In recent decisions rendered less than two months apart, each of the Supreme Courts of Nevada and Delaware upheld challenges to takeover transactions which were supported by the majority stockholders of the target corporation, Cohen v. Mirage Resorts Inc. 62 P.3d (Nev. 2003), the Nevada Supreme Court case, and Omnicare, Inc. v. NCS Healthcare, Inc., 818 A.2d 914 (Del. 2003), the Delaware Supreme Court Case. Such challenges are often upheld in situations in which the majority stockholder is also the acquirer due to the inherent conflict between the majority stockholder which as a buyer would like the lowest possible price and the minority stockholders as sellers who would like the highest possible price. However, in each of these cases the majority stockholders were trying to sell along with the minority stockholders. The cases warrant close examination due to the potential for judicial impingement on corporate democracy and even property rights by limiting the ability of the majority to dispose of their shares and to vote in a manner to facilitate the disposition. While the cases address quite different situations, in the opinion of this author the Nevada Supreme Court made the right decision and the Delaware Supreme Court did not. Should the facts addressed in the Delaware case be addressed by the courts in Nevada, the Nevada Supreme Court should uphold the voting and property rights of the stockholders of Nevada corporations by not following the Delaware precedent.
By Neal Klegerman

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