Twenty-Five Years After 'Takeover Bids in the Target's Boardroom': Old Battles, New Attacks and the Continuing War
14 Pages Posted: 11 Mar 2012
Date Written: March 9, 2012
A quarter century has passed since publication of Takeover Bids in the Target’s Boardroom. In that time, we have witnessed the evolution and integration of the ideas presented in Takeover Bids into common law and amendments to state corporate law statutes. The core principles presented in the article sparked numerous academic and policy debates, most of which focused on varying aspects of shareholder "self-determination" and on the scope of a board’s ability to take unilateral measures that the board considered to be in the best interests of the corporation. I am pleased to reflect, twenty-five years later, on the current state of discussion regarding the theories contained in Takeover Bids.
As I explore my own perspectives, I am reminded of the primary impetus for Takeover Bids - a concern that the business judgment rule and the board’s fundamental gate keeping role were severely threatened by calls for director passivity in the context of hostile takeover attempts. At its core, Takeover Bids argued that a corporation’s board of directors should be permitted, and indeed has a duty, to manage actively the business of the company, and that its discretion in doing so should not depend on the nature of the particular issue that is being decided (so long as the board satisfies its fiduciary duties). Those theories - a rejection of board passivity, an endorsement of the board as gatekeeper and an active role by the board in the context of hostile takeover bids - became part of the public discourse after the publication of Takeover Bids and were ultimately affirmed, either tacitly or explicitly, by both common law and legislative guidance. In short, that battle was won.
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