You might want to take a look at recent developments in the Delaware law relating to the liability of corporate directors in case of a freeze out merger or other self-interested transaction. You can start by taking a look at my recently published article on this subject in New England In-House, which can be accessed at http://newenglandinhouse.com/reprints/2015/08/24/the-care-and-protection-of-the-independent-director/.

Three days after publication, the Delaware Chancery Court issued another opinion which extends the learning set forth in the article. The article correctly stated the Delaware case law that the “entire fairness test” is indeed met if the deal is expressly conditional on both independent committee approval and affirmative vote of majority of independent shareholders. In the August 27^th Delaware Chancery decision In re Dole Food Co. Inc., interested directors nonetheless were held personally liable for inadequate price paid in a freeze-out merger even though these two conditions were present. The reason: in spite of following the formalities of the Delaware law, the controlling Dole shareholders defrauded the independent committee in various ways, including knowingly misrepresenting financial projections and purposely depressing stock price.