Restating the Law of Conflicted Controller Transactions: Part 3

Why I was skeptical of restating corporate law in the first place

This is the fourth in a series of posts on the draft Restatement of the Law of Corporate Governance’s approach to policing conflicted controller transactions. (It’s titled Part 3 because Part 2 was split into two posts.) Such transactions have been much in the news of late, not least because the Delaware judiciary’s approach to regulating such transactions led,many controllers of Delaware corporations to reconsider whether they wanted their companies to be incorporated in Delaware (most notably Elon Musk of Tesla), which in turn led to major legislative action this spring with the passage of SB 21.

In prior posts, I discussed pre-SB 21 Delaware law, the Restatement’s definition of who is a controlling shareholder, and how the Restatement proposes to cleanse conflicted controller transactions.

In this post, I discuss how new Delaware SB 21 regulates conflicted controller transactions and speculate about whether the Restatement drafters will modify their current draft to incorporate aspects of SB 21. In the end, this issue is an object lesson in one of the main reasons I am skeptical of the whole project.