Delaware Supreme Court Upholds Business Judgment Rule in TripAdvisor Reincorporation Case

The Delaware Supreme Court has made a noteworthy ruling regarding TripAdvisor’s decision to reincorporate in Nevada, impacting the scrutiny level of corporate decisions. The high court has determined that the shareholders’ case was too speculative to warrant an entire fairness review. This decision overturns a previous ruling by the Court of Chancery from February 2024 that permitted the case to proceed under stricter standards. In the opinion written by Justice Karen Valihura, it was concluded that when litigation impacts remain hypothetical, Delaware courts should adhere to the business judgment rule, thus showing greater deference to corporate directors. This ruling may indicate a shift towards more lenient standards for evaluating directors’ decisions in Delaware. For further details, you can read the full text of the opinion here.