Abstract

Several aspects of Consob Regulation on related-party transactions of Italian public companies, enacted in 2010, are still being debated by scholars and judges. Among these questions, two issues regarding directors' liability seem to play a pivotal role in the understanding of the whole new Regulation: (i) does compliance with the procedure required for the approval of the transaction warrant the application of the business judgment rule or does it just shift the burden of proof from the defendant to the plaintiff under the entire fairness standard?; (ii) what is the scope of the opinion that is requested of the special committee of independent and disinterested directors prior to the transaction's final approval? By reviewing how similar questions have been answered by the Delaware Courts in the last decades, this Article attempts to extract from that case law insights that may help to provide consistent and balanced anwers to these issues, taking into account the legal and economic differences between the two contexts. In light of this analysis, the Article identifies, as a fundamental criterion underlying the structure of judicial review on conflicted transactions, a trade-off between the focus on the fairness of the transaction and the focus on the care and impartiality of the transaction's approval process. Therefore, with regard to the first issue, the Article suggests to apply this trade-off as a flexible judicial approach, rather than to provide a rigid answer that automatically attaches a standard of review to pre-determined conditions. Finally, within this framework, it is suggested that the second question should be answered by focusing the committee's evaluation on: the net balance between costs and benefits of the operation; the division of the surplus that may possibly derive from the very correlation between the parties; the consistency of the operation at issue with plans and strategies previously identified by the management as the specific goals of the firm's activity.