Business Judgment Rule Now Available for Going-Private Mergers

The rule seemed well settled. When a controlling shareholder attempts to take a company private, and the minority shareholders challenge the transaction alleging a breach of fiduciary duty, the court reviews the transaction under the entire fairness standard—under which the controlling shareholder has the initial burden to prove the transaction was fair. The only questions were how and when the burden would shift to the minority shareholders to show it was unfair.