Smith v. Van Gorkom · 488 A.2d 858

stating that the "settled rule” was that if fully informed stockholders approved a transaction approved by even interested directors, the business judgment rule standard would be invoked, but that in the case of a third-party cash merger before the court, the stockholders’ vote did not qualify because of disclosure inadequacies (citing Gerlach v. Gillam, 139 A.2d 591, 593 (Del.Ch. 1958))

How later courts described this case

stating that the "settled rule” was that if fully informed stockholders approved a transaction approved by even interested directors, the business judgment rule standard would be invoked, but that in the case of a third-party cash merger before the court, the stockholders’ vote did not qualify because of disclosure inadequacies (citing Gerlach v. Gillam, 139 A.2d 591, 593 (Del.Ch. 1958))
holding that a deci sion by the board of directors to approve a merger did not fall within the proper exercise of business judgment because the directors failed to consider the intrinsic worth of the corporation where the stock traded at a depressed market value
holding that directors were capable of assessing the fairness of a transaction based on their own knowledge
holding that "the directors of Trans Union breached their fiduciary duty to their stockholders (1) by their failure to inform themselves ... and (2) by their failure to disclose all material information” and that "an award of damages maybe entered”

Written by the judges who cited it.

Later courts went against this

Overruled on other grounds by Gantler v. Stephens, 2009 Del. LEXIS 33 (2009)
488 A.2d 858, 878 (Del. 1985), overruled on other grounds by Gantler v. Stephens, 965 A.2d 695
Supreme Court of DelawareJan 27, 200918 citing opinionsother groundsRead it
Superseded by statute, as recognized in Emerald Partners v. Berlin
488 A.2d 858 (Del. 1985), superseded by statute as stated in Emerald Partners v. Berlin, 787 A.2d 85 (Del. Super. 2001).
Supreme Court of DelawareNov 28, 2001by statutemedium confidenceRead it

The opinion

McNEILLY and CHRISTIE,

Justices, dissenting:

We do not disagree with the ruling as to the defendant O’Boyle, but we would have granted reargument on the other issues raised.