Notes:

• The Need for Independence: When a potential buyer is also a major shareholder or competitor, the Board cannot be trusted to negotiate fairly. A Special Committee of independent directors is formed to represent the interests of the public shareholders.
• Formation and Mandate: The committee must be hand-picked by the disinterested directors, free from influence by the controlling shareholder or bidder.
• Mandate: The committee’s specific task is to evaluate the offer objectively, shop the company for a better deal, and ensure fair process.
• Legal Shield: If the Special Committee acts in good faith and follows best practices, it is heavily shielded from liability.