Not New: A Response to Claims About “New Control” In Control and Its Discontents

Key Takeaways

• Entire fairness applied beyond freeze‑outs before EZCORP
• Controlling shareholders owed voting fiduciary duties since 1923
• Non‑majority control has always been fact‑specific, not binary
• Recent cases continue, not overturn, established Delaware precedent
• 2025 safe‑harbor amendments reflect some scholarly proposals

Pulse Analysis

Delaware’s corporate jurisprudence has long balanced the need for oversight with the benefits of aligned control. The entire‑fairness doctrine, first applied in cases like Sinclair Oil (1971) and Nixon v. Blackwell (1993), extended well beyond freeze‑out transactions, covering service agreements, management fees, and other conflicts. This historical breadth undermines the notion that EZCORP (2016) introduced a radical shift; instead, it refined the application of the MFW framework to non‑freeze‑out deals, preserving the doctrine’s core purpose of policing uncleansed conflicts.

Equally important, controlling shareholders have been subject to fiduciary duties when exercising voting power for nearly a century. Landmark rulings such as Allied Chemical (1923) and Thorpe (1996) established that votes influencing asset sales, mergers, or charter amendments trigger the same duty of loyalty owed by directors. Recent decisions like Sears Hometown merely reaffirm this trajectory, distinguishing between affirmative changes to the status quo and defensive actions that preserve existing shareholder interests. The courts continue to apply the business‑judgment rule where no conflict exists, reserving entire‑fairness review for genuine breaches.

Legislative action in 2025 introduced transactional safe‑harbor provisions and a clearer definition of “controlling stockholder,” echoing themes from the disputed scholarly article. While these reforms grant immunity to fiduciaries who comply with the new standards, they do not rewrite the underlying case law governing aiding‑and‑abetting claims or transactions outside the safe‑harbor scope. Practitioners must therefore navigate both the enduring Delaware precedents and the nuanced statutory landscape to mitigate litigation risk and optimize deal structures. Understanding the continuity rather than a perceived rupture in the law is essential for informed corporate governance decisions.