June 2006 Vol. 104 No. 7 THE REVIEW

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

Yaman Shukairy

Corporate law statutes determine the nature of the relationship between shareholders, the principal owners of the corporation, and the board of directors, those who 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.”

   //  VIEW PDF
& Other Current Events

Protecting Whistleblower Protections in the Dodd-Frank Act

In 2008, the United States fell into its worst economic recession in over seventy years. In response,...

A Comprehensive Administrative Solution to the Armed Career Criminal Act Debacle

For thirty years, the Armed Career Criminal Act ("ACCA") has imposed a fifteen-year mandatory minimum...

Rethinking the Timing of Capital Clemency

This Article reviews every capital clemency over the last four decades. It demonstrates that in the majority...

The Political Safeguards of Horizontal Federalism

For decades, we have debated whether "political safeguards" preserve healthy relations between the states...

A Solution to Michigan's Child Shackling Problem

Detained children routinely appear before Michigan's juvenile courts shackled with handcuffs, leg irons,...
MAILING LIST
Sign Up to Join Our Mailing List