Duty of Care (M&A Glossary)

Summary

The duty to act as a reasonable, prudent person under the circumstances. The directors on the board of a company in an M&A transaction are subject to the duty of care to the company and the company’s shareholders. The main legal test for whether the board of directors exercised the duty of care in a decision is whether the board availed itself of all reasonably available material information about the subject of the decision.