fiduciary out
USA
An exception to the no-shop covenant in a merger agreement. Generally, the board of directors of a public target company is subject to a heightened duty of care in a merger transaction and is charged with obtaining the highest value reasonably available to stockholders in a cash deal (see Practice Note, Fiduciary Duties of the Board of Directors: Sale of Control). Therefore, directors need the ability to consider superior offers without being fully locked up by the terms of the merger agreement. A fiduciary out permits the target company to negotiate and complete a transaction with a third party and for the board to change its recommendation if failing to do so would breach the fiduciary duties of the target company's board. In the case of a merger of equals, a fiduciary out may be provided to both parties.
For more information on fiduciary outs see Practice Note, What's Market: Fiduciary Out (www.practicallaw.com/5-386-5737).
Related terms

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • fiduciary out — A provision that permits the Board of Directors to terminate a proposed merger if a better deal arises with another party. Bloomberg Financial Dictionary …   Financial and business terms

  • fiduciary duty — see duty Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. fiduciary duty n. Th …   Law dictionary

  • fiduciary duties — Directors owe duties to their company based on trustee principles. They must act honestly to protect its assets and not enrich themselves unduly at its expense. If they fail, the company may have a claim against them. Easyform Glossary of Law… …   Law dictionary

  • Fiduciary — One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one… …   Wikipedia

  • fiduciary — /fad(y)uwsh(iy)ary/ The term is derived from the Roman law, and means (as a noun) a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous …   Black's law dictionary

  • Come Out and Play (song) — Come Out and Play Single by The Offspring from the album Smash …   Wikipedia

  • Rule in Clayton's Case — The rule in Clayton s Case (or, to give it its full legal name and citation: Devaynes v Noble (Clayton s Case) (1816) 1 Mer 572) is a common law presumption in relation to the distribution of monies from a bank account. The rule is based upon the …   Wikipedia

  • duty of care — see duty Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. duty of care …   Law dictionary

  • no-shop — USA A covenant in a merger or acquisition agreement which restricts the target company from soliciting other potential buyers or, in some cases, participating in discussions relating to a competing transaction. This is a common deal protection… …   Law dictionary

  • duty of loyalty — see duty Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. duty of loyalty …   Law dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.