Author: Dan Stroh, Associate Member, University of Cincinnati Law Review
In recent years, Delaware courts have decided several important cases regarding the appropriate standard of review to apply when minority shareholders challenge actions taken by controlling shareholders.[1] In In re Crimson Exploration, the Delaware Court of Chancery created a clarifying framework for courts to analyze the propriety of shareholder involvement and control in the context of a corporate merger.[2] Merger transactions between large companies occur on a regular basis,[3] making any significant decision in this field very important, because the ability of shareholders to protect their interests is paramount in this area of business. The court’s decision clarified that shareholder “control” will be determined on an ad hoc basis, applying all relevant facts and circumstances, and it provided guidance as to when to apply “entire fairness” scrutiny to a board of directors’ decisions. Because corporate law decisions from Delaware are highly regarded due to the large number of corporations that choose to incorporate within the state,[4] the Court of Chancery’s Crimson decision will likely have significant implications for corporate law across the country.
Continue reading “No One Shareholder Should Have All That Power: When Delaware’s Entire Fairness Standard Applies to Controlling Shareholder Transactions” →