Directors of a company that is 'in play' have a fiduciary obligation to maximize shareholder value. One would have thought that this rule would always prevail. However, in Ventas Inc v Sunrise Senior Living Real Estate Investment Trust1 the courts of Ontario preferred to subject the rule to an important exception: a 'superior proposal' that would otherwise maximize shareholder value will be prohibited from being considered by the target's directors and shareholders if it is made in contravention of the auction process established to sell the target company.
Facts
In September 2006 the board of trustees of Sunrise Senior Living Real Estate Investment Trust, a Canadian public real estate investment trust whose units are listed on the Toronto Stock Exchange, determined that it would conduct a sale of the units or assets of Sunrise through a confidential auction process. Purchasers that were approached by Sunrise's financial advisers and were interested in exploring a possible
