Unocal Fifteen Years Later (and What We Can Do About it)

Columbia Law and Economics Working Paper No. 177; and Stanford Law and Economics Olin Working Paper No. 201

31 Pages Posted: 1 Aug 2000  

Ronald J. Gilson

Stanford Law School; Columbia Law School; European Corporate Governance Institute (ECGI)

Date Written: June 2000

Abstract

The coincidence of the new millennium and the fifteenth anniversary of the Delaware Supreme Court's announcement of a new approach to takeover law provides an appropriate occasion to step back and evaluate a remarkable experiment in corporate law - the Delaware Supreme Court's development of an intermediate standard for evaluating defensive tactics. I will argue that Unocal has developed into an unexplained and, I think, inexplicable preference that control contests be resolved through elections rather than market transactions. In doing so, I will highlight the remarkable struggle between the Chancery Court and the Supreme Court for Unocal's soul, a contest I will suggest the Supreme Court won only by fiat. I will also maintain that the current debate over shareholder-adopted bylaws that repeal or amend director-adopted poison pills provides a vehicle to reposition Delaware takeover law. Finally, I will end my retrospective on a note of praise. Intertwined with the development of Delaware takeover law is a reassessment and important expansion of the role of independent directors in corporate governance. There is no reason why this important development cannot be preserved if the Delaware Supreme Court chooses otherwise to restore balance to the law of takeovers.

Suggested Citation

Gilson, Ronald J., Unocal Fifteen Years Later (and What We Can Do About it) (June 2000). Columbia Law and Economics Working Paper No. 177; and Stanford Law and Economics Olin Working Paper No. 201. Available at SSRN: https://ssrn.com/abstract=235417 or http://dx.doi.org/10.2139/ssrn.235417

Ronald J. Gilson (Contact Author)

Stanford Law School ( email )

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United States
650-723-0614 (Phone)
650-725-0253 (Fax)

Columbia Law School ( email )

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New York, NY 10025
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212-854-1655 (Phone)
212-854-7946 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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