Under Control: Recent Delaware Decisions on Controller Transactions, Standards of Review and Disclosure Obligations

Dated June 2024 and built on four fully cited decisions: In re Match Group, 2024 WL 1449815 (Del. Apr. 4, 2024); In re Sears Hometown, 309 A.3d 474 (Del. Ch. 2024); Palkon v. Maffei, 311 A.3d 255 (Del. Ch. 2024); and Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024). Match Group holds that all members of a special committee in a conflicted controller transaction must be independent, not merely a majority; Sears holds that a controller owes no enforceable duties when voting to preserve the status quo but owes loyalty and care when voting to change it; TripAdvisor holds that converting a controlled Delaware corporation to Nevada may confer a non-ratable benefit. Tornetta rescinded a USD 55.8 billion compensation plan where the controller held 21.9 per cent of voting power and lacked mathematical control but exercised transaction-specific control, with the court finding no well-functioning committee of independent directors and a process described as "cooperative and collaborative" rather than arm's length.