Unocal v. Mesa Petroleum (Del. Sup.; 1985) and Revlon v. MacAndrews & Forbes (Del. Sup.; 1986) have guided Delaware courts in their evaluation of board decisions in the M&A arena for more than a generation. This blog from Keith Bishop notes that pending legislation in Nevada would formally reject the application of Revlon and Unocal to Nevada corporations. Here’s an excerpt:
As introduced, SB 203 includes the following statements of legislative intent:
Except in the limited circumstances set forth in NRS 78.139, an exercise of the respective powers of directors or officers of a domestic corporation, including, without limitation, in circumstances involving a change or potential change in control of a corporation, is not subject to a heightened standard of review.
The standards promulgated by the Supreme Court of Delaware in Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), and Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), and their progeny have been, and are hereby, rejected by the Legislature.
If this legislation is enacted, Nevada would join six other states that have enacted statutes rejecting Revlon (Indiana, Ohio, Pennsylvania, North Carolina, Maryland and Virginia) – and a longer list of states that have either directly or indirectly rejected Unocal. If you’re interested in more details, check out this 2009 Virginia Law Review article on “The State of State Antitakeover Laws.”
– John Jenkins