Effect of Approval by a Disinterested Party--Competing Approaches

Standard of Review
(burden of proof) DGCL 144

Neither board nor

shareholders approve EF(D): But see Siconix

Disinterested Directors Business Judgment Rule (P): Cooke but see

authorize (pre-transaction) Cookies (EF, if controller?)

Disinterested Directors ratify

BJR(post-transaction)
(P): same as above

Shareholders ratify BJR/Waste (P) but see Wheelabrator (EF, if controller?)

g Approaches

RMBCA 8.61 ALI 5.02

Entire Fairness(D) EF(D)

Reasonable belief in
fairness (P): 5.02(a)(2)
BJR (P) 8.61(B)(1) & (B) (Full Disclosure +
Comment 2 some fairness)

BJR (P): 8.62(a) & Comment

EF(D):
1 5.02(c), 5.02(a)(2)(A), 5.02(b)

Waste (P) Waste (P)