LITIGATION TRENDS 2025 | 111 T O C E M P E S G A N T I I P C A P R O W C S P O R T C O N T A C T I N T A P P P A T C C L S E C Nevada’s corporate law regime is material,” and that “the hypothetical and contingent impact of Nevada law on unspecified corporate actions that may or may not occur in the future is too speculative to constitute a material, non-ratable benefit triggering entire fairness review.” Maffei v. Palkon, --- A.3d ---- (Del. Feb. 4, 2025). The Match Decision. In April 2024, the Delaware Supreme Court’s decision in Match clarified lingering questions about the application of MFW in non-squeeze out controlling stockholder transactions. Under MFW, a controlling stockholder may obtain the benefit of deferential business judgment review if six conditions are met: (i) the transaction is conditioned from the outset on the approval of both a special committee and a majority of the minority stockholders; (ii) the special committee is independent; (iii) the special committee is fully empowered; (iv) the special committee meets its duty of care; (v) the vote of the minority is fully informed; and (vi) there is no coercion of the minority. Although MFW was decided in the context of a squeeze-out merger transaction, a debate emerged as to whether the so-called “twin protections” of a disinterested and independent director approval plus an unaffiliated stockholder vote were required to shift the standard of review from entire fairness back to business judgment in controlling stockholder transactions outside of the squeeze-out context. In Match, the Delaware Supreme Court confirmed that approval by a disinterested special committee and approval by a majority of the minority stockholders are required in any control transaction in order to obtain the benefit of a deferential standard of review under MFW. The Court in Match also held that, to satisfy MFW, every member of the special committee must be independent, reasoning that it is not sufficient to replicate arm’s length bargaining if the committee is merely made up of a majority of independent directors. The Delaware Legislative Response In the summer of 2024, the Delaware legislature responded to the market practice decisions – Moelis, Crispo, and Activision – with a series of amendments to the DGCL aimed at restoring the market practices. The legislative response to Moelis codified that a corporation has the power to enter into contracts with stockholders, includes a nonexclusive list of the types of provisions that may appear in such contracts, and also provides that board actions under this new section are not required to be in the corporation’s certificate of incorporation. In response to Crispo, the legislature made clear that parties to a merger agreement can contract for penalties following a breach of the merger agreement, can seek lost premium damages, and that the target could keep any such penalty payment. And the amendments in response to Activision provided, among other things, that board approval of an agreement can be in substantially final form, and that the final version can be prepared by agents of the corporation at the board’s direction. On March 25, 2025, Delaware lawmakers enacted amendments to Section 144 of the DGCL to, among other things, provide safe harbors for conflict transactions, including transactions with controlling stockholders. The legislation also amended Section 220 of the DGCL to impose limitations on stockholder books and records inspections. Highlights from the legislation include: ■ Director and Officer Conflict Transactions: Amended Section 144(a) of the DGCL provides a safe harbor for director and officer conflict transactions if: (i) the material facts as to the director’s or officer’s relationship or interest as to the transaction, including any involvement in the initiation, negotiation, or approval of the transaction, are disclosed or known to all members of the board of directors or a committee of the board, and the board or committee in good faith and without gross negligence authorizes the transaction by the affirmative vote of a majority of “disinterested directors” (as defined in the statute and discussed below) then serving on the board or such committee (if a majority of the S Securities Litigation 110 | Weil, Gotshal & Manges LLP
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