Series 79 practice questionhardGoing-Private Transactions
A controlling shareholder proposes a going-private transaction. Which additional procedural safeguard is most critical to validate the process under Delaware law?
- AObtaining a majority-of-minority shareholder vote only
- BHaving the board approve the deal without outside advice
- CIndependent special committee plus majority-of-minority vote✓ Correct answer
- DRelying on the controlling shareholder’s fairness opinion
Explanation
Why C — Independent special committee plus majority-of-minority vote
Delaware law emphasizes both a special committee and a majority-of-minority vote to safeguard fairness in controlling shareholder transactions. Relying on only one or neither exposes the process to legal challenge for potential conflicts.
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