In December 2018, the directors of Clean Coal Inc., a Delaware Corporation (Coal) adopted an expansion plan aimed at increasing the company’s profitability by establishing a number of new mines over the next five years. Meanwhile, Gas Exploration Company Meanwhile, Gas Exploration Company Inc., a Delaware corporation (Gas) began aggressively purchasing Coal stock on the New York Stock Exchange. (The stock of both companies trades on the Exchange.) On January 15 2019, Gas, announced that it intended to make a tender offer for 51% of Coal’s stock at $50 per share.

The directors of Coal met on January 28, 2019.The directors determined that Gas posed a threat to Coal and to the expansion plan. After a presentation by Coal’s lawyers, the directors decided that Coal should offer to buy back stock from its shareholders at $55 per share. At the same time, the board approved the issuance and sale of an additional 25% of Coal’s stock at the bargain price of $40 per share. On January 31, 2019, Gas announced that it was no longer interested in obtaining control of Coal.  

You represent Jim, who has been a Coal shareholder since 2015. Jim is angry about how the defensive measures adopted by the directors depressed the price of Coal’s stock. What is your advice to Jim? Are actions taken Coal’s Board legal? Please advise Jim about any legal rights or remedies he may pursue.