Despite Lack of Control Stockholder, Chancery Court Applies M&F’s “Ab Initio” Requirement in Determining Whether Independent Committee Recommendation Cleansed Transaction Approved by Conflicted Board
Robert S. Reder & Colton Tyler Haney | 73 Vand. L. Rev. En Banc 265 (2020) |
Salladay discusses the options available to corporate dealmakers and their legal counsel to obtain business judgment review—and ultimately pleading-stage dismissal—of conflicted transactions. If a controlling stockholder is to receive benefits from the transaction not shared with the other stockholders (e.g., a controlling stockholder-led buyout), both an independent board committee and obtaining disinterested stockholder approval are necessary to satisfy the Dual Protections of the M&F Framework. In the absence of a controlling stockholder but where at least 50% of the target board is interested in the transaction,either of M&F’s Dual Protections will suffice: (i) fully-informed, uncoerced approval by the disinterested stockholders underCorwin, or (ii) approval by a fully empowered, independent board committee under Trados II.
AUTHORS:
Robert S. Reder and Colton Tyler Haney