The One-Tier Board (IVOR nr. 85) 2012/3.7.3.2:3.7.3.2 Enhanced business judgment rule, hostile tender offers, merger cases and deal protection measures

The One-Tier Board (IVOR nr. 85) 2012/3.7.3.2

3.7.3.2 Enhanced business judgment rule, hostile tender offers, merger cases and deal protection measures

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While the business judgment rule applies to most decisions, acts and omissions, i.e. the court will not second-guess management if it is not in breach of its duties of loyalty or care, there is a slight difference in the event of hostile takeover and merger cases.

Whereas in the UK the board remains passive in hostile takeovers and may not make use of legal defence mechanisms,1 in the US the board may or indeed should be active in hostile takeovers and may make use of defence mechanisms. In this respect, Dutch law is closer to US law than to UK law.2

Actions of directors in reacting to offers or other threats to control are subject to the "enhanced business judgment rule", "modified business judgment rule" or "proportionality test" developed by the Delaware Supreme Court, also known as the "Unocal standard".3

Some defended hostile tender offers as beneficial to the "market of corporate control". This view is based on the hypothesis that the market is efficient and values all listed corporations correctly. If a company is undervalued, this means that its management is not good enough and should be replaced. Minority shareholders do not take the time and trouble to replace directors. Bidders who assume control by a public offer and/or a proxy fight usually force a change of management. Therefore management that is not protected by defence mechanisme will be more intent on not being lax in their management and on producing shareholder value. Easterbrook and Fischel were proponents of this theory.4 One of their arguments was that public offers are good for shareholders because on top of the true value of their shares they often receive a premium.5

Opponents of hostile public offers argued that they were harmful to shareholders because the future value of the target would be higher than the bidder's offer and thus potential future shareholder gains accrue to the bidder. Some of the tender offer tactics such as "front-loaded two-tier tender offers", where a bidder willing to pay, say $25 a share, offers $30 in cash for the first 51% and $20 in shares for the rest, exerted undue force on shareholders. Moreover, public offers might be harmful to others with an interest in the corporation, such as employees, creditors and the community at large. Opponents maintain that hostile takeovers hurt the economy as a whole by merely reshuffling assets at substantial expense. There was concern that, in reality, takeovers were aimed not at inefficient companies but at well-run corporations. Hostile offers tended to put the emphasis on short-term profit-making. Furthermore, the use of debt to finance offers created problems. Some also attacked the "efficient market hypothesis". Martin Lipton was and is a strong proponent of the anti-hostile takeover view.6

In the end, it was generally conceded that target shareholders did benefit by receiving premiums. In many cases the bidders' shares did not appreciate as many of the acquisitions did not create better enterprises. Unsurprisingly, one plus one often turned out to be just two and not more, but often less.

In the 1980s those who were the targets of takeover battles developed ever more ingenious tactics to facilitate or frustrate bidders. Battles were fought in boardrooms, shareholders' meetings and, increasingly, in the courts.

A bidder has two main ways of obtaining control: a hostile tender to acquire the majority of shares and thereby of the votes to replace the board, and a proxy fight, to obtain not the majority of shares, but only the votes to replace the board. Sometimes a combination of these two methods is used. When a tender offer is opposed by defence mechanisms, a proxy fight could result in the majority voting down the defence mechanism. Proxy fights are expensive and there are many regulations, complicating the matter. The outcome is fairly uncertain because of shareholder laxity. Offers to acquire a majority of the voting shares are a surer way of obtaining control. There are many sharp tactics such as the front-end, two-tier tender offer. Some regard this as a form of coercion. Bidders' use of debt to finance a purchase has given rise to problems when they, upon success, repay the debt by selling assets of the target company. A "bust-up" takeover of this kind can adversely affect both the target by destroying know-how and goodwill, and its employees.

Defence tactics available to target companies include amending the articles of association and bye-laws, either to frustrate the vote to have the board replaced or to frustrate or block the tender offer. Examples of how to frustrate the vote include staggering the three-year terms of office of directors so that only onethird of the directors are elected each year, having a super majority requirement for any changes to the articles, or, more extremely, having two classes of shares, one of which holds the significant voting power and is in the hands of the board.

To frustrate a public offer, the target board can also make use of restructuring tactics such as the "crown jewel defence" (selling off significant assets or granting an option to sell them), splitting the corporation, or purchasing its own shares. Alternatively, it may try to attract a "white knight", ready to come to the target's rescue, or a "white squire", i.e. a shareholder willing to sign a "standstill" agreement, i.e. an agreement not to buy or sell shares in that company for a specific period. Sometimes employees have options to buy shares and act as white squires.

The most potent defensive factie is the "shareholder rights plan" or "poison pill", because of its ability to thwart an unfriendly takeover and give control to the target directors. The plan is generally triggered by a predetermined event, usually the announcement or threat of a tender offer. Thereupon, the target issues certain "rights" to its shareholders, i.e. options to obtain securities at a substantial discount. The relevant securities that can be obtained by existing shareholders of the target can be the shares in the bidder corporation ("flip-over" plan) or shares in the target ("flip-in" plan). The poison pill in Moran v. Household International Inc. of 1985, discussed below, was a flip-over. The poison pill in Unocal of 1985 was a flip-in. Both are discussed below and were upheld by the courts as they were judged proportionate to the threat posed (the Unocal standard).

When a target's board institutes actions to defend the corporation from a hostile takeover, they are usually faced with a charge of breach of fiduciary duty to the corporation and its shareholders under state law. Fiduciary duty is generally divided between on the one hand the duty of care and loyalty for the business judgment rule and, on the other hand in case of takeovers, the modified business judgment rule. The most important court cases are discussed here in chronological order. The business judgment rule has been described above in 3.7.3.1 and, in short, means that directors are free in their business judgment, unless they are in breach of loyalty or care. The modified business judgment rule has been developed in takeover jurisprudence and requires an extra proportionality test.

Many states introduced laws intended to make defence mechanisms possible. The rationale was often to protect local business, while some of these laws ostensibly gave power to officials to block offers if they were unfair or gave lax information. At first, some of the laws were held to be unconstitutional, but upon further testing in court, most of them were upheld. In 1982 the prevailing mood was not against hostile takeovers, but attitudes had started to change by 1987.7

The takeover cases

The main standards for the board's fiduciary duties in the event of hostile takeovers were set by the Delaware courts, i.e. the Chancery and Supreme Courts, in very important cases in 1985.

The first case in 1985 was a "sale of company" case, but did not refer to a hostile tender offer, defence mechanism or deal protection. It was the famous case of Smith v. Van Gorkom.8Just before his retirement, Van Gorkom, the "imperial" CEO/chairman of the publicly listed Trans Union Corporation, had sold off all the shares to a Mr Pritzker. The sale was at a 50% premium, but the board failed to consider that the share value was well below the intrinsic value because of substantial hidden value in investment tax credits. The board gave its consent after a 20 minute oral presentation by Van Gorkom and a 2-hour meeting, without even looking at the documents. A damage claim was filed by Smith on behalf of the existing shareholders. The Supreme Court — by a split vote — held the directors liable for gross negligence and referred the case to the Chancellor to determine the damages suffered by the other shareholders because their shares were sold off in a friendly tender offer at too low a price, i.e. the difference between the price paid, including premium, and the higher intrinsic value, which had been neglected. The case was settled by Pritzker, the buyer, paying $23 million more to shareholders.9

It has been said by Justice Jacobs: "At the time of Van Gorkom corporate boards were regarded as essentially passive advisors, with the CEO being completely dominant and the board having no prescribed role other than to give advice when asked for and to approve executive proposals when presented". Van Gorkom changed the corporate culture of American public company boards, by sending a strong message that corporate boards had an affirmative duty to be sceptical, to act with due care and to make a carefully informed decision, independent of management."10

This case emphasizes that the board should decide in its entirety, be wellinformed and take time to discuss all alternatives. The board should not be passive and let shareholders decide. This case was widely discussed and received a lot of attention. It led, in 1986, to the addition of Section 102(b)7 to the Delaware GCL, permitting a company to include in its articles of association an exclusion of liability for directors, even in cases of gross negligence.

The first and most important public offer case is Unocal of 1985. In Unocal Corp. v. Mesa Petroleum Co.11 the bidder Mesa Petroleum, controlled by the famous T. Boone Pickens,12 owned 13% of Unocal and commenced a front-loaded, two-tier takeover bid for the target. The first step was to buy up to 51% at $54 cash and the second to acquire the remaining 49% with shares for $54, but in fact at a lower value because these exchange shares were heavily subordinated to junk bonds. The target board, the majority of whose members were outside directors (this was regarded as important by the Delaware Supreme Court), decided in a 9-hour meeting, which included an executive session, that the tender offer was inadequate in price and coercive. It responded by making a self-tender of $72 cash per share to purchase 49% of the Unocal shares not included in Mesa's first offer. The target's self-tender excluded the 13% owned by Mesa and was funded with new Unocal debt. This debt made Unocal highly leveraged, which hampered Mesa's ability to finance its tender offer. Mesa challenged the self-tender. It argued for a standard of "entire faimess", because it was excluded. Unocal, on the other hand, argued that it was acting in good faith (loyalty) and with due care to protect the company and its shareholders.

The Delaware Supreme Court rejected the Vice-Chancellor's opinion that the defensive mechanism was selective and hence unlawful as it was not entirely fair to Mesa. The court held that the board must prove (i) that it had reasonable grounds for believing that a danger to the corporate policy existed (the threat) and (ii) that the defensive tactic was reasonable to the threat posed (the response). In addition, the presence of a majority of independent directors unaffiliated with the target materially enhances the credibility of directors when they conclude that a threat exists and the response taken was proportional. This test differs from the normal application of the business judgment rule by placing the initial burden of proof on directors and allowing some scrutiny of not just the process but also of the substance of the decision (i.e. whether the response was proportional to the threat). This has been named the modified business judgment or the proportionality test.

The Delaware Supreme Court cleverly found innovative middle ground which did not leave corporations and their boards unprotected, but also did not defer completely to directors. Its solution was to require boards to demonstrate that their defensive measures passed the test of reasonableness and that their defensive actions addressed a legitimate threat to corporate interests. This is the proportionality test.13

In Moran v. Household International, Inc.,14 also of 1985, the Delaware Supreme Court confirmed the Vice-Chancellor's decision to uphold the poison pill drafted by Martin Lipton as lawyer for Household, which was a two-step "flip-over", i.e. the right of shareholders of the target to acquire shares in the bidder corporation at a discount, making the offer economically disastrous for the bidder and its shareholders.

The two top corporate lawyers of the US post-war era, Joseph Flomm (for Moran) and Martin Lipton (for Household, the target)15 squared off. Flomm argued that the Delaware Corporate Law Statute was not intended to allow boards to create illusory "rights" to preclude, and effectively veto, a hostile offer. The Delaware Supreme Court rejected Flomm's arguments. In this case the bidder could have bought 19.9% of the outstanding shares in Household available on the market and initiated a proxy fight to oust the board and then redeem the pill. The court cited Unocal and repeated: "Our corporate law is not static. It must grow and develop in response to, indeed, in anticipation of, evolving concepts and needs. Merely because general corporation law is silent as to a specific matter, does not mean it is prohibited."

As it turned out, it is not statutory law — takeovers are not dealt with in the statutes — but jurisprudence — in the form of the new "reasonableness review" introduced by Unocal — that regulates the power of boards.16 The court confirmed that the use of poison pills is acceptable. The court considered that the poison pill did not preclude the bidder from starling a proxy contest. The court also ruled that in this case the poison pill could be used, applying Unocal, since the threat was considered reasonable and the response was proportionate.

In Revlon Inc. v. MacAndrews & Forbes Holding Inc.17 also of 1985, the Delaware Supreme Court was faced with the application of the Unocal test. Initially, the bidder tried to negotiate a friendly acquisition, but was rebuffed by Revlon claiming an inadequately priced offer. Revlon used several defensive tactics, including a poison pill and a self-tender. The tactics had the positive effect of inducing the bidder to raise the tender offer bid. However, Revlon found a white knight, Forstman Little, which was willing to make a competing bid in return for (1) a "no-shop" provision (Revlon would not look for another bidder), (2) a $25 million cancellation fee if the bid failed, and (3) a crown jewel lock-up (the white knight could buy a valuable division of the target at a discount if its offer failed). Of course, the defence mechanisms of poison pill and self-tender were withdrawn to ensure that they could not be activated against the white knight upon its tender offer.

The first bidder challenged the actions of Revlon's board as a breach of fiduciary duty and asked the court to prohibit the lock-up. The court indicated that lock-ups that encourage other bids are permissible, whereas those that end bids are not. In finding a competing bid, Revlon had effectively been put up for sale by the directors and the break-up of the company had become a reality. The deal with the white knight had in fact closed the way for other bidders. The court therefore prohibited the lock-up and, applying the Unocal rule, required further enhanced scrutiny and held that when a target is up for sale the board cannot "play favoufites".

As a result of Revlon, the target directors' duty is not only to preserve the corporation, but under circumstances to maximise its value for shareholders. If the corporation is up for sale, as a result of board actions, the directors have to behave as auctioneers and get the best price for shareholders.

As became apparent, three years later, in Blasius18 of 1988, boards cannot, by deliberate action, thwart the right of the shareholders to vote and elect the directors they wanted in a takeover case. The Delaware Vice-Chancellor held that the board has less leeway in the context of the basic right of shareholders to elect directors.

In the Blasius case the board of Atlas, a gold mining company, had seven directors. Under the articles of association there was a staggered board (a protection against the board being ousted in a single round of voting). However, for this protection to be effective, it would have been necessary for the board to be composed of 15 directors, which was the maximum number under the bye-laws. With only 7 directors the board was vulnerable to the majority of shareholders voting in 8 other directors. The board could avoid this by proposing to the AGM to appoint two more directors, thus bringing the number up to 9. Before the board fixed the problem, a raider, Blasius Industries, emerged, suggesting a plan to pay Atlas stockholders immediate cash up front, with the promise of an additional reward later.

Vice-Chancellor Allen considered the Blasius plan to be dangerous and found that the board had appointed two really independent directors. However, even if the board had acted with subjective good faith, it was not a question here of the board's business judgment in managing the corporation's property; instead, it involved usurpation of the power of the shareholders to vote on the election of directors. Vice-Chancellor Allen applied a stringent test for judging if it is acceptable for a board to purposefully impinge on the stockholders' ability to elect a controlling vote in a new board, but only if the board could show a "compelling justification" for that decision. In this case, the board did not succeed in meeting this onerous standard.

Blasius obviously taught boards and their advisors to be very careful in matters relating to board elections.19

Fifteen years later, in 2003, in MM Companies Inc. v. Liquid Audio, Inc.,20 the Delaware Supreme Court clarified the Unocal proportionality test and the Blasius "compelling justification" test. The bidder, M14 Companies, sought to buy the target Liquid Audio, but was opposed by the target's directors. There was a complicated proxy fight involving proposed changes to the bye-laws regarding the number of directors and elections to the board. The board elected 2 directors and, although this made the procedure more difficult for the bidder, it did not absolutely preclude the bidder from taking control of the board. This was unlike Blasius, where the board really did try to preclude the insurgents from taking control of the board. Here, in MM Companies, the board only diminished the bidder 's chances, but did not preclude the possibility of the bidder obtaining control. It was therefore decided that Blasius did not apply and the court could apply Unocal and Unitrin, described two pages hereafter, and conclude that the measure was not draconian and therefore permissible.

Together, Unocal and particularly Revlon suggest that the Delaware courts were taking a more active role in scrutinising defensive tactics and putting greater emphasis on shareholder concerns. At that time it was still unclear if and when the Revlon obligations to auction the company would apply. In the Time Warner case of 1989,21 the Delaware Supreme Court put to rest the idea that the courts would actively substitute their judgment for that of outside directors on takeover issues.

The Time directors spent more than a year negotiating a deal with Warner Brothers which would enable Time to keep its culture of joumalistic independence and retain important board positions. The aim of the Time board was an effective merger, not a takeover of Time by Waroer. Paramount, as third party, announced a substantial cash offer for Time. The Time directors were able to defend the company from a Paramount takeover. Time changed the original deal with Wanier to a cash offer by Time for 51% of the shares in Warner, for which Time did not need shareholder consent. The remaining 49% in Waroer would be acquired later for cash and securities. The Court rejected the use of the Revlon ruling. The Court did not find that the negotiations with Wanier amounted to a dissolution or break-up of Time. Time was allowed to pursue its long-term strategy of combining with Wanier.

Applying the Unocal test, the threat was that Paramount's non-coercive bid, and the high premium, would confuse the Time shareholders and disrupt the planned merger with Warner. The response of Time's board of protecting a long-term pre-existing plan of the board was reasonable. The big difference with Revlon was that there was no planned break-up of Time. The court indicated that in this case it was up to the directors to decide which was a better deal for shareholders.

The Delaware Supreme Court's opinion in QVC in 1994,22 however, suggested that the scope for directors to decide was not so broad. Paramount, not courting this time but being a willing bride, agreed to be acquired by Viacom in a friendly acquisition for cash and Viacom shares worth $69.14 a share. The agreement included (1) a "no-shop" provision, which limited Paramount's ability to accept another bid, (2) a $100 million termination/break-up fee and (3) an option for Viacom to buy 19.9 % of Paramount shares at $69.14. After the merger Viacom's controlling shareholder, Summer Redstone, would directly and indirectly own 70% of Paramount. QVC, as third party, offered a higher price than Paramount. Paramount's directors viewed the Viacom offer as fitting into its long-term business strategy and relied on the Time Wanier decision, which, ironically, Paramount had lost. They paid no attention to the QVC bid, which was $1.3 billion higher than Viacom's bid. QVC successfully sued to block Viacom's offer and all Paramount's defensive tactics, i.e. the termination fee and the option.

The Delaware Supreme Court applied Revlon and not Time Warner; boards should leave the decision to shareholders when there is a chance of competition between bidders, because in the QVC case there had been a change of control as Viacom had a single controlling shareholder which would have a majority of the shares in the combined company. The court found that, although directors do have the room to make a choice between bidders, as a matter of process they must at least investigate the competing bid if the target is potentially being sold to a controlling shareholder, i.e. directly or indirectly controlling shareholder.

Practitioners are often faced with Revlon issues when advising boards in connection with the sale of a company. In particular, bidders often insist on "lock-up options", "break-up fees" and "no-shop" provisions. QVC is the leading case in this area. Whereas the Delaware Supreme Court invalidated the provisions in QVC, the Court of Chancery and Supreme Court permitted them in "Rand".23 Arguably the option in favour of the acquirer was "draconian", but by the time the board agreed to the clause the market of potential acquirers had been fully canvassed and it turned out there was only one potential acquirer and there were no others interested to make a public offer, and therefore the option did in practice not restrict the circle of bidders and did not have to be invalidated.

In Unitrin of 199524 the Delaware Supreme Court reversed the Chancellor's injunction barring Unitrin to repurchase its own shares in order to thwart American General's hostile takeover. The Unitrin directors, who owned 23% of the shares, did not sell their shares to Unitrin in the self-tender, which brought their shareholding up to 28%. The Delaware Supreme Court agreed with the lower court that, by the Unocal standard, the threat had been reasonably investigated (and deemed real, namely an inadequate price). The Supreme Court differed with the lower court by accepting that the self-tender, bringing the directors' shareholding up to 28%, was proportionate because, although difficult, the bidder could still organize a proxy fight in order to replace the directors, redeem the extra poison pill and try in that way to achieve a friendly merger. The court did not consider the self-tender to be "draconian".

Gradually thereafter, the important cases became "deal protection" cases. In fact, the Revlon, QVC and Unitrin cases had already been about "deal protection" and application of the "Is the measure draconian?" criterion.

An important more recent deal protection case was Omnicare in 2003.25 Here NCS was subject to competing bids by Omnicare and Genesis Health Ventures, Inc. (Genesis). NCS was in fmancial distress, having defaulted on debts of $350 million. Omnicare was invited by NCS to make a public offer for the NCS shares. It declined and only offered an asset purchase in bankruptcy, which would have lelt the shareholders completely unpaid. Genesis came up with a better offer for the shares and NCS's only option seemed to have to accept to be acquired by Genesis. NCS, represented by a special independent negotiating committee of directors, and Genesis agreed to a deal involving protective devices, which were exclusivity agreements without a "fiduciary out". The deal, as contested in this case, was approved in advance of the shareholders' meeting by two controlling shareholders of NCS, its chairman John Outcalt and its CEO Kevin Shaw, who had a clear majority of the voting power. Moreover, the deal included a "force the vote" provision, i.e. a provision that a merger may be put to a shareholder vote even if the complete board no longer recommends the merger, which in this case made the exclusivity complete. The special negotiating committee had excluded Outcalt and Shaw from the negotiations. Omnicare then made a slightly higher bid than Genesis for the NCS shares, which therefore included an amount for all the shareholders, but the NCS committee did not respond. Genesis then raised its bid, but demanded an immediate acceptance or it would walk away. The NCS committee accepted. Omnicare sought to bar the merger. Vice-Chancellor Lam applied Unocal and found that the threat of loss of any deal was large and that the response, although it gave one bidder exclusivity without a fiduciary out, was reasonable.

The Delaware Supreme Court — there are five justices — in a rare split decision of 3 to 2, did not agree with the Vice-Chancellor's conclusion and decided there was a threat onder Unocal, but that the response — an absolute exclusivity with no "fiduciary out" — was not proportionate. The majority of 3 seemingly set a bright-line rule that absolute exclusivity with no "fiduciary out" is not permitted. Chief Justice Norman Veasey and his successor, the present Chief Justice, Myron Steele, however, wrote strong dissenting opinions, in which they reasoned that there can always be circumstances where absolute exclusivity may be given, especially since NCS was nearly bankrupt and this was the end of a negotiating process.26

NCS was in fmancial distress and had been thoroughly shopped around, i.e. the board had done everything it could to find interested parties and seemingly had no option but to merge with Genesis. NCS and Genesis agreed to a deal including protective devices. The majority of three justices against two found that, in concert, the protective devices were coercive, because they did not include a "fiduciary out". But still, the Vice-Chancellor and the largest minority of the Supreme Court, i.e. two of five members found that the context of the near insolvency of NCS was of such a nature that the board had acted correctly in agreeing to the protection devices.

Another case was "Orman"27 of 2004 in which the Court of Chancery went the other way, and upheld the protective devices by finding that the facts of that case indicated that there was a "fiduciary out".

Deal protection measures and their validity are quite context dependent. Veasey is of the view that the courts should not be too quick in striking them down, but that advisors should be cautious in proposing such measures.28

It is of interest to note that the Unocal standard still applies today. In Yucaipa in 201029 Vice-Chancellor Strine, citing "decades of settled law", upheld the validity of a standard shareholder rights plan, i.e. an issue of favourable securities to existing shareholders, to address not only threatened takeovers, but also acquisitions of substantial, but not controlling positions, especially if the shareholder/bidder could in fact start a proxy contest.

In the Yucaipa case activist investor Ronald Burkle acquired 8% of Barnes & Noble and met its founder and largest shareholder in March 2009 to promote his ideas of strategy for the company. When Barnes & Noble declined to accept those ideas, Burkle increased his stake in the company to 17% in November 2009 and filed notice of his possible intention to acquire more or even bring about a change of control. Barnes & Noble adopted a rights plan that would be triggered when any shareholder acquired more than 20%. The plan "grandfathered" the founder, who held 29%, but would be triggered if he acquired more. The Vice-Chancellor rejected Burkle's challenge of the board's rights plan, holding that the defensive action was a reasonable and proportionate response to Burkle's threat and that Burkle could stil run a proxy contest. He made especial mention of the "influence over the vote" of proxy advisory firms such as Risk Metrics. He added that the rights plan was permitted, even in combination with the staggered board defence, stating that "the reality ... that even the combination of a classified board and a rights plan are hardly show-stoppers in a vibrant American M&A market".

The August 2010 Dollar Thrifty30decision of Vice-Chancellor Strine represents another marker in a long line of cases endorsing the primacy of corporate directors' strategie decisions. The court held that the board reasonably focused on the "company's fundamental value" and remained ready to respect a sales process, even a limited one, that is structured in good faith by an independent and well-informed board.

Again, in February 2011 in Air Products & Chemicals, Inc. v. Airgas, Inc.,31 Chancellor Chandler confirmed that the directors of Airgas Inc. could refuse to redeem the company's poison pill in the face of an inadequate hostile offer, even if the majority of the stockholders, many of whom were merger arbitrageurs, would likely tender. This is a reconfirmation of the "fust say no" doctrine. Again, it was important that Airgas had a long-term strategy plan, that it discussed regularly.

Although the judicial decisions on hostile bids, starting with Unocal, were initially deemed "management friendly", they made a significant contribution to consolidating board centrality in corporate governance. The Delaware cases permitting poison pills were a clear management and board victory in takeover battles and a victory for Martin Lipton's "stakeholder theory".32 The judgments stressed that boards were at the centre of the corporate decision making process and contributed to a power shift from management to boards.33 The board was helped in court in these cases if the decisions were taken by independent directors and if a thoughtful strategy had been adopted by the whole board after consideration of all the options.

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