Director Duties in M&A Transactions: Evolving Standards of Review Under Delaware Law

Decisions issued by Delaware courts in recent years serve as an essential reminder to deal counsel of the scrutiny with which courts will review director and officer compliance with fiduciary duties owed to stockholders when contemplating or conducting an M&A transaction. For example, the 2014 Chen v. Howard-Anderson ruling held that directors and officers may be personally liable for breach of the duty of loyalty if they allowed an improper motive to influence their decisions during an M&A sale process.

Courts have applied several different standards of review when deciding whether directors complied with their fiduciary duties during an M&A transaction. The business judgment standard and the entire fairness standard are the most common. The standard applied is generally dependent on the facts of the case and directly impacts its outcome.

Listen as our authoritative panel examines the latest developments in Delaware fiduciary duty law, §102(b)(7) exculpatory provisions, and evolving standards of review as they relate to the duties directors and officers owe stockholders when conducting the sale of a company.

1. Evolving standards of review
2. Factors to consider in a sales process
   1. Financial adviser risks
   2. Conflicts of interest
   3. Proxy statement disclosures
3. Officer liability

The panel will review these and other relevant issues:

• How should counsel advise directors regarding their fiduciary duties and the evolving standards of review in connection with M&A deals?
• What disclosures must be made by directors to shareholders during the sale process?
• When and how can §102(b)(7) exculpatory provisions be used to protect directors from liability for breach of fiduciary duty?