Delaware Supreme Court Creates Test for Reincorporation Decisions

The Delaware Supreme Court has held that the business judgment rule applied to a proposal to reincorporate from Delaware to Nevada. It reversed a lower court decision holding that the entire fairness standard should be applied.

Why This is Important… This is a critical decision for corporations amid current debates over state laws and the growing number that have left Delaware for Texas, Nevada, or other jurisdictions. It provides a roadmap for evaluating fiduciary duty challenges to reincorporation decisions. It may also provide a helpful roadmap for other states since few have common law addressing reincorporations.