The Delaware Supreme Court on Tuesday ruled that mergers involving a controlling shareholder qualify for review under the business judgment rule if two key procedural protections are adopted prior to economic negotiations, rejecting a proposed bright-line rule that would have made it easier for plaintiffs to challenge conflicted transactions.

The 4-1 ruling from the high court upheld the Delaware Court of Chancery’s dismissal earlier this year of an investor challenge to leading Chinese infant formula firm Synutra International Inc.’s $125 million go-private deal in 2016. And it clarified at what point in the process that a controller must condition its offer on approval by an independent special committee and an informed and uncoerced vote of a majority of the company’s controlling stockholders.

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