May 8, 2017
Delaware: Corwin’s Open Issues
This Fried Frank memo provides an overview of the 7 decisions interpreting the Delaware Supreme Court’s 2015 Corwin decision and an assessment of where things stand. Here’s an excerpt addressing the issues that remain open under Corwin:
– Duty of loyalty cases. As noted, while the Court of Chancery has held that Corwin cleanses even transactions where the directors were not independent and disinterested, breached the duty of loyalty, or acted in bad faith, the Delaware Supreme Court has not yet addressed the issue.
– Unocal cases. The Court of Chancery has noted that there is an issue, but has not yet definitively ruled on, whether Unocal heightened scrutiny may apply notwithstanding fully informed and uncoerced stockholder approval of a transaction.
- Coercion claims. As the Delaware courts have clarified and confirmed the high standard of materiality that will be applicable to making valid disclosure claims in the Corwin context, the plaintiffs’ bar may be considering more focus on potential claims that a stockholder vote has been coerced.
– John Jenkins