Delaware law has long held that “inequitable action does not become permissible simply because it is legally possible.” And, when stockholder voting rights are implicated, even good faith actions by a board will not be upheld absent a “compelling justification.” These holdings arose from Delaware’s seminal decisions in Schnell v. Chris-Craft Industries, 285 A.2d 437 (Del. 1971), and Blasius v. Atlas Industries, 564 A.2d 651 (Del. Ch. 1988).

A string of recent Delaware decisions have reaffirmed the importance of these holdings, and the critical role the Delaware courts play in ensuring that corporate transactions are “twice-tested”—for both legal validity and equitable fairness. These holdings affirm that the demanding standards set forth in Schnell and Blasius are alive and well, particularly when it comes to director actions that burden or interfere with the stockholder franchise.

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