US-CN Companies & Securities Law Assignment

The Revlon rule is the legal principle that a company's board of directors make a reasonable effort to obtain the highest value for a company when a hostile takeover is imminent. The Revlon rule involves a narrower interpretation of a board's fiduciary duty, which typically is limited to protecting a company from external threats; under normal conditions, a director is not required to negotiate with any hostile bidder. In Paramount Communications, Inc. v. Time Inc. William Allen believed that the dealing between Time and Warner did not constitute selling Time, because the control of the company is still in the broad, liquid and changing market after the dealing. In other words, the control of Time was still dispersed. Under Revlon doctrince, when evaluating a sale of a company or the transfer of its control, a court will defer to enhanced judicial scrutiny, rather than a business judgement rule, and a board's fiduciary duty will shift from a duty to preserve the c...

Defensive Tactics for Corporate Control Unocal Corp. v. Mesa Petroleum Co.: Unocal Test Unocal Corp. v. Mesa Petroleum Co. is a landmark decision of  the Delaware Supreme Court on corporate defensive tactics against take-over bids. As a trial court, Delaware Court of Chancery found that this selective exchange offer was not legally permissible, and issued a preliminary injunction against the use of the self tender offer defense. The Delaware Supreme Court reversed the trial court. The Delaware Supreme Court found that the Unocal's board of directors had reasonable grounds for believing that a danger to corporate policy or effectiveness existed and that the response was reasonable in relation to the threat posed. This reasonable relation analysis permitted an analysis of the nature, price and time of the offer as well as the impact on shareholders, creditors, customers and employees. The Unocal test the court established to determine whether the directors...