The Specter of Political Bias Is Haunting Corporate Governance

In 1985, the Delaware Supreme Court, in Unocal Corp. v. Mesa Petroleum Co.,[1] held that the “omnipresent specter” of a conflict of interest sufficiently clouds judicial review of anti-takeover measures to require application of enhanced scrutiny.  Notably, the court essentially took judicial notice of the inherent nature of the conflict that “of necessity” confronts the directors in these cases.  Thus, the court delayed application of the deferential business judgment rule until directors could satisfy the court that a threat to the corporation existed and that adopted anti-takeover devices were reasonably related to the perceived threat.

Today, political divisiveness … Read more