The second problem is related to the first, and even more troubling. Unlike the plaintiffs’ corporate opportunity claim, the offending act the plaintiffs would like for this Court to preliminarily enjoin under the § 203 claim has already occurred. That is, the Digex board has already voted to waive § 203. Given that fact, an injunction issued by this Court would involve a retrospective, not a prospective, form of relief. In other words, because the wrongful act has already occurred, no prospective injunctive order can possibly be an effective remedy. In that sense, the plaintiffs’ request for a preliminary injunction against the Digex board’s § 203 decision is both temporally impossible and jurisdic-tionally inappropriate.149

Finally, not only would an injunction be improper here where the wrongful conduct has already occurred, but an injunction is, in my judgment, unnecessary to fully protect the Digex minority shareholders. As the above analysis demonstrates, there is, to put it mildly, extreme uncertainty over whether § 203 will apply to WorldCom if it acquires Intermedia according to the merger agreement. That extreme uncertainty is no different today than it was in late August when the WorldCom-Interme-diá transaction was being negotiated. What is now much more certain, however, is that the § 203 waiver decision most likely did not have the “belt and suspenders” effect that it was intended to have. In this sense, the uncertainty that WorldCom-In-termedia attempted to contract around, via the § 203 waiver requirement, is an uncertainty that is clearly extant today, just as it was in late August, and provides the plaintiffs with all the relief to which they are entitled. Of course, given the analysis of the defendants’ conduct in securing the *1216§ 203 waiver, under the entire fairness analysis undertaken by this Court in Part IV,C. above, there are additional uncertainties with which defendants must now be concerned as well.

VI. CONCLUSION

For all of the reasons assigned in this Opinion, I deny injunctive relief as to the corporate opportunity claim because the plaintiffs fail to demonstrate a likelihood of success on the merits of that claim. Although the plaintiffs do demonstrate a likelihood of success on the merits of their § 203 claim, they have not shown a threat of imminent irreparable harm. Thus, they are not entitled to injunctive relief on this claim.

If this case goes to trial, the defendants have the burden of establishing the entire fairness of the § 203 waiver. This will be no small burden, based on the evidence I have reviewed in the last week. As I have noted in this Opinion, the current record strongly suggests that the § 203 waiver decision was not entirely fair to the Digex minority. In the wake of this Opinion, the defendants’ choice becomes whether they will proceed with a WorldCom-Intermedia merger knowing that this Court seriously questions the integrity of the § 203 waiver decision and knowing that certain of the defendant fiduciaries stand accused of faithless acts that under the stringent standard of the entire fairness test, could well give rise to a range of equitable remedies, including monetary remedies.

An Order has been entered in accordance with this decision.