Chancery Court Suggests that Rights Offerings May Limit Liability in Transactions with Controlling Stockholders

When a corporation sells corporate assets to its (or an affiliate of its) controlling stockholder, Delaware courts generally will review that transaction under the exacting “entire fairness” standard.

But what if the corporation’s minority stockholders are given the opportunity to participate along with the controlling stockholder in the purchase of the corporate assets pro rata to the extent of their stock ownership?

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This blog post was republished by Harvard Law School Forum on Corporate Governance and Financial Regulation.