BUS2 365 Lecture Notes - Lecture 16: Derivative Suit, Existential Crisis, Agency Cost
5 Mar 2018
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Fiduciary disloyalty iii: entrenchment: multiple loyalties: conflicts of duty. Important role in structuring hostile bids: the limited continuing role for corporate law, yet still important role b/c corp govnt provisions still apply. Hw resists: diretors cause corps to sell 40% of their business assets to a friendly interest called ally ryans and create a new corp called fin gas and sold 49% of shares to fin gas. Fg used the hw shares to defeat the takeover bid by offering a premium takeover bid. Gc was defeated and uses for injunction by accusing hw of breaching duty of loyalty: ratio: if directors acted with fiduciary purpose/justification in resisting hostile bid, there is no liability for breach of fiduciary duty. Reasons: proper purposes, fiduciary duty and issuance of shares, applies teck: issuing shares to friendly business must be analyzed from a fiduciary reference. Should there be liability when the board resists: court must review all available evidence related to board decision making.
