Takeover bylaws: a wrench in the proxy works
Article Abstract:
Jonathan R Macey forgets, in his suggestion that the takeover market can be saved by limiting the power of corporate directors in favor of shareholders, that corporate directors are the ones who run corporations. Shareholder-enacted bylaws, such as the ones on appeal in Delaware courts, that limit a board's ability to resist takeovers run contrary to a central concept in Delaware corporate law, and courts have frequently noted that shareholders dissatisfied with management have the recourse of electing different managers.
Publication Name: The National Law Journal
Subject: Law
ISSN: 0162-7325
Year: 1998
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Early screening helps avoid judicial scrutiny; when deals go sour, companies need, as much as possible, to show director independence
Article Abstract:
Potential director conflicts of interest give unhappy shareholoders the opportunity to seek judicial review of corporate transactions under heightened scrutiny, and avoiding them should be among the goals of start-up companies. Claims can raise conflict-of-interest issues charging that directors have favored personal financial interests over those of the corporation. Directors usually shield their corporate decisions with the business judgment rule, but there are instances where plaintiffs are able to overcome that.
Publication Name: The National Law Journal
Subject: Law
ISSN: 0162-7325
Year: 1998
User Contributions:
Comment about this article or add new information about this topic:
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