The recent Delaware Superior Court decision in Toedtman v. Turnpoint Medical Devices, C.A. No. N17C-08-210 RRC (Del. Super. Ct., Jan 23, 2019), adds clarity to the case law interpreting Section 144 of the Delaware General Corporation Law (DGCL), 8 Del C. Section 144. This case is important for the clear guidance it provides for anyone who seeks to understand Section 144(a)’s safe harbors when one or more board members are conflicted in connection with a board vote.

In Toedtman, the court discussed Section 144(a)’s three safe harbors and considered the application of two of the safe harbors to a former director’s employment agreement as a CEO. Ultimately, the court decided that even though a self-interested director entered into the agreement, the agreement was nonetheless valid because it fell within at least one of Section 144(a)’s safe harbors.

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