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Court Of Chancery Discusses Interrelationship Between Corwin and Santa Fe

Posted In M&A

In Re Paramount Gold And Silver Corp. Stockholders Litigation, C.A. 10499-CB (April 13, 2017)

In its now famous Corwin decision the Delaware Supreme Court held that when a majority of the stockholders in a fully informed, noncoercive vote approve a transaction, the business judgment rule applies and the transaction is virtually immune from attack. However, plaintiffs continue to argue that Corwin did not hold that the stockholder approval precluded a claim based on a Unocal theory that by virtue of excessive deal protection devices the vote was coercive. Such a claim had been upheld in the older Santa Fe case and Corwin expressly declined to overrule Santa Fe. This decision notes that the status of Santa Fe may be unclear, but then goes on to hold that the agreements alleged to be preclusive deal protection devices do not violate Unocal even if it were applicable.

It is also worth noting that the Court went on to apply Corwin as well in dismissing the complaint. Hence, it may well be that the Court really does think Santa Fe no longer is good law.

Tags: M&A


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