New York Adopts Delaware Standards of Review for Going-Private Mergers by Controlling Shareholders

New York Adopts Delaware Standards of Review for Going-Private Mergers by Controlling Shareholders

May 6, 2016, Covington Alert

New York’s highest court, in an opinion1 issued yesterday, adopted as New York law the test established by the Delaware Supreme Court in Kahn v. M&F Worldwide Corp. (“MFW”)2 for applying the business judgment rule to the review of going-private transactions by controlling shareholders. This important decision clarifies the standards applicable to directors of New York corporations in such transactions and promotes the use of the protective majority-of-the-minority vote mechanism.