Director responsibilities in company sales

Author: | Published: 22 Feb 2016

A Delaware ruling on directors’ responsibilities in company sales could change the way boards sell their companies

Few things put more responsibility, or more stress, on directors of a publicly traded company than its possible sale. And few corporate governance topics have received more attention than directors' responsibilities with regard to this situation. However, a Delaware Supreme Court decision at the end of 2014 changed many lawyers' views of what directors must do to sell a company. This is an updated review of directors' responsibilities regarding sales of their companies.

The possibility that a company will be sold can arise in a number of ways. The company can receive an unsolicited bid from a potential purchaser. Or the CEO of the company can propose to the board a strategic combination with another company. Alternatively, the board can decide that the company should seek a buyer, possibly to access financial support...