Special Committee Process Not Effective and Over $2 Billion Awarded for Controlling Stockholder's Breach of Fiduciary Duty

摘要

The Delaware Supreme Court's decision in Americas Mining Corp. v. Theriault confirmed that the entire fairness standard of review will apply ab initio and remain the standard of judicial review throughout the course of litigation if a controlling stockholder stands on both sides of a transaction. While defendants can obtain a shift of the burden of persuasion on the issue of entire fairness by showing that the transaction was negotiated and approved by a well-functioning committee of disinterested and independent directors, the burden shifting determination must be made before trial, if possible. The burden of persuasion will remain with defendants if a pre-trial burden shifting determination is not feasible.