Business Judgment Rule

News & Analysis as of

Tension Between 'Aronson' Analysis and the Standard of Review

On Monday, just after the arrival of the blizzard of 2016 in Delaware, the Court of Chancery created its own momentous event with the release of its opinion in In re EZCorp Consulting Agreement Derivative Litigation, C.A. No....more

"Delaware Supreme Court Clarifies Earlier Rulings, Chancery Court Stakes Out New Positions"

Delaware courts tackled a number of issues of importance in 2015. The Delaware Supreme Court clarified prior inconsistent case law by reiterating that deference must be given to decisions made by disinterested directors. It...more

"Director Compensation in the Spotlight"

Individuals serving on company boards of directors should carefully examine director compensation programs and decisions involving their own compensation following an April 30, 2015, ruling by the Delaware Court of Chancery....more

Global Private Equity Newsletter - Winter 2016 Edition: Recent Developments in Acquisition Finance

Two recent court decisions may result in a broadening of the range of options available to an equity sponsor in respect of an insolvent portfolio company. The first decision may provide increased flexibility in structuring...more

Shaev v. Adkerson, C.A. No. 10436-VCN (Del. Ch. Oct. 5, 2015) (Noble, V.C.)

In this memorandum opinion, the Court of Chancery granted defendants’ motion to dismiss plaintiff’s claims that in granting one million restricted stock units, defendants, the board of directors of a corporation, violated its...more

Edge of Our Seats: Oral Argument on “Suitable Seats” Cases

The countdown begins to receiving some clarity on the suitable seating rule from the California Supreme Court. On January 5, 2016, the Court heard oral argument in the consolidated matters of Kilby v. CVS Pharmacy, Inc. and...more

Cybersecurity Risks: Directors and Officers Should Stop, Collaborate and Listen

The risks associated with cyber-attacks and data breaches are growing in Canada and internationally and the costs associated with an organization preventing, detecting, responding to and recovering from such an incident can...more

Problems To Avoid When Making A Meiselman Claim And/Or Filing A Derivative Action

The Business Court's Opinion last week in Coleman v. Coleman, 2015 NCBC 110, provides useful guidance on how to properly plead a Meiselman claim, and proper procedure to follow before making a derivative claim. Plaintiff...more

Financial Advisor Conflicts of Interests: Rural/Metro and Other Recent Cases

In a series of recent decisions, Delaware courts have emphasized the potential risks arising when a board’s financial advisor has a conflict of interests. The board of an acquired entity generally will enjoy the...more

The Most Important Principles of Delaware Corporate Law Can’t Be Found In the DGCL

I have often observed that you can read every section of the Delaware General Corporation Law and learn almost nothing about Delaware corporate law.  Here are three of the most fundamental principles of Delaware corporate law...more

The California Political Contribution Case That 19 Law Professors Missed

Earlier this week, I wrote about an amicus curiae brief submitted by 19 law school professors Friedrichs v. Cal. Teachers Ass’n, a case now pending before the United States Supreme Court. In particular, I questioned whether...more

Delaware County Employees Retirement Fund v. Sanchez, No. 702, 2014 (Del. Oct. 2, 2015) (Strine, C.J.)

In this en banc decision, the Delaware Supreme Court reversed the Court of Chancery’s dismissal of derivative claims for failure to plead demand futility adequately. The Court held that a director’s “deep friendship” with an...more

Did 19 Law Professors Get The Business Judgment Rule Wrong?

In yesterday’s post, I wrote about the amicus curiae brief filed by 19 law school professors in Friedrichs v. California Teachers Ass’n, a case now pending before the United States Supreme Court.  Being a California corporate...more

Espinoza v. Zuckerberg, No. 9745-CB (Del. Ch. Oct. 28, 2015) (Bouchard, C.)

In a decision reinforcing the importance of observing corporate formalities, Chancellor Bouchard found that a controlling stockholder cannot ratify a board’s self-dealing with something as informal as an affidavit, a...more

Court of Chancery Applies Business Judgment Standard Under New Supreme Court Precedent

This is an important decision that reverses a prior opinion in the same case. The Court did so because after it issued its prior opinion, the Delaware Supreme Court issued its Corwin decision holding that when a merger is...more

Chancellor Bouchard Rules There Can Be No Ratification Without Works

In reading Chancellor Andre G. Bouchard’s ruling yesterday in Espinoza v. Zuckerberg, 2015 Del. Ch. LEXIS 273 (Del. Ch. 2015), I was reminded of the theological debate among Christians concerning justification by faith.  The...more

Inside M&A - October 2015

Overview of SPACs and Latest Trends - A number of recent successful business combination transactions involving special-purpose acquisition companies (SPACs) led by prominent sponsors have driven a resurgence in the SPAC...more

Insights: The Delaware Edition - October 2015

We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more

"Delaware Supreme Court Reaffirms Important Protections for Corporate Directors"

A trio of opinions from the Delaware Supreme Court, each authored by Chief Justice Leo E. Strine, Jr., has reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored...more

"Dole Ruling Serves as Cautionary Tale for Take-Private Deals"

Earlier this year, in a consolidated breach of fiduciary duty and appraisal action, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a post-trial opinion that includes many important takeaways for...more

Business Judgment Standard for Disinterested-Stockholder Approval

The Delaware Supreme Court in Corwin v. KKR Financial Holdings LLC, No. 629, 2014 (Del., October 2, 2015), issued an important opinion authored by Chief Justice Leo E. Strine Jr. resolving uncertainty about the effect fully...more

Informed Approval of M&A Transactions by Disinterested Stockholders Invokes the Business Judgment Rule

In Corwin v. KKR Financial Holdings LLC, No. 629, 2014 (Del. Oct. 2, 2015), the Delaware Supreme Court sitting en banc unanimously affirmed the Delaware Court of Chancery decision that the voluntary judgment of the fully...more

Business Judgment Rule Applies to Merger Approved by Informed, Disinterested Stockholders

Delaware Supreme Court’s ruling provides additional grounds for dismissal in post-closing stockholder litigation regarding mergers that are not subject to entire fairness review. Introduction - Clarifying a...more

Corwin v. KKR Financial Holdings LLC, No. 629, 2014 (Del. Oct. 2, 2015) (Strine, C.J.)

In this opinion affirming the Court of Chancery’s dismissal of a stockholder challenge to a merger, the Delaware Supreme Court held that the approval of the merger by a fully informed, disinterested stockholder majority...more

CLIENT ALERT: Delaware Supreme Court Finds That Fully Informed Stockholder Vote Approving Merger Invoked Business Judgment Rule

Corwin v. KKR Financial Holdings LLC, No. 629, 2014 (Del. Oct. 2, 2015). In this opinion affirming the Court of Chancery’s dismissal of a purported class action challenging an acquisition transaction, the Delaware...more

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