Delaware Supreme Court Reaffirms High Bar for Proving Control by a Minority Stockholder
Key Takeaways Delaware Supreme Court reaffirms that “the test for actual control by a minority stockholder is not an easy one to satisfy.” Supreme Court makes clear that control by a minority stockholder is “not presumed.” Supreme Court’s decision indicates that a special committee of independent directors, and not the full suite of MFW-procedures, may suffice […]
Posted by Rick Horvath, Stephen Leitzell, and Eric Siegel, Dechert LLP, on Wednesday, February 26, 2025
Editor's Note:
Rick Horvath, Stephen Leitzell, and Eric Siegel are Partners at Dechert LLP. This post is based on a Dechert memorandum by Mr. Horvath, Mr. Leitzell, Mr. Siegel, Sarah Kupferman, and Stephen Pratt, and is part of the Delaware law series; links to other posts in the series are available here.
Key Takeaways
- Delaware Supreme Court reaffirms that “the test for actual control by a minority stockholder is not an easy one to satisfy.”
- Supreme Court makes clear that control by a minority stockholder is “not presumed.”
- Supreme Court’s decision indicates that a special committee of independent directors, and not the full suite of MFW-procedures, may suffice to restore the business judgment rule to an interested transaction with a minority stockholder who is a potential controller.
- If Oracle is expanded to allow for a special committee to restore the business judgment rule when a minority stockholder is alleged to have control, such a result would reduce litigation risk and provide for greater deal certainty.
