Is The Twitter Board Required To Accept Elon’s Offer?
April 15, 2022
The board could reject Musk’s offer or refuse to negotiate even though the Tesla billionaire offered a substantial premium, as long it hasn’t broken its fiduciary responsibilities, Alon Kapen, partner and leader of the Emerging Companies and Venture Capital practice group at Farrell Fritz, told the DCNF.
The board has two fiduciary obligations, one of which is the Duty of Care, Kapen told the DCNF.
“The Duty of Care, means the directors have to be well informed and surround themselves with advisers who provide relevant information about the facts of the offer as well as other alternatives.”
“The company could decide to remain independent if this was the best path forward for the company and its shareholders,” Kapen told the DCNF.
If the board does decide to sell the company, it then has the obligation to find the best deal that offers the highest value available to its shareholders, according to Kapen.
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