Delaware's Living Fossil: Minority Detriment in the Age of SB 21

<div> Delaware Senate Bill 21 (SB 21) generated significant discussion surrounding conflict transactions, including whether the Delaware legislature intended to overrule <i>Sinclair Oil Corp. v. Levien</i>. In <i>Sinclair</i>, the Delaware Supreme Court held that a controlling stockholder engages in self-dealing when it obtains a benefit to the exclusion of, and detriment to, minority stockholders. Although Delaware courts have not consistently invoked <i>Sinclair</i>, this article argues that, prior to SB 21, minority detriment nonetheless remained an essential element of a viable controller self-dealing claim. In particular, this article contends that two recent, pre-SB 21 Delaware Supreme Court decisions confirmed that minority detriment remains necessary to establish self-dealing. </div> <div> <span><br></span> </div> <div> <span>This article next considers whether SB 21 overruled </span><span><i>Sinclair</i></span><span>. SB 21 added a definition of “controlling stockholder transaction.” Although that definition does not expressly incorporate a minority detriment requirement, this article argues that SB 21 did not overrule </span><span><i>Sinclair</i></span><span>. SB 21’s legislative history and the Delaware Supreme Court’s subsequent reliance on </span><span><i>Sinclair </i></span><span>in upholding SB 21’s constitutionality strongly suggest that SB 21 was not intended to expand what constitutes controller self-dealing. This interpretation is consistent with Delaware law’s historic view that the purpose of controller fiduciary duties is minority protection rather than merely to police potential divergent interests.</span> </div>