Nevada Enacts Law to Provide More Statutory Liability Protections

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Recently, Nevada passed new legislation (AB 239) to amend the Nevada Revised Statutes to provide a number of statutory liability protections, including de-emphasizing the use of Delaware case law in interpreting Nevada law.

Here are five key aspects of this new legislation:

1. Modernizing fiduciary duty for controlling stockholders

Nevada now defines a controlling stockholder based on actual voting power (enough to elect a board majority) and limits their fiduciary duty to refraining from undue influence that induces a director’s breach for personal gain – bringing more predictability and clarity to M&A and governance scenarios.


2. Safe harbor for controller transactions

The law provides a presumption of no breach if a controller transaction is approved or recommended by a committee of disinterested directors – raising the bar for plaintiffs challenging conflict transactions involving controlling stockholders.


3. Bench trials over jury trials – by design

Companies may now require internal corporate disputes to be resolved via bench trials in Nevada. This aligns with Delaware’s judge-centric Chancery Court and may appeal to companies considering reincorporation.


4. Board authority over draft documents clarified

Boards may formally act on preliminary versions of merger and transaction documents, at their discretion, without risking claims over technical finality – reinforcing Nevada’s strong business judgment rule.


5. Appraisal rights = sole remedy

Where appraisal rights exist for private companies in Nevada, the new law makes them the exclusive remedy – limiting the risk of parallel or follow-on litigation and promoting transactional certainty.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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