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IN RE DELL TECHNOLOGIES INC. CLASS V STOCKHOLDERS LITIGATION

There has been a growing deference in Delaware courts for transactions approved by independent special committees and minority stockholders. In the context of a company with a controlling stockholder, the Delaware Supreme Court has provided guidance in Kahn v. M&F Worldwide Corp.[1] (“MFW”) on how boards can structure special committees and minority stockholder votes to have board decisions adjudicated under the highly deferential protection of the business judgment rule.[2] However, the Delaware Court of Chancery recently found in In re Dell Technologies Inc. Class V Stockholders Litigation[3] (“Dell”) that it was reasonably conceivable that the conditions established in MFW had not been satisfied in the transaction under review resulting in the application of the more onerous entire fairness standard of review.[4] The opinion in Dell provides helpful insight for boards as they navigate transactions involving controlling stockholders.[5]
Continue Reading Board Guidance: Getting To Business Judgment Rule Deference When You Have A Controlling Stockholder

Boards of directors have a duty to exercise oversight and to monitor the company’s operational viability, legal compliance and financial performance during this COVID-19 pandemic. In Marchand v. Barnhill,[1] the Delaware Supreme Court held that the alleged facts relating to an outbreak of listeria raised a reasonably conceivable inference that the company’s directors failed to adopt a reporting and monitoring system sufficient to ensure they remained informed about food safety issues, which resulted in the company recalling all of its products, shutting down production, and laying off over a third of the workforce.[2]
Continue Reading COVID-19 Directors’ Duties of Oversight: Reporting and Monitoring