Delaware Business Litigation Report

Court of Chancery Explains DGCL Section 141

Cummings v. Eden, C.A. 13007-VCS (February 20, 2018)

This decision is particularly helpful in clarifying the effect of Section 141 of the DGCL. A transaction that is passed by the vote of even a single disinterested director is not void because of the language of Section 141. However, that does not mean that the transaction also is then subject to the business judgment standard of review. If the other directors are interested in the transaction, then the entire fairness standard will apply.

This decision also reviews and clarifies when a gift to a director’s charity may be enough to make that director not independent of the gift giver.

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