USA – NEVADA Trends and Developments Contributed by: Krisanne Cunningham, David Lewandowski, Christopher Walther and Jeffrey Zucker, Fennemore
emphasising that it requires an intent to engage in wrongful conduct, not merely the intent to take an action that in and of itself is bad or adverse. This inter - pretation further narrows the scope of potential liabil - ity in transactional settings. In Guzman v Johnson , 483 P.3d 531 (Nev. 2021), the Nevada Supreme Court confirmed that the business judgement rule is the governing framework for eval - uating director conduct, and declined to adopt the tiered standards that characterise Delaware law. Significantly, Nevada’s statutory framework, together with the Guzman and Chur cases, provides Boards with substantial discretion to evaluate and approve M&A transactions and do what they believe is right without exposure to the more expansive and con - text-specific forms of judicial scrutiny seen in other jurisdictions. In practical terms, this means that M&A plaintiffs in Nevada face a substantial pleading and proof burden: they must do more than allege conflicts, flawed process or even gross negligence; they must satisfy the statutory prerequisites for overcoming the business judgement rule and, in damages actions, show intentional misconduct, fraud or a knowing vio - lation of law. Notably, Nevada’s statutory framework for limited lia - bility companies (LLCs) emphasises the contractual nature of LLCs by giving managers broad authority to make decisions, subject to limitations (if any) within the governing documents, and provides that man - agers only owe a fiduciary duty to act in good faith, although members may include additional manager fiduciary duties in the LLC’s governing documents if so desired. The evolution of fiduciary standards in M&A transactions Nevada’s modern approach to fiduciary duties in the M&A context reflects a broader shift toward statutory primacy in Nevada corporate law. Through amend - ments such as NRS Section 78.012 and related pro - visions, the Nevada Legislature has made clear that director and officer duties must be determined by the plain meaning of Nevada’s statutes rather than by imported foreign doctrines.
This statutory focus is additionally evident in the change-of-control context. Nevada has not left take - over-related fiduciary questions solely to general com - mon law development; instead, NRS Section 78.138 (8) provides that – except when the stockholders’ right to vote for or remove directors is affected – changes in control are subject to the same standards as other transactions, and NRS Section 78.139 specifically addresses the duties, presumptions and powers of directors and officers in the latter case. These statu - tory developments, taken together with recent case law, show Nevada’s deliberate movement toward a distinct, generally more director-protective framework in which the text of Nevada’s corporate statutes, not foreign common law overlay, supplies the governing rule. The statutory framework for M&A: NRS Chapter 92A Mergers and acquisitions involving Nevada corpora - tions are governed by NRS Chapter 92A, which pro - vides a relatively streamlined and flexible framework for transactional approval. The Board plays the central role in initiating and approving merger transactions, with stockholder approval generally required as a matter of statute. However, Nevada law makes it comparatively diffi - cult to challenge mergers on speculative or technical grounds, reflecting a policy preference for facilitating transaction completion. Although Nevada law does not impose the same judi - cially developed requirements seen in other jurisdic - tions, such as the use of independent committees in certain conflict scenarios, market practice continues to influence deal structuring. The use of a disinter - ested committee, for example, may still be advisable in appropriate circumstances to enhance process integrity and mitigate risk, even if not strictly required. Stockholder approval requirements for private company mergers and acquisitions Determining how a privately held Nevada corporation must approve an M&A transaction typically presents two separate inquiries. First, the Board must deter - mine whether the stockholders need to approve the transaction. Second, the Board must determine how
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