THE DUTY OF FAIR DEALING - BOARD JUDGMENT IN MANAGEMENT LED BUYOUTS

This paper investigates board judgment in response to management led b uyouts (MLBs). Board response is suggested to be guided by the busines s judgment rule and its dual duties of care and loyalty. The duty of l oyalty is seen to be evolving into a specification of fair dealing. Wi th this trend, the current interpretation of the business judgment rul e emphasizes the role of care and relies on the market to insure fairn ess. Possible failures in the MLB market which limit its effectiveness in assuring fairness are discussed. Recommendations to counteract the se failures are suggested.