Delaware General Assembly

Defeated 3/25/25

SS 1 for SB 21

3/25/25

Wilson-Anton

This amendment clarifies that approval by a disinterested board or committee may have cleansing effect only if the board or committee's approval is uncoerced. This codifies the approach in, among other cases, In re Dell Techs. Inc. Class V Stockholders Litig., 2020 WL 3096748, at *34 (Del. Ch. June 11, 2020), Sciabacucchi v. Liberty Broadband Corp., 2018 WL 3599997, at *16 (Del. Ch. July 26, 2018), and Kahn v. Lynch Commc'n Sys., Inc., 638 A.2d 1110, 1120 (Del. 1994). Second, the amendment clarifies that for a committee's approval to have cleansing effect when a majority of the board is conflicted or the transaction is a controlling stockholder transaction, the Court must determine that each member of the committee is disinterested. Third, the amendment clarifies that in order for a disinterested committee to cleanse a controlling stockholder transaction, the committee must negotiate on behalf of the company or minority stockholders, not merely oversee negotiations run by another person or entity (who might themselves be conflicted). Fourth, the amendment deletes vague and undefined phrasing in SS1 to SB21 regarding a "heightened" presumption and a requirement that facts rebutting such presumption be "substantial" as these terms are unknown to current Delaware case law and would heighten uncertainty and unpredictability. As modified, the bill would still impose a rebuttable presumption of disinterestedness for directors who satisfy the exchange listing standards and would require particularized facts to rebut that presumption.

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