a. The board members of RSL Plc and RSL Ltd overlapped. RSL Plc claims that because of this overlap, both boards were aware of what was going on with RSL Plc. Shouldn't that makes a difference when determining whether the board of RSL Plc was making an informed decision?
b. Does the fact that the board did not formally meet to discuss the loan or the draw down mean that the members acted improperly?
Ronald S. Lauder founded RSL, Ltd., a multinational telecommunications corporation that provided voice, mobile, and data/internet services. RSL Plc was a subsidiary of RSL Ltd. The subsidiary began issuing $1.4 billion of bonds. A few years later, in July, Lauder provided RSL Plc with a $100 million line of credit. The company's board of directors did not hold a meeting to approve the line of credit, but in August drew down $25 million from the loan. The following March, the company's board held their first meeting in a year. Five days later, RSL Plc filed for bankruptcy.
The issue before the court is whether the members of the board of directors of RSL Plc breached their duty of care to the company when they failed to hold a meeting for a year at a time when the company was in such a precarious financial position.