It is often easy to forget the many facets of a director's duty to act in the best interests of all of the company's shareholders. The complexity becomes apparent when a takeover offer is made. At that time do the directors reject the offer (on the basis that the company will do better under current management), try and negotiate a better offer ( to reduce the prospect of claims they sold too cheaply) or accept the offer (for fear that shareholders will sue if the share price drops below the offer price)?
I've previously referred to ASIC v Vines (in relation to the rejected AMP takeover of GIO) and recent court decisions on shareholder rights (here and here).
In recent days, we have seen the directors of Qantas act transparently about their intention to get the best price possible for their shareholders in response to a share offer.
Coles directors, on the other hand, took a more defensive approach by rejecting an offer outright.
Of course, both boards met their obligations by keeping the market fully informed.
The Coles board has now received news from a large shareholder that it has commenced proceedings in the Supreme Court of Victoria under section 247A of the Corporations Act for access to board documents relating to its decision.
Coles has responded by saying that it will contend that there is no foundation for the proceedings and access to documents is not being sought for a proper purpose as required by the Corporations Act 2001.
There is no prescribed approach for boards to take as long as they act in the interests of shareholders.
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