Notes:

• The Board’s Dual Role: When a company is the target of a takeover, the Board has a unique conflict: it owes a fiduciary duty to its existing shareholders (to maximize value) but also has a duty to manage the company in the best interest of its current stakeholders (employees, customers) during the transition.
• The Unocal Standard:
  • Defined in the Unocal Corp. v. Mesa Petroleum case (1985). It establishes that a Board can adopt defensive measures (like a “poison pill”) to prevent a hostile takeover only if they reasonably believe the takeover poses a threat to corporate policy.
  • Balancing Test: The defensive measure must be proportional to the threat it is meant to block. If a Board defends a takeover without a valid threat, it can be found to be acting for its own benefit rather than the shareholders’.
• The Revlon Duties:
  • Defined in the Revlon, Inc. v. MacAndrews & Forbes Holdings case (1986). A “Revlon Moment” occurs when a company is “in play” (i.e., a sale to another company is inevitable or imminent).
  • Shift in Focus: At this point, the Board’s primary fiduciary duty shifts from “preserving the status quo” to maximizing immediate shareholder value (getting the highest price).
  • Consequence: Once a company enters “Revlon” mode, it cannot block a takeover simply to remain independent if the price offered is clearly superior to alternatives.
• Entire Fairness Review: A stringent judicial standard applied to “interested transactions” (transactions between a company and a controlling shareholder or director). It requires the transaction to be both “procedurally fair” (approved by an independent