Under the Delaware Supreme Court’s decision in Corwin v. KKR Financial Holdings, 125 A.3d 304 (Del. 2015), business judgment review applies to cleanse a fiduciary challenge to a noncontrol transaction that was approved by an uncoerced, fully informed, disinterested stockholder vote. Absent a claim of waste, the result of a Corwin-qualifying stockholder vote is dismissal. The Corwin doctrine is premised on the rationale that when a disinterested majority of stockholders approve a transaction, the vote represents their determination that the transaction is in the corporate interest, and Delaware courts will avoid second-guessing the stockholders’ decision by applying the deferential business judgment rule.
While the Delaware courts have applied Corwin to dismiss a number of post-closing fiduciary challenges, firmly establishing the protection that stockholder approval can afford a transaction under Delaware law, the Court of Chancery has recently cautioned that Corwin “was never intended to serve as a massive eraser, exonerating corporate fiduciaries for any and all of their actions or inactions preceding their decision to undertake a transaction for which stockholder approval is obtained,” as in In re Massey Energy Derivative & Class Action Litigation, C.A. No. 5430-CB (Del. Ch. May 4) (Bouchard, C.).
