The Court found that these allegations were sufficient to state a claim for breach of the duty of loyalty. Next, the Court analyzed the applicable standard of review. Defendants first argued that the business judgement rule should apply because the Challenged Transactions fit within the safe harbor provision codified in 8 Del. C. § 144(a)(1). The Court found that compliance with Section 144(a)(1) does not necessarily invoke business judgment review of an interested transaction because common law principles requiring a majority of disinterested directors approve the transaction must still be considered.

ng the business and affairs of the corporation. While the board can delegate management of the day-to-day affairs of the corporation to officers, fundamental corporate changes and most material transactions must be approved by the board. This includes amending the charter or bylaws, granting equity, adopting or amending employee equity or benefit plans, making material expenditures outside of the budget, and entering into mergers and acquisitions.There is no hard and fast rule about which actions must be approved by the board, and the above list is not exhaustive; always check with your legal counsel to determine if your proposed action requires board and/or stockholder approval. FIDUCIARY, Black’s Law Dictionary (11th ed. 2019).Guth v. Loft. Inc., 5 A.2d 503, 510 (Del. 1939).Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).Sinclair Oil Corp. v. Levien, 280 A.2d 717, 720 (Del. 1971). 8 Del. C. § 141(e).Smith v. Van Gorkom, 488 A.2d 858, 875 (Del. 1985).Id. at 872–4.Guth, 5 A.2d at 510. 8 Del. C. § 144. 8 Del. C. § 141(a).[View source.]

If an officer or director discloses a personal interest prior to the transaction in question, and that transaction is approved by a majority of independent, disinterested directors, then the protection of the business judgment rule will apply to the transaction. See 8 Del. C. § 144(a); Benihana of Tokyo, Inc. v. Benihana, Inc., 906 A.2d 114, 120 (Del.2006) (“After approval by disinterested directors, courts review the interested transaction under the business judgment rule . . . .”). For this reason, it is important for boards to convene a special committee of independent directors to approve any transaction that raises, or may appear to raise, a conflict of interest.

Although “reasonable reliance on expert counsel is a pertinent factor in evaluating whether corporate directors have met a standard of fairness in their dealings with respect to corporate powers,” it’s existence is not outcome determinative of entire fairness. [Footnote omitted] To hold otherwise would be to replace this court’s role in determining entire fairness under 8 Del. C. §144 with that of various experts hired to give advice to the directors in connection with challenged transactions, creating a conflict between sections 141(e) and 144 of the [DGCL]. However, the choice should not and need not be between protecting shareholders (the ultimate beneficiaries of enhanced scrutiny reviews) and protecting conscientious directors.