News & Analysis as of

Business Judgment Rule

Allen Matkins

For Delaware, The Garden Party May Soon Be Ending Despite SB21

Allen Matkins on

In speaking with a reporter earlier this year, I observed that this proxy season will tell whether DExit has legs.  While not exactly, a flood, several well-known and lesser-known corporations have recently filed proxy...more

Farrell Fritz, P.C.

It’s Time to CO-OPerate: Commercial Division Refuses to Overturn Election of Board of Directors

Farrell Fritz, P.C. on

Business Corporation Law § 619 (“BCL”) gives shareholders an “exclusive method . . . to test the validity of an election of a director.” Specifically, BCL § 619 states...more

Davis Wright Tremaine LLP

Delaware Enacts Sweeping Changes to the Delaware General Corporation Law

The Delaware Legislature passed, and Delaware Gov. Matt Meyer signed on March 25, 2025, the landmark Senate Bill 21. Senate Bill 21 amends the Delaware General Corporation Law (the "DGCL") in significant ways, with broad...more

Jones Day

Will the 'Business Judgment Rule' Be Bigger (and Better) in Texas?

Jones Day on

On February 27, 2025, Senator Bryan Hughes (R-Tyler) filed Senate Bill 29 (S.B. 29), proposing several corporate reforms designed to cement Texas as the premier business-friendly jurisdiction in the nation. If enacted, S.B....more

Frost Brown Todd

Legislature Takes Steps to Ensure Texas Remains the Most Business-Friendly State in the Union

Frost Brown Todd on

On February 27, 2025, Senator Bryan Hughes (R-Tyler) filed Senate Bill 29 (S.B. 29), proposing several corporate reforms designed to ensure that Texas remains the premier business-friendly jurisdiction in the nation. If...more

Cadwalader, Wickersham & Taft LLP

In re Oracle Corporation Derivative Litigation: Delaware Supreme Court Affirms Chancery Court Decision Not to Impose Fiduciary...

On January 21, 2025, the Delaware Supreme Court affirmed the Court of Chancery’s decision in In re Oracle Corp. Derivative Lit., finding that a less than 50% stockholder does not owe fiduciary duties absent evidence of either...more

Farrell Fritz, P.C.

Affiliated Entities, Conflicting Duties, and the Business Judgment Rule

Farrell Fritz, P.C. on

I am increasingly encountering businesses that straddle across several different entities, especially LLCs. The popularity of LLCs, their relatively low cost of organization, and business owners’ apparent desire to...more

Holland & Knight LLP

Delaware Supreme Court: Permissive Business Judgment Rule Applies to Corporate Conversions

Holland & Knight LLP on

everal 2024 decisions by the Delaware Court of Chancery led some prominent corporate leaders to express frustration over perceived increased liability standards for corporate officers and directors, even publicly advising new...more

Sheppard Mullin Richter & Hampton LLP

Delaware Supreme Court Holds Business Judgment Governs Decision to Reincorporate Outside of Delaware For Purpose of Reducing...

In Maffei v. Palkon, No. 125, 2024, 2025 Del. LEXIS 51 (Del. Feb. 4, 2025) (Valihura, J.), the Delaware Supreme Court held that a corporation’s decision to reincorporate in another state purportedly to reduce exposure to...more

A&O Shearman

Delaware Supreme Court Holds Business Judgment Rule Applies To Controlled Corporation’s Change Of Corporate Domicile From Delaware...

A&O Shearman on

On February 4, 2025, the Delaware Supreme Court, on interlocutory appeal, reversed the decision of the Delaware Court of Chancery to deny defendants’ motion to dismiss breach of fiduciary duty claims against directors and a...more

Cooley LLP

Delaware Supreme Court Reverses Chancery Court, Holds Business Judgment Review Applicable to Tripadvisor’s Decision to...

Cooley LLP on

Delaware corporations contemplating conversion to another state should take note of the Delaware Supreme Court’s recent decision in Maffei, et al. v. Palkon, et al., in which the court ruled that Tripadvisor’s decision to...more

Perkins Coie

When Is a Minority Stockholder a Controller? The Delaware Supreme Court Reaffirms the Ground Rules in In Re Oracle Derivative...

Perkins Coie on

Controlling stockholders owe fiduciary duties to other stockholders that minority stockholders do not. A holder of over 50% of a corporation’s voting power is clearly a controlling stockholder. As a consequence, transactions...more

Allen Matkins

Is Pareto Optimality The Answer For Controlling Stockholder Transactions?

Allen Matkins on

Yesterday's post concerned the Delaware Supreme Court's decision that the business judgment rule applied to TripAdvisor's decision to reincorporate in Nevada.  Maffei v. Palkon, 2025 WL 384054 (Del. Feb. 4, 2025).  This...more

Holland & Knight LLP

The Nice List: Rounding Up Some Notable SCOTUS and Delaware Decisions in 2024

Holland & Knight LLP on

2024 brought several important decisions of the U.S. Supreme Court (SCOTUS) and the courts of the state of Delaware concerning how corporations, their boards of directors and officers interact with investors, regulators and...more

Patton Sullivan Brodehl LLP

The “Business Judgment Rule” Applies in LLCs Too

Corporate directors have long relied on the “business judgment rule,” under which their decisions are presumed to have been made “on an informed basis, in good faith, and in the honest belief that the action taken was in the...more

Allen Matkins

Does Personal Animosity Vitiate The Business Judgment Rule?

Allen Matkins on

Under the business judgment rule, "a director is not liable for a mistaken business judgment which is made in good faith and in what he or she believes to be in the best interest of the corporation, where no conflict of...more

Jenner & Block

Delaware Supreme Court Clarifies MFW Framework

Jenner & Block on

On April 4, 2024, the Delaware Supreme Court held in In re Match Group Inc., Derivative Litigation that the entire fairness standard of review applies to all controlling stockholder transactions in which a controller receives...more

Hogan Lovells

Delaware Supreme Court clarifies entire fairness standard for controlling stockholder transactions

Hogan Lovells on

In In re Match Group Deriv. Litig., the Delaware Supreme Court affirmed in part and reversed in part the lower court’s decision on the appropriate standard of review and the application of Kahn v. M & F Worldwide Corp., 88...more

Skadden, Arps, Slate, Meagher & Flom LLP

Insights: The Delaware Edition - June 2024

In this issue, we discuss Delaware court developments, including the first-ever dismissal of a SPAC disclosure complaint, as well as rulings pertaining to financial advisor conflict and disclosure law, state laws involving...more

Skadden, Arps, Slate, Meagher & Flom LLP

Under Control: Recent Delaware Decisions on Controller Transactions, Standards of Review and Disclosure Obligations

The first half of 2024 has been a watershed moment for the development of controller law in the Delaware courts. Among the highlights, the Delaware Supreme Court reexamined and confirmed that transactions involving a...more

Cadwalader, Wickersham & Taft LLP

MFW Framework Inapplicable Where Conflicts Are Not Adequately Disclosed to Stockholders

Following other recent decisions addressing the applicability and scope of Kahn v. M&F Worldwide Corp. (“MFW”), including In re Match Group Inc., Derivative Litigation and Tornetta v. Musk, on May 1, 2024, the Delaware...more

Cadwalader, Wickersham & Taft LLP

Delaware Supreme Court Expands MFW Applicability in Conflicted Controller Transactions

On April 4, 2024, the Delaware Supreme Court issued a much-anticipated decision, In re Match Group Derivative Litigation (“In re Match Group”), extending the MFW doctrine more broadly to all conflicted controller...more

Mayer Brown

In re Match Group, Inc.: Delaware Supreme Court Clarifies Standard of Review for Controlling Stockholder Transactions

Mayer Brown on

In a recent decision, the Delaware Supreme Court clarified the proper standard to apply to a non-freeze-out merger transaction involving a controlling stockholder. Litigators who practice in the Delaware Court of Chancery are...more

Goodwin

Delaware Supreme Court Holds That Boards Must Satisfy the MFW Framework in Controller Transactions to Obtain Business Judgment...

Goodwin on

In 2014, the Delaware Supreme Court held in Kahn v. M&F Worldwide Corp. (“MFW”) that a court will apply the entire fairness standard of review to freeze-out merger transactions between a controlled corporation and its...more

Cooley LLP

Delaware Supreme Court applies MFW framework to other conflicted transactions

Cooley LLP on

In In re Match Group, Inc. Derivative Litigation, the Delaware Supreme Court answered some important questions about the standard of review applicable to conflicted transactions under Delaware law. The first question relates...more

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