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Delaware Supreme Court Reverses MFW Dismissal Due to Inadequate Disclosures Regarding Special Committee’s Advisors’ Material Conflicts

By Barnaby Grzaslewicz, Aubrey Morin, K. Tyler O'Connell on September 5, 2024
Posted In Controlling Stockholder, Delaware Supreme Court, Disclosure Claims, Fiduciary Duty Claims, M&A


City of Sarasota Firefighters’ Pension Fund v. Inovalon Holdings Inc., No. 305, 2023 (Del. May 1, 2024).
The Delaware Supreme Court’s decision in Khan v. M & F Worldwide Corp. (“MFW”) established a cleansing process for a corporation’s transactions with a controlling stockholder: “(i) the controller conditions the procession of the transaction 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 empowered to freely select its own advisors and to say no definitively; (iv) the Special Committee meets its duty of care in negotiating a fair price; (v) the vote of the minority is informed; and (vi) there is no coercion of the minority.” If all those elements are met, the transaction is reviewed under the deferential business judgment standard. More ›

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