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In Re BGC Partners, Inc. Derivative Litigation
In the following opinion, Vice Chancellor Will applies the entire fairness standard to a transaction with a controlling shareholder on both sides, as both buyer and seller. It's a classic conflict scenario.
Delaware courts traditionally apply the entire fairness standard to such conflict transactions. The standard includes two components (fair dealing and fair price). When properly invoked defendants bear the burden of proving at trial that the challenged transaction was entirely fair to the corporation, notwithstanding the conflict presented by the conflicted controller or director.
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