Corporate Law-Interested Board of Director’s Termination of Sales Process Subject to Entire Fairness Review-Gantler v. Stephens,965 A.2d 695 (Del. 2009)

Although Delaware statutory law entrusts a corporation’s board of directors with the power to manage the corporation’s business and affairs, fiduciary duties severely circumscribe the authority allocated to the board.  Such duties are essential to safeguard the shareholders’ equity stake from opportunistic board behavior, for although shareholders are statutorily empowered to replace self-serving directors, widespread dispersion of ownership may effectively usurp such control of the corporate enterprise.  In Gantler v. Stephens,  the Supreme Court of Delaware considered whether the business judgment rule protected a board’s decision to reject a merger proposal and abandon a sale of the company.  Under the unique facts presented, the court held that because a majority of the board had breached its duty of loyalty to shareholders, the court would not apply the business judgment rule, but rather would determine the objective fairness of the board’s actions. . .