Delaware Court of Chancery Finds Business Judgment Rule Review Standard Applicable to Controlling Stockholder Merger Conditioned on the Approval of Both an Independent Special Committee and a Majority-of-the-Minority Stockholder Vote | White & Case LLP International Law Firm, Global Law Practice
Delaware Court of Chancery Finds Business Judgment Rule Review Standard Applicable to Controlling Stockholder Merger Conditioned on the Approval of Both an Independent Special Committee and a Majority-of-the-Minority Stockholder Vote

Delaware Court of Chancery Finds Business Judgment Rule Review Standard Applicable to Controlling Stockholder Merger Conditioned on the Approval of Both an Independent Special Committee and a Majority-of-the-Minority Stockholder Vote

A recent decision of the Delaware Court of Chancery, In re MFW Shareholder Litigation, held that the business judgment rule standard of review applies in cases where a going-private transaction has been conditioned on both the approval of a special committee comprised of independent directors with the absolute authority to reject the deal and a fully-informed, uncoerced majority-of-the-minority stockholder vote. In this case, Chancellor Leo E. Strine, Jr. answered the question that practitioners have been asking for years, which is whether a going-private merger with a controlling stockholder can be structured to be subject to the business judgment rule, a lower standard of judicial review.

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