Unocal Fifteen Year Later (and What We Can Do About it)
23 Pages Posted: 15 Nov 2002
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 occasion to evaluate a remarkable experiment in corporate law; the Delaware Supreme Court's development of an intermediate standard of review for appraising defensive tactics. This assessment reveals that Unocal has developed into an unexplained and likely inexplicable preference that control contests be resolved through elections rather than through market transactions. In doing so, the remarkable struggle between the chancery court and the supreme court for Unocal's soul is canvassed. The author also maintains 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, the retrospective ends 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 improvement cannot be preserved if the Delaware Supreme Court chooses otherwise to restore balance to the law of takeovers.
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