Director’s Duty of Loyalty & Duty of Care in Merger and Acquisition

碩士 === 中原大學 === 財經法律研究所 === 98 === Corporate directors owe fiduciary duties to the corporation they serve and its shareholders. These fiduciary obligations include the duty of loyalty and the duty of care. Directors, the internal organ in charge of corporate management, owe duty of loyalty and duty...

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Bibliographic Details
Main Authors: Yu-Chen Chu, 朱玉真
Other Authors: Jru-Sheng Yang
Format: Others
Language:zh-TW
Published: 2010
Online Access:http://ndltd.ncl.edu.tw/handle/84660080917256644398
Description
Summary:碩士 === 中原大學 === 財經法律研究所 === 98 === Corporate directors owe fiduciary duties to the corporation they serve and its shareholders. These fiduciary obligations include the duty of loyalty and the duty of care. Directors, the internal organ in charge of corporate management, owe duty of loyalty and duty of care to the corporation to avoid their conducts giving rise to damage to the corporation while undue operating. Contrast to daily dealings, M&As is an material and unique operation, in which, the issues of fiduciary duties of directors undoubtedly are worth the efforts to discuss. M&As involves fundamental changes to the corporation, and it might not be safeguarded enough, solely depending on directors’ self-regulated conducts. Therefore, it is necessary to construct a comprehensive standard of making decision on M&As. Besides, creating reasonable standards corresponding to the uniqueness of the M&As is also emphasized. As to the duty of loyalty, directors shall not be involved in conflict of interest with corporation. By means of allocating burdens of proof of evidence, adjusting intensity of judicial review, requiring of material information disclosures, the judgments of conflict of interest might be illustrated. As to the duty of care, directors have duty to establish mechanisms to monitor information system which eliminate false or untrue information transmitting among internal entities and prevent wrong decisions from the board. Nevertheless, for management flexibility, board’s decision shall be respected and the due diligence at reasonable and fair principle shall be downgraded to gross negligence. As to hostile takeovers, from the perspective of information asymmetry, directors are expected to deliberately analyze and determine whether such transactions would benefit the corporation, or take applicable defensive measure. When directors decide to fight, corporate assets might be consumed; therefore, decisions shall be examined under enhanced scrutiny, and to set a standard to review defensive measures would benefit the corporation.