The Delaware Supreme Court, sitting en banc, reversed Vice Chancellor Laster’s Chancery decision and held that the business-judgment rule — not entire fairness, not MFW — applies to a board’s clear-day decision to reincorporate, even where a controller stands to benefit from reduced future fiduciary exposure. The reversal is narrower than the headline reads: disclosure and process challenges remain available, and the Court reserved — without deciding — whether a different standard could apply if fiduciaries take articulable, material pre-conversion steps in furtherance of a breach (n.249). That reserved scenario is precisely what the pending Dropbox complaint attempts to plead. The matrix below sorts what Maffei decided, what it reserved, and what it did not address.
Figure 4
Delaware Supreme Court, en banc, Feb. 4, 2025 (Valihura, J., for the Court), 339 A.3d 705, reversing Palkon v. Maffei, 311 A.3d 255 (Del. Ch. 2024).
Sources: Maffei v. Palkon, 339 A.3d 705 (Del. 2025) (en banc) (Valihura, J.); Palkon v. Maffei, 311 A.3d 255 (Del. Ch. 2024).
How Maffei narrowed plaintiff theories without closing them
The clearest way to read Maffei v. Palkon is that the Delaware Supreme Court, en banc, reversed a specific Chancery holding — that the future possibility of reduced fiduciary exposure under Nevada law constituted a non-ratable controller benefit triggering entire-fairness review — without disturbing the broader doctrinal architecture. Three implications matter for counsel triaging a reincorporation challenge:
First, the “clear-day” line. The Court’s rationale is that a board’s decision to reincorporate, made when no specific transaction or fiduciary breach is pending, falls within business-judgment review even where the controller might prospectively benefit. The reversal is keyed to the absence of articulable pre-vote breach groundwork. Where fiduciaries have, by contrast, taken material steps in furtherance of a breach before the vote, the Court reserved without deciding whether a different standard of review could apply (n.249) — a reservation, not a holding, and the open question the Dropbox plaintiff now asks the Court of Chancery to answer.
Second, disclosure and process attacks are not foreclosed. Schedule 14A item 14 and item 19 disclosure claims survive in full; Section 14(a) and Rule 14a-9 federal-law claims survive in full. Pre-vote process challenges — board independence, advisor conflicts, soliciting-stockholder coercion, bylaw-amendment process — all remain available. Plaintiff counsel who anchor a challenge in process or disclosure (rather than in the controller-benefit theory the Court rejected) face no Maffei bar.
Third, dual-class supervoting cases are open. The Coinbase reincorporation — effective December 15, 2025, approved by a 78.40% voting bloc assembled from 20:1 Class B supervoting shares 20 — presents a post-effective theory Maffei did not adjudicate: that a dual-class transfer of value through reincorporation is itself a non-ratable benefit because the economic stake supporting the controlling vote is a minority of total shares. The doctrinal question is whether the Maffei standard, applied to a clear-day Nevada conversion of a single-class company, extends to a dual-class Texas conversion approved by written consent under DGCL § 228. No published Delaware-court decision has yet adjudicated the question.