The Delaware Court of Chancery has approved a class action settlement of claims against Aytu BioPharma Inc. and certain of its current and former members of the company’s board of directors arising from the approval of two related-party transactions between Aytu and its then-largest shareholder, the accounting for goodwill from those transactions, and subsequent stock sales. The settlement provides for the addition of new, independent directors, one of whom will be an audit committee financial expert, and the board also agreed to implement important corporate governance enhancements, including establishment by the Audit Committee of guidelines, reflective of best practices, for its review and approval of related-party transactions; enhanced review of goodwill accounting; and more rigorous and effective reporting and oversight by the board with respect to Aytu’s insider trading policy. In addition, the directors have agreed to maintain a position of neutrality with respect to the claims asserted against Armistice Capital LLC, and litigation of those claims will continue following the settlement.
Morris Kandinov LLP represented the lead plaintiff.
The case is Witmer v. Armistice Capital LLC, et al., No. 2022-0807-MTZ (Del. Ch.).
Contact Leo Kandinov for additional information.
