DealLawyers.com Blog

Last week, Vice Chancellor Laster of the Delaware Court of Chancery published a piece in the HLS Forum on Corporate Governance on controlling stockholders — specifically, whether the decisions in Match, Sears Hometown, and Tornetta were a significant departure from the historical approach of Delaware courts to judicial oversight of controlling stockholders. The article is in response to an academic paper, Control and its Discontents, by Professors Jill E. Fisch and Steven Davidoff Solomon, arguing that they were. VC Laster disagrees and argues that:

– Entire fairness was never limited to freeze-outs and asset sales;
– Controlling stockholders have long owed fiduciary duties when voting; and
– Non-majority control was always functional.

You may be wondering if this is all purely academic at this point, following SB-21. And I think the answer to that is, “no.” In fact, VC Laster details the situations in which case law predating the 2025 DGCL amendments continues to be relevant:

That does not mean the debate over control is over. The safe harbor amendments establish remedial immunity for corporate fiduciaries who comply with their terms. Prior law remains relevant for aiding-and-abetting claims and for transactions that fall outside the safe harbors. The amendments also do not change the law governing LLCs, limited partnerships, or general partnerships. And the safe harbor amendments do not apply to other jurisdictions.

– Meredith Ervine