Larry Ribstein's got a very thoughtful post on the recent Delaware Chancery Court decision in Unisuper Ltd. v. News Corporation. He writes:
... this case as it stands boils down to a simple one of statutory interpretation about what has to be in the certificate. It makes sense to require any contract in this situation to be clear. That’s evident from the facts here, including the considerable uncertainty about the terms of the supposed contract, and even who the parties were – not shareholders themselves, but an institutional investor group supposedly acting on behalf of shareholders whose interests in the firm the opinion didn't specify. It follows that it’s reasonable to require agreed managerial powers to be set forth in the certificate.
The more interesting question is what the certificate should be able to provide. Specifically, should a certificate that limits the board’s power to enter into a poison pill be enforceable? I think the answer to this question as a matter of policy is clearly yes.
I think that's basically right. as I explain in my book Corporation Law and Economics, corporate law generally ought to be enabling rather than mandatory in nature. Because director primacy is such a fundamental norm of corporate governance, however, limitations on the directors' power of fiat should be in the corporation's articles of incorporation (at least when one is dealing with a public corporation).
