TRAYNOR, Justice, for the Majority

Michael Hanrahan, Esquire (argued), Ronald A. Brown, Jr., Esquire, Stephen D. Dargitz, Esquire, J. Clayton Athey, Esquire, Marcus E. Montejo, Esquire, Samuel L. Closic, Esquire, PRICKETT JONES & ELLIOTT, P.A., Wilmington, Delaware; Carl L. Stine, Esquire, Adam J. Blander, Esquire, Antoinette Adesanya, Esquire, WOLF POPPER LLP, New York, New York; Brian D. Long, Esquire, LONG LAW, LLC, Wilmington, Delaware; Frank P. DiPrima, Esquire, LAW OFFICE OF FRANK DIPRIMA, P.A., Morristown, New Jersey, for Plaintiffs-Below, Appellants.

Kevin G. Abrams, Esquire, John M. Seaman, Esquire, Matthew L. Miller, Esquire, ABRAMS & BAYLISS LLP, Wilmington, Delaware; John A. Neuwirth, Esquire (argued), Evert J. Christensen, Jr., Esquire, Seth Goodchild, Esquire, Matthew S. Connors, Esquire, Nicole E. Prunetti, Esquire, WEIL, GOTSHAL & MANGES LLP, New York, New York, for Defendant-Bellow, Appellee Brookfield Property Partners, L.P.

Peter J. Walsh, Jr., Esquire, Berton W. Ashman, Jr., Esquire, Jaclyn C. Levy, Esquire, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Peter E. Kazanoff, Esquire, Michael J. Garvey, Esquire, Sara A. Ricciardi, Esquire, SIMPSON THACHER & BARTLETT LLP, New York, New York, for Defendants-Below, Appellees Mary Lou Fiala, Janice R. Fukakusa, John K. Haley, and Christina M. Lofgren.

Raymond J. Dicamillo, Esquire, Susan M. Hannigan, Esquire, RICHARDS, LAYTON & FINGER, Wilmington, Delaware; Brian T. Frawley, Esquire, Y. Carson Zhou, Esquire, SULLIVAN & CROMWELL LLP, New York, New York, for Defendant-Below, Appellee Sandeep Mathrani.

David J. Teklits, Esquire, Thomas P. Will, Esquire, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware, for Defendants-Below, Appellees Richard B. Clark, J. Bruce Flatt, and Brian W. Kingston.

Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and MONTGOMERY-REEVES, Justices, constituting the Court en banc.

TRAYNOR, Justice, for the Majority: In the negotiations leading up to a merger in which Brookfield Property Partners, L.P. and its affiliates acquired GGP, Inc., Brookfield evinced its concern over the number of GGP stockholders who might seek appraisal under 8 Del. C. § 262. Brookfield sought to allay this concern by including in the merger agreement an appraisal-rights closing condition that would allow it to terminate the transaction if a specified number of GGP shares demanded appraisal. But the special committee of GGP directors charged with negotiating the terms of the merger agreement held firm in opposition to this condition, and Brookfield relented. The condition was nixed.

The plaintiffs in this case, former GGP stockholders, allege that Brookfield and the directors of GGP decided to come at this problem from another angle. According to the stockholders, GGP's directors, urged on by Brookfield, structured the merger so that, as a practical matter, the GGP stockholders’ appraisal rights were eviscerated. The plaintiffs say that Brookfield and the GGP directors accomplished their objective by dividing the consideration Brookfield would pay for GGP shares into a sizeable pre-closing dividend followed by a relatively small residual payment, the latter of which the merger proxy defined as the "per share merger consideration." GGP's directors then told their stockholders that they were "entitled to exercise their appraisal rights solely in connection with the merger," which occurred after the declaration of the dividend, and that the appraised fair value of GGP—a company being sold for $23.50-per-share—"may be greater than, the same as or less than" the "per share merger consideration," valued at $0.312.

The GGP stockholders claim that, by divorcing the appraisal remedy from the large pre-closing dividend and linking it to the meager "per share merger consideration," Brookfield and the GGP directors led them to believe that a fair value determination in an appraisal proceeding would be limited to the value of post-dividend GGP. This description of appraisal rights, coupled with other descriptions of how the transaction was to be effected, led the stockholders, or so they have alleged, to believe that their appraisal rights had either been eliminated or so reduced as to be meaningless. And by agreeing to do this, they say, the GGP directors, with the aid of Brookfield, breached their fiduciary duties.

The stockholders filed suit in the Court of Chancery seeking quasi-appraisal damages, and the defendants—the GGP directors and Brookfield—moved to dismiss, contending that the stockholders’ complaint failed to state a claim upon which relief could be granted. The Court of Chancery concluded that, because it could consider the pre-closing dividend as a "relevant factor" under the appraisal statute, the defendants’ structuring of the merger did not deny the stockholders their right to seek appraisal. The court, moreover, determined that, although the defendants’ appraisal disclosures "could have been more clearly drafted," they were sufficient. The court therefore found that the plaintiffs’ complaint failed to state a claim.

We agree with the Court of Chancery—though for different reasons—that, whether or not they may have intended to, the defendants did not, by paying a large portion of the merger consideration by way of a pre-closing dividend, structure the merger in a manner that effectively and unlawfully eliminated appraisal rights. We disagree, however, with the court's conclusion that the merger proxy's disclosures regarding appraisal were sufficient.

Although it is undisputed that the GGP directors notified stockholders that appraisal rights were available and complied with Section 262 ’s notice requirements by including in the notice a copy of the statute, the manner in which the merger proxy described the merger and the stockholders’ attendant appraisal rights was, at best, materially misleading. In our view, the disclosures, having described the merger and appraisal rights in a confusing manner, did not provide the stockholders the information they needed to decide whether to dissent and demand appraisal. And, as will be more fully developed below, it is reasonably conceivable to us that GGP's directors, aided and abetted by Brookfield, consciously crafted the transaction and the related disclosures in such a way as to deter GGP's stockholders from exercising their appraisal rights. Consequently, we have concluded that the Court of Chancery erred when it dismissed the plaintiffs’ disclosure claim against the GGP directors and the stockholders’ aiding-and-abetting claim against Brookfield. I

A

GGP (or "the Company") was a real estate company and one of the largest owners and operators of shopping malls in the United States. The Plaintiffs in this case are former GGP stockholders Randy Kosinski, Arthur Susman, and Robert Lowinger. The Defendants are Brookfield Property Partners ("Brookfield" or "BPY") as well as the members of GGP's Board of Directors and the Special Committee (the "Director Defendants") that approved the sale of GGP to Brookfield and disseminated the Definitive Proxy Statement (the "Proxy").

Before it was sold to Brookfield, GGP's properties included the Christiana Mall in Newark, Delaware, and other luxury malls throughout the country. GGP was organized as a tax-advantaged real estate investment trust ("REIT") that was publicly traded on the New York Stock Exchange. After the consummation of the sale at issue in this case (the "Transaction"), GGP was reconstituted and renamed Brookfield Property REIT Inc. ("BPR"). BPR is a publicly traded U.S.-registered REIT and is designed to mirror the economics of a BPY unit.

Before the Transaction, GGP had counted Brookfield as a shareholder since at least 2010, when Brookfield made a multi-billion-dollar equity investment in the Company and helped it to emerge from bankruptcy. In exchange, Brookfield received the right to appoint three directors to the nine-member GGP Board. When merger negotiations began in 2017, Brookfield owned about 35 percent of GGP's voting stock.

On May 1, 2017, GGP was trading at $23.07 per-share. On an investor conference call that day, GGP CEO Sandeep Mathrani shared his view that "there is a wide discount between public and private markets. The sum of the parts is far greater than GGP's current stock price." Mathrani added that "we are reviewing all strategic alternatives to bridge the gap" and "the disconnect has gotten so wide [that] it is up to us to demonstrate to the market that there's a real estate value at stake here." In June 2017, Mathrani argued to the GGP Board that "[t]he Company is trading at a deep discount to its private market valuation" and explained that "the current share price of $22.00 represents an approximately 20% discount to the mean [net asset value] per share estimate of Wall Street research analysts[.]" Brookfield, at this time merely a major stockholder in GGP, appeared to share in Mathrani's optimism. On a November 2, 2017 investor call, Brookfield CFO Bryan Davis pegged GGP's net asset value at "about $30 per share."

Nine days later, on November 11, Brookfield made an unsolicited offer to buy the rest of GGP it did not own, about 65 percent of the company (the "2017 Offer"). Under the 2017 Offer, each GGP share would be exchanged for, subject to proration, either (a) $23.00 in cash or (b) 0.9656 limited partnership units in the Bermuda-registered BPY. The implied total offer value of the 2017 Offer was $13.8 billion. On November 12, the GGP Board established a five-member Special Committee to negotiate with Brookfield. After three weeks of internal discussions, the Special Committee rejected the 2017 Offer, in part because of concern that many GGP stockholders would be restricted from, or otherwise not interested in, owning units of BPY, a Bermuda-registered partnership that was not organized as a REIT.

During the next three months, the Special Committee negotiated for GGP shareholders to have the option to receive equity in a United States-registered REIT. Brookfield agreed to this in February 2018—it eventually offered GGP stockholders equity in BPR, a newly formed U.S. REIT designed to mirror the economics of BPY—but the parties continued to negotiate other issues. According to the Proxy, the Special Committee credited concerns from GGP management during this period that trends in the real estate market were growing less favorable.

Interested in either making progress with Brookfield or cutting off negotiations entirely, the Special Committee countered on February 24 at $24.00-per-share, a one dollar increase from Brookfield's previous offer. The Special Committee then requested Brookfield's "best and final" offer. Brookfield quickly responded with its final top-line offer (the "February 25 Offer"). According to the Proxy:

The final proposal provided for consideration per share of GGP common stock, at the election of the unaffiliated GGP common stockholders and subject to proration, of up to $23.50 in cash, subject to a maximum aggregate amount of cash to be paid of $9.25 billion, with the remainder of the consideration to consist of BPY units (or shares of class A stock) at an exchange ratio of 1:1.

The February 25 Offer carried an implied value of $14.5 billion, up slightly from the $13.8 billion 2017 Offer.

The Special Committee met with its advisers the next day and instructed them to begin negotiating definitive transaction documents in line with the February 25 offer. The Special Committee circulated a draft merger agreement on February 27. Counsel for Brookfield responded with various proposed changes and, on March 7, a new draft agreement. The new draft featured a proposed structure with various steps—including "special dividends"—that were to occur over three days and culminate in the merger. It also included an "appraisal rights closing condition."

Generally speaking, an appraisal-rights closing condition allows the purchaser to terminate the transaction if a specified number of shares demands appraisal. Although the Proxy does not disclose the contours of Brookfield's demand or the threshold at which the appraisal-rights closing condition would have been triggered, it does disclose that the Special Committee actively fought the inclusion of such a condition. On March 10—three days after receiving Brookfield's latest draft agreement—the Special Committee requested "the deletion of the proposed appraisal rights closing condition[.]" Undeterred, Brookfield on March 13 sent back a draft agreement proposing that "the closing would be subject to the previously proposed appraisal rights closing condition[.]" In response, the Special Committee met to discuss five specified open issues, one of which was "the proposed appraisal rights closing condition[.]" The Special Committee refused to budge on this point and, on March 19, "sent a revised draft of the merger agreement ..., which did not reflect any material concessions on the material open issues."

According to the Proxy, after the appraisal-rights closing condition failed to stick, the parties hammered out a small number of other open items. Negotiators cleared these issues during the week of March 19, and on March 26, the Special Committee met to consider the fairness of Brookfield's final proposal (the "Final Offer"), which offered stockholders $23.50 in cash or one unit of either BPY or the new BRP REIT, subject to proration, and did not contain an appraisal-rights closing condition. At this meeting, the Special Committee's financial adviser, Goldman Sachs, opined that

the aggregate amount of the pre-closing dividend in the form of cash and shares of class A stock (or, at the election of GGP common stockholders, BPY units) and merger consideration to be paid to the GGP common stockholders (other than BPY and its affiliates) pursuant to the merger agreement was fair from a financial point of view to such holders.

The Proxy does not describe any substantive negotiations between the Special Committee and Brookfield about the pre-closing dividend. Instead, the "Background of the Transactions" section of the Proxy notes that Brookfield's 2017 Offer proposed "consideration per share of ... $23.00," while the Final Offer was for "consideration per share of ... up to $23.50 in cash[.]"

Shortly after Goldman's presentation, and still on March 26, the Special Committee determined that Brookfield's offer was fair and formally recommended that the GGP Board support it. Immediately following the Special Committee's meeting and recommendation, GGP's Audit Committee and the GGP Board approved the Final Offer. GGP and Brookfield executed the merger agreement on March 26, 2018.

B

The Transaction required approval by GGP's stockholders. Accordingly, Brookfield and GGP worked together to prepare the Proxy, which they filed on June 27, 2018. The Proxy is 344 pages—not including the introductory letter, selected definitions, or the various exhibits—and is a deeply challenging read. It explained that, upon receipt of the required shareholder approvals, Brookfield would acquire GGP through a multi-step process headlined by a large pre-closing dividend (the "Pre-Closing Dividend"). The Pre-Closing Dividend would be funded by Brookfield and become payable to all eligible stockholders after GGP adopted various charter amendments (the "Charter Amendments"), which facilitated the Transaction by, among other things, allowing GGP to issue new classes of equity. The Pre-Closing Dividend was to be followed, the next day, by the closing of the Transaction, which would trigger the right to the "per share merger consideration" (the "Per-Share Merger Consideration"). According to the Merger Agreement, which was attached to the Proxy as Exhibit A, the Pre-Closing Dividend was an automatic payment, while the Per-Share Merger Consideration would be paid only upon surrender of certificates of share ownership to a payment agent.

The Court of Chancery summarized the mechanics of the Transaction:

[s]tructurally, the deal consideration would be paid in two parts: (1) a pre-closing dividend of cash and shares, amounting to about 98.5% of the deal consideration (the "Pre-Closing Dividend"), and (2) $0.312 per share in cash at closing, representing the balance of the deal consideration, capped at $200 million [the Per-Share Merger Consideration].

These exact figures were not ascertainable from the Proxy. Instead, the Proxy used 161 words to define Per-Share Merger Consideration and noted that the final amount of that payment would be determined after the effective time of the merger. That said, stockholders who strung together the various defined terms and followed the Proxy's dense descriptions would have learned that the deal price was $23.50-per-share, that the Per-Share Merger Consideration would be tiny, and that the Pre-Closing Dividend would make up the lion's share of the consideration delivered in the merger—including more than $9 billion of the $9.25 billion in cash on offer. In two hypotheticals included to illustrate the mechanics of the transaction, the Proxy assumed that the Per-Share Merger Consideration would be $0.20 and the Pre-Closing Dividend would be $23.30.

This distinction between the two types of consideration was central to the entire Proxy. While, in some places, the Proxy discussed the various steps of the sale collectively as "the Transactions," it defined the Per-Share Merger Consideration and Pre-Closing Dividend as completely separate from each other. Keeping with this distinction, the Proxy defined "merger consideration" as "the per share merger consideration multiplied by the merger share number," i.e. , not including the Pre-Closing Dividend. Likewise, the Proxy said that the "merger"—which it defined as "the merger of Goldfinch [the acquisition vehicle] with and into GGP, with GGP surviving the merger" —would occur after the declaration of the Pre-Closing Dividend and the execution of the Charter Amendments.

The distinction between types of consideration was also prominent in the Proxy's discussion of appraisal rights, which is central to this appeal. In a section entitled "Appraisal Rights in the Merger," the Proxy explained that:

If the Transactions are completed, GGP common stockholders who comply exactly with the applicable requirements and procedures of Section 262 of the DGCL will be entitled to demand appraisal of

their GGP common stock and receive in lieu of the per share merger consideration a cash payment equal to the "fair value" of their GGP common stock, as determined by the Court of Chancery, in accordance with Section 262 of the DGCL, plus interest, if any, on the amount determined to be the fair value, subject to the provisions of Section 262 of the DGCL. Such appraised value may be greater than, the same as or less than the per share merger consideration.

This opinion refers to the above-quoted text, together with the entire "Appraisal Rights in the Merger" section appearing at pages 335–39 of the Proxy, as the "Appraisal Rights Notice."

Again, the Per-Share Merger Consideration—ultimately valued at 31 cents—was a tiny portion of the overall deal price. It would become payable immediately following the completion of the sale process's final step, which the Proxy referred to as the "merger." This was all distinct from the Pre-Closing Dividend, which was worth about 98.5 percent of the consideration and would become payable the day before the closing.

The Appraisal Rights Notice—and its guidance that the fair value of each share of GGP, a multi-billion-dollar company being sold for $23.50-per-share, "may be greater than, the same as or less than" 31 cents—was not a scrivener's error or a one off. Elsewhere, the Proxy reiterated to stockholders that they were "entitled to exercise appraisal rights solely in connection with the merger." The Proxy's introductory letter said the same thing. And an election form, which was distributed after the stockholder vote had succeeded and the appraisal deadline had passed, directed stockholders to review the Proxy and stated that "[a]ppraisal is only available with respect to the Merger Consideration." Each of these notices was consistent with the manner in which the Proxy and its exhibits described the closing process, which was that the Pre-Closing Dividend would become payable before the "merger," with the separately defined Per-Share Merger Consideration becoming payable upon closing.

Notably, in its detailed reasons for recommending the approval of the Final Offer, the Special Committee appeared to take a different view of appraisal rights than the rest of the Proxy. The Special Committee told stockholders that counting in favor of approval was

the availability of appraisal rights under Delaware law ... which provides those eligible GGP common stockholders with an opportunity to have the Court of Chancery determine the fair value of

their shares of GGP common stock, which may be more than, less than, or the same as the consideration to be received in the Transactions [.]

Thus, while the Appraisal Rights Notice told stockholders that GGP's fair value would be "greater than, the same as or less than" 31 cents, the Special Committee's reasons for approving the Final Offer included that the fair value would be "greater than, the same as or less than the consideration to be received in the Transactions," which was $23.50.

C

1

Ninety-four percent of stockholders unaffiliated with Brookfield approved the Transaction on July 26, 2018. On August 27, the Pre-Closing Dividend became payable by GGP with Brookfield's funds. On August 28, the Transaction closed, and the Per-Share Merger Consideration became payable. The Plaintiffs allege that GGP stockholders received both payments together in the same wire or check.

The Plaintiffs filed their original Complaint in April 2018, shortly after the Transaction—then just a merger agreement subject to ratification—was announced. They filed their operative Third Amended Complaint, which this decision refers to as the Complaint, in May 2020. During the intervening period, Plaintiff Randy Kosinski "sought books and records under Section 220 of the Delaware General Corporation Law to investigate possible wrongdoing in connection with the merger." The Court of Chancery described Kosinski as "the quintessential main street investor," found that he had stated a credible basis and proper purpose for his investigation, and ordered GGP to produce records essential to his inspection demand. GGP eventually "produced documents including Board and Special Committee meeting minutes and materials, director questionnaires, as well as emails."

The Plaintiffs’ Complaint draws on certain of those books and records, as well as the public Proxy. It alleges six causes of action. The Court of Chancery dismissed each count, and on appeal the Plaintiffs press only two. Count III asserts that the Defendants designed the large Pre-Closing Dividend to improperly eviscerate GGP stockholders’ appraisal rights. Count III also alleges that the Defendants "breached their fiduciary duty of loyalty by failing to provide GGP stockholders with a fair summary of their appraisal rights and [not] disclosing all material information relevant to GGP stockholders asked to vote in favor of the Buyout or pursue appraisal." Count VI alleges that Brookfield aided and abetted the Director Defendants’ fiduciary breaches because it helped design the Transaction and "co-authored, co-filed, and disseminated the misleading and deficient Proxy to GGP's stockholders." Count VI is relevant on appeal because the Court of Chancery found that Brookfield was not a controller and therefore did not owe fiduciary duties to GGP's stockholders. That said, "it is well settled that a third party who knowingly participates in the breach of a fiduciary's duty becomes liable to the beneficiaries of the trust relationship."

Key to the Plaintiffs’ disclosure claim is their allegation that "Defendants’ misleading statements and omissions ... would have dissuaded any rational stockholder from seeking appraisal." The Plaintiffs also assert that, by telling stockholders that the fair value of GGP would be "greater than, the same as or less than" the Per-Share Merger Consideration of 31 cents, the Appraisal Rights Notice erroneously gave the impression that a dissenter would "only place[ ] a de minimis part of GGP's supposed pre-Buyout value at issue." According to the Complaint:

Defendants’ conduct was intentional, a contrived scheme to dissuade Class members from exercising appraisal rights that BPY was actively trying to limit in negotiations with the Special Committee. While the Special Committee rejected the appraisal right condition BPY sought in the Buyout, Defendants were nonetheless successful in presenting GGP stockholders with an option no reasonable stockholder would accept – pursue the appraisal for only 1.5% of the consideration put in controversy by the Buyout.

As a remedy for the Defendants’ alleged breaches of the duty of loyalty, the Complaint requests quasi-appraisal damages.

2

After oral argument, the Court of Chancery ordered supplemental briefing on Count III, asking the parties to address three questions. First, the court inquired as to whether the Transaction's structure violated Section 262 by stripping most of GGP's value out via the Pre-Closing Dividend shortly before the merger. Second, it requested that the parties specify, based on the structure of the Transaction, "what specifically was a GGP stockholder entitled to have the Court appraise[.]" Third, the court asked if the definitions of Per-Share Merger Consideration, Pre-Closing Dividend, and "merger consideration" were materially misleading. The parties submitted supplemental briefing in response to these questions on February 18, 2021.

In an opinion issued on May 25, 2021, the Court of Chancery found that the Plaintiffs had failed to state a non-exculpated claim against the Defendants. As to Count III, the court first determined that the Pre-Closing Dividend did not unlawfully deprive stockholders of their appraisal rights because, in a hypothetical appraisal, the Court of Chancery would have had the "flexibility" to consider the Pre-Closing Dividend as a "relevant factor" and adjust its fair-value determination accordingly. Second, the court determined that, although "the Proxy could have been more clearly drafted" and "the stockholders may have been better served had Defendants capitalized the defined term ‘merger consideration’ and tightened up its definition," the Complaint failed to allege an actionable disclosure violation. According to the court, the Proxy adequately disclosed that stockholders had the "right to an appraisal of their shares" and was not required to entertain hypotheticals presented by the Transaction's structure.

II

The Plaintiffs have appealed the Court of Chancery's dismissal of the Complaint. We review a trial court's ruling on a motion to dismiss de novo . We "(1) accept all well pleaded factual allegations as true, (2) accept even vague allegations as ‘well pleaded’ if they give the opposing party notice of the claim, (3) draw all reasonable inferences in favor of the non-moving party, and (4) do not affirm a dismissal unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances." Naturally, our review recognizes that stockholder plaintiffs often have the ability under Section 220 to obtain corporate documents in support of their claims, as the Plaintiffs did here. These documents, and other public materials that the Plaintiffs refer to, like the Proxy, necessarily shape the range of "reasonably conceivable" outcomes.

III

The threshold question in this appeal is whether the Transaction's use of the Pre-Closing Dividend to shift consideration from the purchaser, Brookfield, to GGP's stockholders violated Delaware law by improperly restricting or eliminating appraisal rights. We conclude that it did not. In Part III.A, we offer a brief history of the appraisal remedy in Delaware as well as a description of the remedy's characteristics as relevant here. In Part III.B, we hold that dividends that are conditioned on the consummation of a merger are treated as merger consideration under Delaware law, meaning that the fair value of an entity that declares a conditional dividend—such as the Pre-Closing Dividend—is appraised as if the dividend had not been declared. In Part III.C, we hold that receiving a conditional dividend that is merger consideration as a matter of law does not result in the abandonment of a stockholder's appraisal right. This is because Section 262 does not prohibit the receipt of dividends payable before the effective date of the merger, and our settled prohibition of the "acceptance" of merger consideration does not apply to the choiceless receipt of a mandatory payment such as the Pre-Closing Dividend. After explaining these conclusions about how GGP would have been appraised, we turn in Part IV to the Plaintiffs’ claim that GGP's directors violated their fiduciary duty of disclosure.

A

Before the Delaware appraisal statute, now located at 8 Del. C. § 262, was enacted in 1899, a consolidation or merger of corporations required unanimous stockholder approval. This effectively gave individual stockholders a veto right over any transaction with which they disagreed. This form of minority protection led to nuisance blocking, threatening stockholder democracy. To curb nuisance blocking, the Delaware General Assembly enacted statutes that "permit[ted] the consolidation or merger of two or more corporations without the consent of all the stockholders. ..." At the same time, the General Assembly protected dissenting minority stockholders by creating appraisal rights. In an appraisal proceeding, the stockholder receives her pro rata share of the fair value of the appraised company—as calculated by the Court of Chancery—instead of accepting the consideration offered in the approved transaction. "Accordingly, the Court of Chancery's task in an appraisal proceeding is to value what has been taken from the shareholder, i.e. , the proportionate interest in the going concern."

Section 262 is implicated when the terms of a merger or consolidation require stockholders "to accept any consideration other than shares of stock in the surviving company, shares of stock listed on a national securities exchange [or held of record by more than 2,000 holders], [ ] cash received as payment for fractional shares," or any combination of shares of stock and cash received for fractional shares. Here, GGP stockholders received a combination of cash, representing 61 percent of the consideration delivered in the Transaction, and equity in one of two entities, representing the remaining 39 percent. All parties agree that this structure triggered Section 262, allowing dissenting stockholders to seek a judicial appraisal of the fair value of their stock.

To perfect appraisal rights, stockholders must strictly comply with the requirements of Section 262. Section 262(a) provides that the right to seek appraisal extends only to each stockholder who (1) "holds shares of stock on the date of the making of a demand" for appraisal, (2) "continuously holds such shares through the effective date of the merger," and (3) "has neither voted in favor of the merger ... nor consented thereto in writing[.]" Section 262 does not explicitly forbid dissenting stockholders from receiving merger consideration, but the general rule is that "[a]cceptance of the merger consideration is simply an abandonment of the appraisal right, no more and no less, at least in the usual case."

When determining the fair value of a dissenting stockholder's shares under Section 262, the Court of Chancery must "take into account all relevant factors," which include "market value, asset value, dividends, earning prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of merger and which throw any light on future prospects of the merged corporation[.]" The court calculates a per-share valuation by first "envisag[ing] the entire pre-merger company as a ‘going concern.’ " " ‘[T]he corporation must be viewed as an on-going enterprise, occupying a particular market position in the light of future prospects." "The valuation should reflect the ‘ "operative reality" of the company as of the time of the merger,’ " but it should not consider a minority discount or any synergies or value arising from the merger.

Section 262 also places strict compliance requirements on corporations. Within certain time periods outlined in the statute, corporations must notify stockholders of record of their right to seek appraisal and attach a copy of Section 262 to that notice. Additionally, when disclosing appraisal rights to stockholders, corporate directors must provide all material information necessary to make an informed decision to either approve the merger or dissent and seek appraisal. If the directors provide notice that violates the fiduciary duty of disclosure, stockholders may, subject to affirmative defenses and exculpation under Section 102(b)(7), be entitled to a "quasi-appraisal," a term this Court coined in Weinberger v. UOP .

As we explained in Berger v. Pubco Corp ., in a quasi-appraisal, the Court of Chancery determines the fair value of the corporation and, if it exceeds the deal price, awards the balance as damages to an opt-out class of the former corporation's stockholders. Berger concerned a "short-form" merger under 8 Del. C. § 253, but decisions issued before and after Berger support the application of the quasi-appraisal remedy to other mergers as well. Indeed, "[o]ne cause of action where the Delaware Supreme Court and the Court of Chancery consistently have held that quasi-appraisal damages are available is when a fiduciary breaches its duty of disclosure in connection with a transaction that requires a stockholder vote." The Plaintiffs in this case allege that GGP's directors violated their disclosure duties and seek quasi-appraisal as a remedy. GGP argues that no fiduciary violation occurred but does not contest the availability of quasi-appraisal as a remedy.

To summarize, Delaware law requires the Court of Chancery, when conducting an appraisal, to determine the value of the corporation at the time of the merger as if it had not occurred and the company had continued as a going concern. Once this fair value is determined, each petitioner is entitled to his pro rata portion of the appraised company's value, plus interest. And, although stockholders must comply exactly with Section 262 to secure the appraisal remedy, they may be entitled to a quasi-appraisal if they can show that the corporation's directors violated their fiduciary duty of disclosure when they sought stockholder approval of the deal.

B

Our review of Delaware appraisal law frames the question of how an appraisal proceeding conducted under Section 262 would consider a transaction, such as the one at issue here, that utilizes a large dividend to transfer consideration to stockholders shortly before closing. The Defendants have argued throughout this case that the answer is uncertain and that they left stockholders to figure out how an appraisal would view the Transaction GGP and Brookfield designed. Repeatedly noting that they advised GGP's stockholders to retain lawyers to help them navigate the appraisal process, the Defendants explain that a dissenter "would have been free to make any argument and submit any evidence she (and her experts) wished as to how the court should treat the Pre-Closing Dividend." The Court of Chancery agreed, holding that the Pre-Closing Dividend was a "relevant factor" that the appraising court could—or could not—consider under Section 262(h).

The Plaintiffs argue that the Pre-Closing Dividend was "part of the Merger," such that any appraisal proceeding would have measured GGP's value before the payment was made. They observe that the Pre-Closing Dividend was detailed in the section of the Merger Agreement entitled "THE MERGER," that it was dependent on stockholder approval of the Transaction, and that it was paid with Brookfield's funds in the same check or wire as the Per-Share Merger Consideration. The significance of labeling the Pre-Closing Dividend as legal merger consideration—"part of the Merger"—is, according to the Plaintiffs, this: "[i]f the Dividend was part of the Merger, then the fair value determination would be based on GGP as it stood pre-Dividend but if, as the Proxy said, the Dividend was separate from the Merger, then fair value would be determined post-Dividend."

We agree with the Plaintiffs: the Pre-Closing Dividend was, as a matter of Delaware law, merger consideration in the Transaction, just like the Per-Share Merger Consideration. The Defendants’ careful efforts to divide the deal price into two payments—while no doubt confusing to the stockholders who attempted to read the Proxy—do not change the object of the Court of Chancery's appraisal. That is to say, the court would have been required to determine the fair value of GGP as an entity before both payments were made.

Although the Transaction hardly exhibits a common structure, its use of a large conditional dividend is similar to the merger Chancellor Chandler considered in Louisiana Municipal Police Employees Retirement System v. Crawford . Crawford dealt with a stock-for-stock merger of equals between Caremark and CVS. After Express Scripts made an unsolicited offer to acquire Caremark, CVS sweetened its offer by agreeing to a conditional dividend of $6-per-share. Caremark and CVS then scheduled a stockholders’ meeting for the approval of the merger, but certain Caremark stockholders sued to enjoin the meeting because the disclosures did not inform stockholders of their appraisal rights. Caremark and CVS responded that the dividend had "independent legal significance preventing it from being recognized as merger consideration." Thus, they argued, the merger did not trigger appraisal rights.

The Court of Chancery rejected that argument and determined that the conditional dividend was, as matter of law, merger consideration. The court elaborated that the dividend was "simply cash consideration dressed up in a none-too-convincing disguise." The court reached this conclusion because the dividend was being paid to Caremark stockholders on behalf of CVS and was conditioned on the approval of the merger. The Chancellor therefore held that payment of the cash dividend as part of the merger consideration triggered the stockholders’ appraisal rights under Section 262(b).

The Defendants argue that Crawford is not applicable here because it held only that conditional dividends trigger appraisal rights, not that conditional dividends are part of the merger consideration for purposes of an appraisal action. Thus, the Defendants contend that, to the extent Crawford is relevant, they satisfied it by disclosing in the Proxy that GGP stockholders had the right to seek appraisal of their shares. But the obvious application of Crawford ’s holding is that the Pre-Closing Dividend is merger consideration not only for the purpose of triggering appraisal rights but also for the purpose of framing the scope of the appraisal proceeding under Section 262. Because such proceedings determine the value of the corporation at the time of the merger as if it had not occurred, dividends expressly conditioned on the merger—like all other merger consideration—must be treated as if they had not been paid.

We therefore hold that the Pre-Closing Dividend was, as a matter of Delaware law, merger consideration in the Transaction. This is because it was conditioned on the Transaction's approval and, according to the Complaint, paid with Brookfield's funds in the same wire as the Per-Share Merger Consideration. Thus, a properly conducted appraisal of GGP would have valued the Company as if the Pre-Closing Dividend and Per-Share Merger Consideration had not been paid.

C

Because we have held that the Pre-Closing Dividend was merger consideration under Delaware law, we must now decide whether each GGP stockholder's receipt of this payment effected a forfeiture of the right to seek appraisal. If the Transaction operated in this way, we must also determine if it was consistent with our law. Writing as Vice Chancellor, former Chief Justice Strine explained the general rule: "Acceptance of the merger consideration is simply an abandonment of the appraisal right, no more and no less, at least in the usual case." But this is not the general or usual case. The Transaction designed by Brookfield and the Director Defendants featured the large Pre-Closing Dividend, which was worth 98.5 percent of the deal price and automatically became payable the day before closing, and the tiny Per-Share Merger Consideration, which was worth 1.5 percent of the offer and became payable upon closing. In our view, receipt of the Pre-Closing Dividend did not effect a waiver of appraisal rights.

We start our analysis with the text of Section 262. Delaware's appraisal statute does not contain a specific textual prohibition against receiving consideration offered in a merger. Instead, Section 262(a) provides that appraisal is only available to the stockholder, otherwise eligible, who "has neither voted in favor of the merger ... nor consented thereto in writing[.]" Receipt of the Pre-Closing Dividend does not offend this prohibition because it was payable to supporting and dissenting GGP stockholders alike the day before the Transaction closed.

Nor does the Pre-Closing Dividend contravene Section 262(k). According to that subsection, dissenting stockholders may not "receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation )[.]" Thus, Section 262 creates an express exception allowing stockholders to receive dividends payable before the "effective date of the merger." Here, that day was August 28, 2018, and the Pre-Closing Dividend became payable on August 27.

Again, it is true that, in more traditional mergers where the deal consideration is not surgically bifurcated into separate payments, acceptance of that consideration effects a waiver of the appraisal right. We have explained as much, as has the Court of Chancery. In these more typical scenarios, taking the merger consideration means that the stockholder is no longer dissenting and has accepted the terms of the transaction. But we have also explained that "the basic principle underlying the appraisal statute [is] that an investor make an election either to accept the merger consideration or to pursue an appraisal of his shares." Here, qualifying GGP stockholders had no choice: they all received the Pre-Closing Dividend, and the only election they could make was whether it came in prorated cash or stock. This did not constitute acceptance of the Transaction's terms and, as a result, did not operate to waive appraisal rights.

In sum, we have concluded that the Pre-Closing Dividend was merger consideration for appraisal purposes under Delaware law and that receipt of this payment did not violate the eligibility requirements established by Section 262 or our doctrine. We therefore hold that the Transaction did not improperly eviscerate the appraisal rights of GGP stockholders. A properly conducted appraisal would have allowed otherwise eligible dissenters to participate, despite their receipt of the Pre-Closing Dividend, and would have valued GGP as if none of the steps of the Transaction—including the Pre-Closing Dividend, the Charter Amendments, and the Per-Share Merger Consideration—had taken place. With this established, we turn next to the Plaintiffs’ claim that GGP's directors violated their fiduciary duty of disclosure when they drafted the Appraisal Rights Notice and the rest of the Proxy.

IV

The Complaint alleges that the Defendants made materially misleading disclosures regarding the GGP stockholders’ appraisal rights. According to the Plaintiffs, these flawed disclosures were part of an intentional effort to structure and describe the Transaction in a way that would mislead stockholders and dissuade them from dissenting from the Transaction and exercising their appraisal rights. This objective, the Plaintiffs assert, was consistent with Brookfield's repeated demand of an appraisal-rights closing condition, which the Special Committee ultimately rejected. Accepting, as we must, all well pleaded factual allegations in the Complaint as true, and drawing all reasonable inferences in the Plaintiffs’ favor, we conclude that the Plaintiffs have stated a claim that the Director Defendants violated their fiduciary duty of disclosure with Brookfield's support.

A

The fiduciary duty of disclosure is a sharpened application of corporate directors’ omnipresent duties of care and loyalty that obtains when directors seek stockholder action, such as the approval of a proposed merger, asset sale, or charter amendment. In these situations, directors have "a fiduciary duty to disclose fully and fairly all material information within the board's control[.]" This specific disclosure duty is independent from a corporation's statutory obligation to notify its stockholders of their appraisal rights under Section 262. It is also distinct from a director's fiduciary duty to avoid misleading partial disclosures. Of course, these separate obligations may overlap, especially where, as here, corporate directors seek stockholder ratification of a proposed transaction that triggers the statutory appraisal remedy.

When a stockholder asserts a disclosure violation linked to a request for her vote, "the essential inquiry ... is whether the alleged omission or misrepresentation is material," and the stockholder need not prove reliance, causation, or damages. Information is considered material "if there is a substantial likelihood that a reasonable stockholder would consider it important in deciding how to vote." Stated another way, there must be "a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable stockholder as having significantly altered the ‘total mix’ of information made available." Notably, "the question is not whether the information would have changed the stockholder's decision to accept the merger consideration, but whether ‘the fact in question would have been relevant to him.’ "

Because the duty of disclosure sounds in the fiduciary duties of both care and loyalty, certain violations fall within the coverage of exculpatory charter provisions authorized by 8 Del. C. § 102(b)(7). Section 102(b)(7) allows stockholders, via a provision in the corporate charter, to eliminate or limit "the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as director[.]" Critically, Section 102(b)(7) provisions may not exculpate directors for their breaches of the duty of loyalty or "acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law[.]"

Thus, "[a] good faith erroneous judgment as to the proper scope or content of required disclosure implicates the duty of care rather than the duty of loyalty" and may be exculpated. However, "where a complaint alleges or pleads facts sufficient to support the inference that the disclosure violation was made in bad faith, knowingly or intentionally, the alleged violation implicates the duty of loyalty" and may not be exculpated. Here, GGP's charter includes a provision that exculpates directors to the fullest extent authorized by Section 102(b)(7). The Plaintiffs allege that this does not protect the Director Defendants because they intentionally misled stockholders about their appraisal rights in the Proxy.

B

The Plaintiffs allege in the Complaint that the Director Defendants, aided and abetted by Brookfield, violated their fiduciary duty of disclosure by inaccurately describing the entity that would be subject to appraisal. The Plaintiffs observe that the Proxy told stockholders that their appraisal rights were limited to GGP as it was positioned after declaring the Pre-Closing Dividend and amending its charter, when in fact a properly conducted appraisal would have valued the Company before these steps were taken. The Plaintiffs allege that this disclosure was "materially misleading and incomplete." They also claim that it was intentional and that the Defendants hoped to dissuade stockholders from dissenting and seeking appraisal.

Contrariwise, the Defendants argue that the Proxy accurately disclosed "that GGP stockholders were entitled to seek appraisal of their shares in connection with the Transaction[.]" The Defendants add that, to the extent the Transaction they designed implicated uncertainty in our appraisal law, they were not required to speculate and offer legal advice about how an appraisal proceeding would operate.

We take up these contentions regarding the adequacy of the Director Defendants’ disclosures in turn. We hold that the Proxy was materially misleading and that the defenses offered by Brookfield and the Director Defendants are without merit.

1

As previously quoted in this decision, the heart of the Appraisal Rights Notice in the Proxy explained that

If the Transactions are completed, GGP common stockholders who comply exactly with the applicable requirements and procedures of Section 262 of the DGCL will be entitled to demand appraisal of their GGP common stock and receive in lieu of the per share merger consideration a cash payment equal to the "fair value" of their GGP common stock , as determined by the Court of Chancery, in accordance with Section 262 of the DGCL, plus interest, if any, on the amount determined to be the fair value, subject to the provisions of Section 262 of the DGCL. Such appraised value may be greater than, the same as or less than the per share merger consideration .

Separately, the Proxy defined the "merger" as occurring after GGP's charter was amended and the Pre-Closing Dividend was declared and told the GGP stockholders that they were "entitled to exercise their appraisal rights solely in connection with the merger." The fair value available in that proceeding, stockholders were told, would be "greater than, the same as or less than" the "per share merger consideration." This decision capitalizes Per-Share Merger Consideration for the reader's convenience; the Proxy defined it in lowercase as the sliver of compensation, eventually set at $0.312, that would remain after GGP declared the massive Pre-Closing Dividend.

These disclosures were, in our view, confusing and misleading. As discussed above, a properly conducted appraisal would have valued GGP before the Charter Amendments and the payment of the Pre-Closing Dividend and the Per-Share Merger Consideration. It was the fair value of this pre-Transaction entity that stockholders were set to part with if they consented to the Transaction, and therefore it was this fair value that the stockholders were entitled to in an appraisal. Indeed, at the second oral argument in this appeal, the Defendants acknowledged as much:

You get an appraisal of your shares, you get your pro rata share in the company at the effective time of the merger, which the court would be free to decide was before any of the transaction mechanics began to happen. Before the pre-closing dividend was paid, and before the per-share merger consideration was paid. What was your pro rata share of the Company? That's what the statute says. You get appraisal on your shares, and the determination is, before anything happened with respect to the merger mechanics, what was your pro rata share of the company ?

The italicized portion of the above argument is a correct statement of Delaware law. The problem for the Defendants is that it is not what they disclosed in the Proxy. In contrast to this belated and qualified concession, the Proxy repeatedly decoupled the appraisal analysis from everything but the Per-Share Merger Consideration. To quote again from the Appraisal Rights Notice, stockholders were informed that the appraised fair value of GGP—a company that was being sold for $23.50-per-share—would be "greater than, the same as or less than the per share merger consideration" of $0.312. The reason this was so, the Proxy explained separately, was that any appraisal would be "solely in connection with the merger," which would occur after declaration of the Pre-Closing Dividend and the amendment of GGP's charter to authorize the issuance of new types of equity. It is reasonably conceivable, if not reasonably certain, that a GGP stockholder who read the Proxy would have taken it at its word and concluded that appraisal rights were limited to the fair value of GGP after payment of the Pre-Closing Dividend. Stockholders who reached this conclusion were misled.

We recognize that the Court of Chancery did not read the Proxy's appraisal disclosures as we have here. Instead, the court understood them to mean that, if

the Preclosing Dividend plus the closing consideration [i.e. , the per share merger consideration of $0.312] undervalued the dissenting stockholder's shares...[,] the dissenting shareholder would receive an appraisal award that reflected the difference between what she had received in the Pre-Closing Dividend and the adjudicated value of her shares.

Likewise, the Special Committee, in its evaluation of the benefits of the Transaction as recorded in the Proxy, considered the availability of appraisal rights and told stockholders that the fair value of GGP's shares "may be more than, less than, or the same as the consideration to be received in the Transactions," which included the Pre-Closing Dividend.

Would that it had been so disclosed in the Appraisal Rights Notice—but, as discussed, it was not. Instead, the Appraisal Rights Notice stated that a dissenting stockholder would receive not the difference between the fair value of the stockholder's shares as appraised by the court and the already received Pre-Closing Dividend, but rather a cash payment "equal to the ‘fair value’ " of those shares, and explicitly correlated that value to the $0.312 Per-Share Merger Consideration. In this way—and unlike the straightforward description of how an appraisal award would be determined that was offered by the Court of Chancery and, belatedly, by the Defendants at oral argument—the Proxy's description of appraisal rights was misleading.

2

Information is considered material "if there is a substantial likelihood that a reasonable stockholder would consider it important in deciding how to vote." At this early stage of the proceedings, we believe that it is reasonably conceivable that the Proxy's failure to correctly identify which entity would be subject to appraisal was material to stockholders in at least two ways. First, the entity confusion created by the Proxy left stockholders to ponder difficult questions about how GGP would be valued after declaring the Pre-Closing Dividend, which obligated the Company to pay out more than $9 billion in cash. Second, it is reasonably conceivable that the Proxy's definitions of Per-Share Merger Consideration and the "merger" led some stockholders to believe that they could not qualify for appraisal at all due to the operation of Section 262(g) and its de minimis condition.

We begin with what should be apparent by now: the Proxy told stockholders that they were entitled to an appraisal only of the GGP that remained after the Company declared the Pre-Closing Dividend and amended its charter, but this was incorrect as a matter of Delaware law. Although it may be possible to envision statements of the law that suffer from a technical inaccuracy but are not necessarily material to a stockholder's decision about how to vote, this is not one of them. We think it obvious that stockholders would have conceivably found it important to know that a properly conducted appraisal would have valued GGP before the declaration of the Pre-Closing Dividend and the execution of the Charter Amendments. Adequately informed, stockholders could have made a judgment about the value of the total consideration offered in the Transaction and their view of the fair value of GGP as a going concern. Indeed, this is the precise judgment the Special Committee made in recommending the Transaction. Instead, stockholders were left to guess about how an appraisal would consider the Pre-Closing Dividend and the Charter Amendments, and whether the fair value of GGP after these steps were taken—when added to the Pre-Closing Dividend—would make them whole.

Next, it is reasonably conceivable that the Proxy's defective description of appraisal rights was consequential to the stockholders’ evaluation of the eligibility criteria laid out in Section 262(g). That subsection provides, in pertinent part, that the Court of Chancery must dismiss appraisal proceedings unless the total number of dissenting shares is either more than one percent of the total amount of shares outstanding or the "value of the consideration provided in the merger ... for such total number of [dissenting] shares exceeds $1 million[.]"

At issue here is the second of Section 262(g) ’s thresholds, what some call the de minimis condition, which provides that dissenters must represent at least $1 million in "consideration provided in the merger." Even though the Proxy mirrored this statutory text, the Plaintiffs argue that they were misled because the Defendants defined Per-Share Merger Consideration to represent just $0.312 out of the total deal price of $23.50. Thus, applying the Defendants’ own defined terms, the Plaintiffs maintain that stockholders were left with the impression that they needed to satisfy the $1 million threshold by aggregating shares worth $0.312, rather than $23.50.

The Defendants counter this argument on three grounds. First, they claim that the Plaintiffs waived it by failing to advance it in the Court of Chancery. We disagree. In their Complaint, the Plaintiffs allege that "the misleading disclosure is material because no rational stockholder would dissent on the Buyout and perfect his appraisal rights if by doing so he only placed a de minimis part of GGP's supposed pre-Buyout value at issue." The Complaint also asserts that "[u]nder Delaware law, the Pre-Closing Dividend would be included as part of ‘the value of the consideration provided in the merger’ under Section 262(g)." Finally, in their briefing to the Court of Chancery, the Plaintiffs argued that "[t]he Proxy falsely disclosed (in buried, confusing form) stockholders’ appraisal rights by stating that only the [Per-Share Merger Consideration], a de minimis portion of deal consideration, could form the basis for recovery in any appraisal proceeding."

Second, and on the merits, the Defendants argue that, even if the Proxy was confusing or inaccurate, it is "speculative" whether stockholders were harmed because Section 262(g) allows for the aggregation of holdings and "only 0.5% of GGP's outstanding shares would be required to reach" the $1 million de minimis threshold. We do not agree. While it may take speculation to conclude that the Section 262(g) threshold was factually insurmountable, it is nevertheless reasonably conceivable that individual stockholders were harmed when the Proxy misled them about the total number of shares that had to dissent in order for appraisal to be available. Put differently, by dramatically overstating the number of shares that Section 262(g) required for appraisal to be available, the Proxy conceivably dissuaded stockholders from seriously considering appraisal at all.

Third, at oral argument, the Defendants suggested that the Proxy was not misleading at all because stockholders could have disregarded the defined terms and come to the independent conclusion that "consideration provided in the merger" included both the Pre-Closing Dividend and the Per-Share Merger Consideration, As the Defendants argued:

I think the language in 262(g) talks about, and you quoted it Your Honor, ‘the value of the merger consideration,’ which one could fairly assume includes both the pre-closing dividend and the $0.312, and why would someone be dissuaded under those circumstances from seeking appraisal?

THE COURT: Well, because you're telling us the merger consideration could

include both, but the proxy defines it as excluding the dividend.

As discussed at length, the Proxy persistently separated the Pre-Closing Dividend and the Per-Share Merger Consideration. Stockholders were told that the Pre-Closing Dividend would be declared before the "merger" and that appraisal rights were available "solely in connection with the merger" and the $0.312 in Per-Share Merger Consideration that came with it. Given this, stockholders could hardly have been expected to conclude that they could satisfy Section 262(g) by adding the two types of consideration together.

We therefore hold that the Proxy's erroneous statements about which entity would be appraised—the GGP before the Transaction or the GGP after the Charter Amendments and the payment of the Pre-Closing Dividend—were material because they deprived stockholders of necessary information about the fair value available in an appraisal proceeding and misled stockholders about the operation of Section 262(g).

3

As an overarching defense to the Plaintiffs’ duty of disclosure claim, the Defendants argue that that their disclosure duties did not require them to explain to stockholders the implications of the transaction structure on their appraisal rights "much less speculate about how a court might decide hypothetical legal issues." Tellingly, the Defendants maintain that the "hypothetical legal issue" requiring speculation is how the Pre-Closing Dividend might be treated in an appraisal proceeding." We note here that the conceded presence of a "hypothetical legal issue" supports our conclusion that the Proxy disclosure left stockholders in the dark about the true nature of their appraisal rights. It also reinforces the inference, mentioned previously, that the Defendants were poised to press for a narrow, post-dividend valuation in the event that a sufficient number of GGP stockholders pursued an appraisal remedy.

But, from a disclosure perspective, the Defendants’ approach suffers from a more fundamental flaw: the Appraisal Rights Notice—read with the Proxy's defined terms—did offer stockholders advice about how an appraisal proceeding would operate. It did so by applying the definition of the residual $0.312 payment as the "per share merger consideration" and, as previously discussed, closely linking the court's "fair value" determination in a hypothetical appraisal proceeding to the residue of GGP represented by that limited consideration. Thus, whether or not the Defendants were originally required to tell stockholders how the complex Transaction they designed would affect their appraisal rights, once the Defendants attempted to offer such an explanation, they were required to be correct and complete. In other words, they had to tell the stockholders that a properly conducted appraisal would determine the value of GGP before the payment of the Pre-Closing Dividend and the execution of the Charter Amendments. Because this did not happen, the Defendants are left to "face the consequences of a breach of fiduciary duty."

4

GGP's charter contains a Section 102(b)(7) exculpatory provision. The Plaintiffs argue that it does not apply here because the Director Defendants intended to mislead stockholders about the true nature of their appraisal rights. At this early stage of this case, we "do not affirm a dismissal unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances." With this standard in mind, we conclude that it is reasonably conceivable that the Director Defendants, aided and abetted by Brookfield, committed a violation of the fiduciary duty of disclosure that may not be exculpated.

The Complaint alleges that the Director Defendants, with Brookfield's support, "breached their fiduciary duty of loyalty by failing to provide GGP stockholders with a fair summary of their appraisal rights and [not] disclosing all material information relevant to GGP stockholders" and their decision whether to support the Transaction. The Plaintiffs also claim that this "conduct was intentional, a contrived scheme to dissuade Class members from exercising appraisal rights that BPY was actively trying to limit in negotiations with the Special Committee." While we do not accept unsupported allegations as true even at the pleading stage—after all, stockholder plaintiffs often have the ability to draw on public documents and Section 220 books and records in order to fill out their complaints—we believe that the Plaintiffs have met their initial burden for at least two reasons.

First, the Complaint observes that Brookfield demanded an appraisal-rights closing condition early in its negotiations with the Special Committee. As discussed above, an appraisal-rights closing condition allows the purchaser to terminate the transaction if a specified number of shares demands appraisal. The Proxy, which the Court of Chancery determined was integral to the Complaint and therefore incorporated by reference, supports the Complaint's allegation. It indicates that Brookfield twice demanded an appraisal-rights closing condition and was rejected by the Special Committee on both occasions. After these rejections, the parties agreed to bifurcate the deal consideration into two pieces, the large Pre-Closing Dividend and the tiny Per-Share Merger Consideration. In our view, it is reasonably conceivable that the Defendants settled on this structure and the related Proxy disclosure as another method of limiting Brookfield's exposure to appraisal demands.

Second, and relatedly, the Defendants have not identified an alternative justification for the structure they chose. Although it is generally true that corporate directors do not have to justify each element of a proposed transaction structure when they communicate with stockholders, in this case the Plaintiffs have argued, with citation to a Proxy written by the Defendants, that Brookfield's purchase of GGP was designed and disclosed with the explicit aim of curtailing the statutory appraisal rights that were triggered by the Transaction's cash consideration. Facing this argument in litigation, the Defendants have had every opportunity to explain to this Court why the negative inferences proposed by the Plaintiffs are not reasonably conceivable. Instead, the Defendants on appeal offer a blanket and summary denial, maintaining that "[n]o facts are alleged in the Complaint suggesting that the GGP directors’ conduct concerning appraisal rights was ‘deliberate, intentional, unlawful, and in bad faith,’ as Plaintiffs contend[.]" At this stage, this is not enough to defeat the Plaintiffs’ well-pleaded claim that the Defendants committed a knowing violation of the fiduciary duty of disclosure.

V

The judgment of the Court of Chancery dismissing Counts I, II, IV, and V of the Complaint is affirmed. The judgment of the Court of Chancery dismissing Counts III and VI of the Complaint is reversed, and this matter is remanded for further proceedings in accordance with this opinion.

MONTGOMERY-REEVES, Justice, concurring in part, dissenting in part, joined by VAUGHN, Justice:

We agree with the Majority's decision to affirm the dismissal of the Plaintiffs’ claim that the Transaction structure deprived stockholders of their right to seek appraisal for two reasons. First, we agree that the Pre-Closing Dividend is merger consideration. Second, we agree that stockholders can accept the Pre-Closing Dividend and still seek appraisal. However, we depart from our colleagues in the majority on their interpretation of the disclosure of appraisal rights. We do not believe it is reasonably conceivable that the disclosure is misleading. We also would hold that the Plaintiffs waived the Section 262(g) arguments presented on appeal. Thus, we would affirm the Court of Chancery's decision.

The Plaintiffs argue that if the Pre-Closing Dividend is merger consideration for appraisal purposes, they state a reasonably conceivable claim that the notice of appraisal in the Proxy is misleading. The Plaintiffs contend that the Proxy did not accurately inform stockholders of the appraisal rights that were available because "[i]t told them that appraisal rights were limited to the Merger (excluding the Pre-Closing Dividend) and that an appraisal proceeding would only determine whether fair value post-Dividend was greater than, the same as or less than the $.0312 [sic] merger consideration." In general, the Plaintiffs take issue with the Proxy because it

identifies the $0.312 in cash received in the merger as "the per share merger

consideration" and specifies that stockholders perfecting appraisal rights would "receive in lieu of the per share merger consideration a cash payment equal to the fair value of their GGP common stock," which might be "greater than, the same as or less than the per share merger consideration."

In other words, the Plaintiffs believe that the Proxy is misleading because it "expressly, directly and repeatedly said" "that appraisal would be limited to the [Per-Share Merger Consideration]."

Plaintiffs further allege that "in light of Crawford , the notice was not an accurate statement of the available appraisal rights" because "under Crawford the Dividend might be part of the Merger." And because, according to the Plaintiffs, Delaware law requires corporations to provide notice of the scope of an appraisal proceeding, the Proxy's failure to mention that the Dividend would be merger consideration for appraisal purposes renders it incomplete and misleading.

A. Disclosure Obligations Under Delaware Law

"[D]irectors of Delaware corporations are under a fiduciary duty to disclose fully and fairly all material information within the board's control when it seeks shareholder action." "The duty of disclosure is a judicially imposed fiduciary duty" that "serves the ultimate goal of informed stockholder decision making." "The duty of disclosure is, and always has been, a specific application of the general fiduciary duty owed by directors" and is "[a] combination of the fiduciary duties of care and loyalty." "The Delaware fiduciary duty of disclosure is not a full-blown disclosure regime like the one that exists under federal law ...."

"Directors of Delaware corporations have a fiduciary duty to shareholders to exercise due care, good faith and loyalty whenever they communicate publicly or directly with shareholders about the corporation's affairs." "When stockholder action is requested, directors are required to provide shareholders with all information that is material to the action being requested and ‘to provide a balanced, truthful account of all matters disclosed in the communications with shareholders.’ "

"A board can breach its duty of disclosure under Delaware law in a number of ways—by making a false statement, by omitting a material fact, or by making partial disclosure that is materially misleading." "The last of these occurs where a board makes a required or even non-obligatory pronouncement on a subject that is incomplete and by which shareholders are materially misled." Omitted facts are considered material "if there is a substantial likelihood that a reasonable stockholder would consider [them] important in deciding how to vote." Stated another way, there must be "a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable stockholder as having significantly altered the ‘total mix’ of information made available." Therefore, the primary question is whether the alleged misrepresentation is material with respect to the stockholder action being sought. Notably, "the question is not whether the information would have changed the stockholder's decision to accept the merger consideration, but whether ‘the fact in question would have been relevant to him.’ "

"When determining whether there has been a disclosure violation, a proxy statement should be read as a whole." Thus, it is not dispositive that a sentence or particular characterization read in isolation may be misleading if the misleading nature of that sentence or characterization cannot be sustained in light of the entire proxy statement. This concept is grounded in the fact that, "in order to be material, the omitted fact must contribute meaningfully to the ‘total mix’ of information available to the stockholders."

Under Delaware case law, the corporation's disclosure of appraisal rights must include all material information to allow stockholders to determine whether to accept the merger consideration or seek appraisal. Thus, the disclosure of appraisal rights must comply with Section 262 ’s notice obligations and include all material information (i.e., that which meaningfully adds to the total mix of information a stockholder takes into account when deciding whether to accept the merger consideration or seek appraisal).

B. The Plaintiffs Fail to State a Claim That the Proxy Is False or Misleading

The following passage from the Proxy lies at the heart of this appeal:

If the Transactions are completed, GGP common stockholders who comply exactly with the applicable requirements and procedures of Section 262 of the DGCL will be entitled to demand appraisal of their shares of the GGP common stock (i.e., the dissenting shares) and receive in lieu of the per share merger consideration a cash payment equal to the "fair value" of their GGP common stock, as determined by the Court of Chancery, in accordance with Section 262 of the DGCL, plus interest, if any, on the amount determined to be the fair value, subject to the provisions of Section 262 of the DGCL. Such appraised value may be greater than, the same as or less than the per share merger consideration.

The Plaintiffs contend that the Proxy directly states that GGP would be appraised after the payment of the Pre-Closing Dividend because the Proxy uses the defined term "per share merger consideration." The majority agrees and concludes that because the Proxy defines the "merger" as occurring after the Pre-Closing Dividend was declared, and because the Proxy states that GGP stockholders are "entitled to exercise their appraisal rights solely in connection with the merger ," it is reasonably conceivable that a stockholder would conclude that GGP would be appraised after the payment of the Pre-Closing Dividend. We disagree.

1. The Proxy's use of the term "per share merger consideration"

The Plaintiffs take issue with the Proxy's use of the defined term "per share merger consideration" in the sentences quoted above. In particular, the Plaintiffs argue that the definition of per share merger consideration, which excludes the Pre-Closing Dividend, is misleading because it implies that any appraisal proceeding would value the corporation after the payment of the Pre-Closing Dividend. We disagree and would conclude that the Proxy's use of that definition simply described the mechanics of a potential appraisal proceeding.

As explained in the majority opinion, although stockholders must forgo the merger consideration to demand appraisal, Section 262(k) entitles all stockholders of record (even those that demand appraisal) to dividends payable before the effective date of the merger. Because the Pre-Closing Dividend was a dividend payable prior to the effective date of the Transaction, GGP stockholders who demanded appraisal were entitled to that payment. And because the Per-Share Merger Consideration did not take the form of a dividend payable prior to the effective date of the Transaction, stockholders were required to forgo the Per-Share Merger Consideration to perfect their appraisal right. Thus, under the mechanics of an appraisal proceeding, any payment required by the Court of Chancery would be made in place of only the Per-Share Merger Consideration because Section 262(k) entitles the stockholder to the Pre-Closing Dividend. In other words, the Proxy's use of "per share merger consideration" accurately reflects that the Per-Share Merger Consideration, and not the Pre-Closing Dividend, would be the only consideration at risk in an appraisal action.

Thus, we do not believe that Plaintiffs stated a reasonably conceivable claim that the Proxy's use of "per share merger consideration" was misleading.

2. The Proxy's use of the term "merger"

The majority holds that it is reasonably conceivable that a stockholder could read the Proxy and conclude that any appraisal proceeding would value the Company after payment of the Pre-Closing Dividend because the Proxy states that GGP stockholders are "entitled to exercise their appraisal rights solely in connection with the merger ." And because the Proxy defines the merger as occurring after the declaration of the Pre-Closing Dividend, a stockholder could reasonably read the Proxy as stating that appraisal would be limited to the approximately one and a half percent of the value of the company left at the time it paid the Per-Share Merger Consideration. We disagree.

In our view, the phrase "in connection with" qualifies the word "merger." There is nothing more connected to the Transaction than the Pre-Closing Dividend—after all, it makes up 98.5% of the Transaction's consideration, is conditioned on the Transaction's approval, and is funded by the buyer. That the Pre-Closing Dividend was connected to the merger is disclosed throughout the entirety of the Proxy:

• Therefore, as a result of receiving the pre-closing dividend and the per share merger consideration, unaffiliated GGP common stockholders ... will be entitled to receive, for each share of issued and outstanding GGP common stock and each share of GGP common stock deemed held, and subject to proration, total consideration of up to $23.50 in cash or one (1) share of class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash).

• Q: How do I calculate the value of the total consideration received in connection with the Transactions?

A: Unaffiliated GGP common stockholders ... will be entitled to receive, for each share of issue and outstanding GGP common stock, and subject to proration, total consideration of up to $23.50 in cash or one (1) share of class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash).

• If the Transactions, including the merger, are not completed, GGP common stockholders will not receive any consideration in connection with the Transactions.

• [E]quity award average cash amount is the value (rounded to the nearest $0.001) of the aggregate cash consideration that would be paid in respect of each share of GGP common stock ... in connection with (i) the pre-closing dividend , assuming that every share makes a cash election and the form of consideration is prorated in accordance with the merger agreement,

and (ii) the per share merger consideration .

• At a meeting of the special committee held on March 26, 2018, Goldman Sachs & Co. LLC, which we refer to as Goldman Sachs, rendered to the special committee its oral opinion, subsequently confirmed in writing, to the effect that, as of that date, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the aggregate amount of the pre-closing dividend in the form of cash and the shares of class A stock ... and merger consideration, which we refer to collectively as the aggregate consideration , to be paid to GGP common stockholders, pursuant to the merger agreement was fair from a financial point of view to such holders.

• As a result, the BPY general partner board revised its initial offer that BPY publicly announced on November 13, 2017 to: (i) increase the cash consideration from $23.00 to $23.50 per share of the GGP common stock; (ii) increase the aggregate cash consideration by $1.85 billion from $7.4 billion to $9.25 billion ....

• [E]ach of the Parent parties and the Brookfield filing persons believes that the Transactions are substantively and procedurally fair to unaffiliated GGP common stockholders based on its consideration of the following factors, among others: the consideration per share of GGP common stock of up to $23.50 in cash or one (1) share of class A stock or one BPY unit, subject to proration, and the other terms and conditions of the merger agreement ....

• [I]n no event shall the Company be obligated to consummate the Charter Closing unless the Escrow Agent has confirmed to the Company the receipt of an amount at least equal to the sum of (i) the Total Cash Amount ....

• ‘Total Cash Amount’ shall mean $9,250,000,000 less (i) the Partnership Common Unit Cash Amount, less (ii) the Partnership LTIP Unit Cash Amount, less (iii) the Total Restricted Stock Cash Consideration.

And "[w]hen determining whether there has been a disclosure violation, a proxy statement should be read as a whole."

Similarly, in the same paragraph as the first sentence at issue, the notice of appraisal in the Proxy states that "GGP common stockholders should note ... the opinion of Goldman Sachs as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the merger consideration ...." In other words, the Proxy's notice of appraisal references Goldman Sachs’ opinion as to the fairness of the Transaction value; that opinion concludes that the Pre-Closing Dividend plus the Per-Share Merger Consideration is a fair price . Thus, the Goldman Sachs opinion further confirms that the Pre-Closing Dividend is connected to the merger.

For these reasons, we do not think it is reasonably conceivable that a stockholder would read the entirety of the Proxy and conclude that the Pre-Closing Dividend was not declared "in connection with" the merger.

3. The Proxy's Discussion of the Consideration of the Pre-Closing Dividend in an Appraisal Action

We also disagree with the appellant and the majority for an additional reason. In our opinion, it is not reasonably conceivable that a stockholder would read the Proxy, the Agreement, or the statute and conclude that the Company's value for appraisal purposes would be determined after payment of the Pre-Closing Dividend.

Section 262(h) instructs the Court of Chancery "to determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger ." The Court has held that in an appraisal action, while "the fair value determination must be measured by the ‘operative reality’ of the corporation at the time of the merger," "the court should first envisage the entire pre-merger company as a ‘going concern,’ as a standalone entity, and assess its value as such" without considering any elements of value (positive or negative) arising from the merger. In other words, in an appraisal action the court must value the company as it would have been had the merger never occurred .

Traditionally, this has explained why synergies and other elements of value arising from the merging of corporations should not be considered in an appraisal proceeding. Elements of value arising from the expectation of the merger should be backed out of an appraisal proceeding because that value would not arise had the merger never occurred. But there is nothing more representative of "value arising from the accomplishment or expectation of the merger" than the merger consideration itself—the value of the transaction at issue. As the Court of Chancery aptly noted in In re Dollar Thrifty Shareholder Litigation , where the use of a $200 million dividend in a merger gave rise to questions regarding the reasonableness of the merger's termination fee, the "value of the Merger ... is logically quantified as the amount of consideration flowing into [the] shareholders’ pockets." In other words, under the statute, which was attached to the notice of appraisal, the Court of Chancery would value GGP as if the Pre-Closing Dividend had not been paid because value arising from the merger—here, the payment of the Pre-Closing Dividend to GGP and then to its stockholders—would not be part of the corporation as a going concern had the merger never occurred.

Notably, the Plaintiffs agree with this conclusion in their brief, stating, "if, as in Crawford , the Dividend was part of the Merger, GGP ’s operative reality would not include the Dividend and fair value would be based on GGP ’s pre-Dividend value ."

Moreover, that the Court of Chancery's determination of fair value would exclude any element of value arising from the accomplishment or expectation of the merger was repeated three times in the appraisal notice of the Proxy:

• [H]olders of record of GGP common stock ... will be entitled to have their GGP common stock appraised by the Court of Chancery and to receive in lieu of the per share merger consideration, a cash payment equal to the "fair value" of such shares, exclusive of any element of value arising from the accomplishment or expectation of the merger ....

• After determining the stockholders entitled to appraisal, the Court of Chancery will appraise the "fair value" of the GGP common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger ....

• Section 262 of the DGCL provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the merger. "

It is not reasonable to read the plain language of the Proxy or the statute and assume that "any element of value arising from the accomplishment or expectation of the merger" would somehow exclude the Pre-Closing Dividend, which, as the Plaintiffs note multiple times, makes up 98.5 percent of the Transaction's value. The use of the word "any" in this context means "each" or "every." Thus, the plain language of the Proxy and statute render unreasonable any reading that the Pre-Closing Dividend was not included in the definition of value for appraisal purposes, which means the appraisal action would value the corporation as if the Pre-Closing Dividend was not paid.

Moreover, we note that in the Plaintiffs’ first argument on appeal, they convincingly argue that the Pre-Closing Dividend is merger consideration for purposes of an appraisal, pointing to at least two portions of the Proxy that support their stance. The Plaintiffs cannot have it both ways. They cannot seriously allege in the first argument that the Proxy makes clear that the Pre-Closing Dividend is merger consideration but contend in the second argument that the Proxy misleads stockholders into concluding that the Pre-Closing Dividend is not connected to the merger for appraisal purposes.

When the Proxy is read in full, the sentences at issue are not misleading because the whole of the Proxy makes clear that GGP would be valued as if the Pre-Closing Dividend had not been paid. As such, it is not reasonable for a stockholder to conclude that an appraisal action would value the corporation after the distribution of the Pre-Closing Dividend.

Thus, we would affirm the Court of Chancery's holding that the Plaintiffs did not state a reasonably conceivable claim that the Proxy violated Section 262 or Delaware disclosure obligations.

C. The Plaintiffs Waived Their De Minimis Argument

Finally, the Plaintiffs contend, and the majority opinion concludes, that it is reasonably conceivable that the Proxy's definitions of Per-Share Merger Consideration and the "merger" led some stockholders to believe that they could not qualify for appraisal at all due to Section 262(g) ’s de minimis condition.

The majority concludes that this argument is not waived because the complaint states, "[T]he misleading disclosure is material because no rational stockholder would dissent on the Buyout and perfect his appraisal rights if by doing so he only placed a de minimis part of GGP's supposed pre-Buyout value at issue." The majority also relies on the following sentence from the Plaintiffs’ brief below: "The Proxy falsely disclosed (in buried, confusing form) stockholders’ appraisal rights by stating that only the [Per-Share Merger Consideration], a de minimis portion of deal consideration, could form the basis for recovery in any appraisal proceeding." We disagree.

On appeal, the Plaintiffs argue that the Transaction's structure effectively eliminated appraisal rights because the Pre-Closing Dividend was too small for most stockholders to satisfy Section 262(g) ’s de minimis requirement. In the complaint, the Plaintiffs argue that stockholders likely would not seek appraisal because only a de minimis portion of the consideration would be at issue in an appraisal proceeding. That is, the Plaintiffs alleged that stockholders were dissuaded from seeking appraisal because the small, de minimis amount of money that would have been at stake in an appraisal proceeding—the Per-Share Merger Consideration—rendered appraisal futile. While we acknowledge that both statements use the term de minimis , they convey separate concepts. Their argument on appeal relates to whether GGP stockholders could meet Section 262(g) ’s de minimis exception. Their argument below states only that appraisal would be limited to the small (de minimis ) Per-Share Merger Consideration. It cannot be enough that a plaintiff merely uses the same phrase—a plaintiff must also make the same argument. Thus, we would hold that under Supreme Court Rule 8, the Plaintiffs waived the de minimis argument made on appeal.

In sum, we would hold that the Proxy was not misleading for three reasons: (1) the Proxy's use of the term "per-share merger consideration" in the appraisal notice tells the stockholders what is at risk in an appraisal proceeding; (2) the Proxy's use of the term "merger" is qualified by the phrase "in connection with," and the entirety of the Proxy makes clear that the Pre-Closing Dividend is connected to the merger; and (3) any appraisal proceeding would exclude any value (positive or negative) arising from the Transaction and the Pre-Closing Dividend is value arising from the Transaction. We would also hold that the Plaintiffs waived the de minimis argument they made on appeal.

For these reasons, we respectfully dissent.