Selling stockholders in a buy-sell agreement typically designate a shareholder representative to act as their agent and attorney-in-fact with respect to all matters relating to the agreement, including acting on their behalf in connection with any claims under the agreement. The shareholder representative structure promotes efficiency in closing the deal and in adjudicating post-closing disputes. In Fortis Advisors v. Allergan W.C. Holding, C.A. No. 2019-0159-MTZ (Del. Ch. May 14, 2020), the counterparty sought to bypass the agreed-upon shareholder representative by moving to treat the selling stockholders as parties for purposes of discovery and trial. Vice Chancellor Morgan T. Zurn denied the motion, holding that the merger agreement’s shareholder representative structure identified the shareholder representative as the real party in interest and did not give the shareholder representative control over the selling stockholders’ discoverable material.

The case arose out of the merger between Allergan and Oculeve. Under the merger agreement, the selling stockholders appointed Fortis Advisors to be the shareholder representative, acting as their “sole, exclusive, true and lawful agent, representative and attorney-in-fact” with respect to any and all matters relating to the merger agreement, including contingent payments. The agreement provided that “all actions, notices, communications and determinations” by or on behalf of the selling stockholders would be made by the shareholder representative. The agreement did not give the shareholder representative access to the individual sellers’ books and records.

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