Richards Layton & Finger

The New Paradigm (Burden) Shift: The Business Judgment Rule After KKR

December 2015

The Delaware Supreme Court recently held that an uncoerced, fully informed vote of a majority of the disinterested stockholders adopting a merger agreement invoked the business judgment rule standard of review, even though the vote was statutorily required. The opinion left unanswered the question as to whether the business judgment rule invoked in that context was a rebuttable presumption or a substantive rule of law protecting the directors’ decision. Two subsequent opinions of the Court of Chancery suggest that the business judgment rule applied in that context is a rebuttable presumption.