The New Unocal

40 Pages Posted: 27 Mar 2023 Last revised: 8 Aug 2023

Date Written: August 7, 2023

Abstract

American corporate law has remained remarkably stable for decades. The stakeholder movement of recent years has unleashed extensive discussions about environmental, social, and corporate governance (“ESG”), corporate purpose, diversity, and benefit corporations. Yet change in actual legal rules has been slow to appear. Against that backdrop, two Delaware decisions of the 2020s (the Williams Companies Stockholder Litigation in 2021 and Coster v. UIP Companies, Inc. in 2023) suggest a significant adaptation in a more traditional part of corporate law. These decisions reinterpret key aspects of Unocal Corp. v. Mesa Petroleum Co., a foundational case in the current corporate law paradigm. They reflect the absorption into Unocal of what has been the separate (and more intense) Blasius standard of review for director acts impeding shareholder voting and the narrowing of several Unocal elements that increase the likelihood that some director governance decisions, such as implementing or declining to redeem a poison pill, will fail judicial review. This article examines the corporate law template that gave rise to Unocal and other standards of enhanced scrutiny, the changes in that template evidence by recent Delaware decisions, and how these changes reflect a reshaped role for shareholders in the face of recent technological innovations and market changes. The August 2023 version of this paper reflects the Delaware Supreme Court’s summer 2023 decision in Coster v. UIP Companies, Inc.

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Keywords: takeovers, fiduciary duty, enhanced scrutiny, Delaware corporate law, Unocal, Blasius

Suggested Citation

Thompson, Robert B., The New Unocal (August 7, 2023). Available at SSRN: https://ssrn.com/abstract=4392086 or http://dx.doi.org/10.2139/ssrn.4392086

Robert B. Thompson (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States
(202) 661-6591 (Phone)

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