Kahn v. M&F Worldwide Corp.

Business-judgment review for controller buyouts using dual procedural protections.

MacAndrews & Forbes proposed to acquire the remaining shares of M&F Worldwide. The transaction was conditioned from the outset on approval by an independent special committee and by an informed, uncoerced majority of the minority shareholders.

The Delaware Supreme Court held that business-judgment review applies to controller buyouts if specified dual protections are established from the beginning and function effectively.

The court reasoned that an empowered independent committee with the ability to say no, combined with an informed and uncoerced majority-of-the-minority vote, can replicate key protections of an arm's-length merger. The rule creates incentives for controllers to adopt stronger procedural protections rather than rely on only one cleansing device.

1. Which corporate actor gains authority or bears monitoring responsibility under the rule?
2. How does the rule affect agency costs without unduly impairing informed business judgment?