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Like US constitutional regulation, Delaware courts apply a tiered normal of judicial assessment to actions taken by the board of administrators of firms:
- Enterprise judgment deference (rational foundation).
- Enhanced scrutiny beneath Unocal and Revlon (intermediate scrutiny).
- The compelling justification normal articulated in Blasius (strict scrutiny).
Within the constitutional enviornment, the failure to fulfill the strict scrutiny normal utilized in First and Fourteenth Modification circumstances led one constitutional scholar to comment that “strict scrutiny is strict in principle, however deadly actually.”[1] And so the identical could also be mentioned of the compelling justification normal in company jurisprudence. In truth, the Delaware Court docket of Chancery’s then-Vice Chancellor (and later Chancellor and Chief Justice) Leo E. Strine articulated a view[2] that Delaware courts ought to depend on the judiciary’s conventional equitable powers, articulated in circumstances akin to Schnell, slightly than strict scrutiny, to make sure that company equipment is just not being manipulated by insiders for an improper goal.
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