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Megasubsidiaries and Asset Sales under Section 271: Which Shareholders Must Approve Subsidiary Asset Sales

Michigan law review, 2006-06, Vol.104 (7), p.1809-1833

Copyright 2006 The Michigan Law Review Association ;COPYRIGHT 2006 Michigan Law Review Association ;Copyright Michigan Law Review Association Jun 2006 ;ISSN: 0026-2234 ;EISSN: 1939-8557

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Title:
Megasubsidiaries and Asset Sales under Section 271: Which Shareholders Must Approve Subsidiary Asset Sales
Author: Shukairy, Yaman
Subjects: Acquisitions and mergers ; Assets (Accounting) ; Boards of directors ; Business ; Business judgment rule ; Commercial law ; Common stock ; Corporate regulation ; Corporations ; Decision making ; Divestiture ; Fiduciary duties ; Fiduciary responsibility ; Good faith (Law) ; Law ; Laws, regulations and rules ; Parent companies ; Presumptions (Law) ; Sales ; Sales transactions ; Shareholder approval ; Shareholder voting ; Shareholders ; State court decisions ; Statutory interpretation ; Statutory law ; Stockholders ; Subsidiaries ; Subsidiary companies ; Voting rights ; Voting rights (Stockholders)
Is Part Of: Michigan law review, 2006-06, Vol.104 (7), p.1809-1833
Description: Corporate law statutes determine the nature of the relationship between shareholders, the principal owners of the corporation, and the board of directors, those w ho run and operate the corporation. Under the Delaware General Corporation Law ("DGCL"), many of the powers are delegated to the board of directors. More specifically, under section 141, "the business and affairs of every corporation... [are] managed by or under the direction of a board of directors..." The Delaware courts have interpreted this provision by deferring to decisions by directors and their designated management under the business judgment rule, which presumes that in making a business decision, the directors acted on an informed basis with a good faith, an honest belief that the action taken was in the best interests of the company. As many have noted, "[t] he effect of this presumption when applied by a court is that the court will not substitute its judgment for that of the board, unless it is shown by a preponderance of the evidence that the directors' decision involved a breach of fiduciary duty."
Publisher: Ann Arbor: Michigan Law Review Association
Language: English
Identifier: ISSN: 0026-2234
EISSN: 1939-8557
Source: AUTh Library subscriptions: ProQuest Central

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Megasubsidiaries and Asset Sales under Section 271: Which Shareholders Must Approve Subsidiary Asset Sales

Copyright 2006 The Michigan Law Review Association ;COPYRIGHT 2006 Michigan Law Review Association ;Copyright Michigan Law Review Association Jun 2006 ;ISSN: 0026-2234 ;EISSN: 1939-8557

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