Special committee clause: Copy, customize, and use instantly
Introduction
A special committee clause establishes the formation and authority of a committee within the organization for the purpose of addressing specific issues or handling certain business matters. Special committees are typically formed to focus on particular tasks that require more attention, expertise, or confidentiality than can be managed by the full Board of Directors.
Below are templates for special committee clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard special committee clause
This version provides for the creation of a special committee with defined duties.
The Board of Directors may establish a special committee to address specific matters requiring focused attention, such as mergers, acquisitions, or significant corporate transactions. The special committee will be authorized to review the issue, conduct investigations, and make recommendations to the full Board.
Special committee clause with authority to approve transactions
This version grants the committee authority to approve certain transactions.
The special committee is empowered to approve certain transactions, including mergers, acquisitions, or investments, as delegated by the Board of Directors. Any decisions made by the committee must be ratified by the full Board before being finalized.
Special committee clause with independence and conflict of interest provisions
This version includes provisions for the independence of the committee and conflict of interest disclosure.
Members of the special committee must be independent from the transaction or matter under review. Any committee member with a potential conflict of interest must disclose it to the Board and recuse themselves from discussions or decisions related to the matter at hand.
Special committee clause with defined responsibilities
This version defines the specific responsibilities of the special committee.
The special committee shall be responsible for reviewing and making recommendations regarding the proposed merger with [Company], including financial analysis, due diligence, and the terms of the agreement. The committee will report its findings and recommendations to the Board of Directors.
Special committee clause with delegation of authority
This version allows delegation of authority to the special committee.
The Board of Directors delegates the authority to the special committee to negotiate the terms of the transaction, conduct due diligence, and execute the final agreement, subject to the Board’s final approval. The committee may retain external advisors as necessary to complete its work.
Special committee clause with the power to hire advisors
This version grants the committee the power to hire advisors.
The special committee has the authority to hire legal, financial, and other advisors as it deems necessary to assist in its review of the proposed transaction. The cost of these advisors will be borne by the company.
Special committee clause with regular reporting to the Board
This version requires the committee to report regularly to the Board.
The special committee will report to the Board of Directors on a regular basis, providing updates on its activities, findings, and any issues that may arise. The committee will submit its final report to the Board prior to the approval of any major transaction.
Special committee clause with terms of appointment for committee members
This version outlines the terms of appointment for the committee members.
Members of the special committee shall be appointed by the Board of Directors. Each member shall serve for the duration of the committee’s mandate, which will be defined in the committee’s charter. The Board may replace committee members at any time.
Special committee clause with confidentiality requirements
This version includes confidentiality provisions for committee members.
Members of the special committee are required to maintain strict confidentiality regarding any information discussed or reviewed in the course of their work. The committee may implement a non-disclosure agreement (NDA) with external advisors, where applicable, to safeguard sensitive information.
Special committee clause with independence review
This version includes provisions for the independent review of the committee’s work.
The special committee’s actions and decisions shall be reviewed by the Board of Directors or an independent external consultant to ensure the committee has acted in the best interests of the company and its shareholders.
Special committee clause with specific tasks
This version assigns specific tasks to the special committee.
The special committee is tasked with reviewing the proposed acquisition of [Company], conducting due diligence on the target company, and negotiating the terms of the acquisition agreement. The committee shall provide a comprehensive report with its recommendations to the Board.
Special committee clause with the power to negotiate terms
This version includes the committee’s power to negotiate terms on behalf of the company.
The special committee is authorized to negotiate the terms of the proposed transaction with the counterparties. The committee shall report the progress of these negotiations to the Board of Directors on a regular basis.
Special committee clause with the ability to create subcommittees
This version allows the committee to create subcommittees.
The special committee may form subcommittees with specific duties, such as legal review or financial due diligence. These subcommittees will operate under the oversight of the special committee and will report their findings back to the full committee.
Special committee clause with approval of related party transactions
This version involves approval of related party transactions.
The special committee will review and approve any related-party transactions that may arise during its work. The committee will ensure that such transactions are fair to the company and do not present any conflicts of interest.
Special committee clause with performance evaluation
This version includes performance evaluation of the special committee.
The special committee shall undergo a performance evaluation at the conclusion of its mandate to assess its effectiveness and compliance with its charter. The results of this evaluation will be reported to the Board of Directors.
Special committee clause with power to reject transactions
This version includes the committee’s power to reject certain transactions.
The special committee has the authority to reject any transaction that it determines is not in the best interest of the company or its shareholders. Any rejection must be reported to the Board with a detailed explanation of the decision.
Special committee clause with consultation with senior management
This version includes consultation with senior management.
The special committee will consult with senior management, including the CEO and CFO, to obtain their input on the proposed transaction. However, the final decision will rest with the special committee and the Board of Directors.
Special committee clause with external audit of committee decisions
This version includes an external audit of committee decisions.
An external auditor will review the special committee’s decisions and provide an independent opinion on whether the committee’s actions were taken in accordance with the company’s governance policies and in the best interests of the shareholders.
Special committee clause with specific authority for governance matters
This version includes specific authority for governance matters.
The special committee shall have the authority to address governance-related matters, such as reviewing and recommending changes to the company’s corporate governance policies, including board composition, executive compensation, and shareholder rights.
Special committee clause with authority to terminate transactions
This version includes authority to terminate transactions.
The special committee has the authority to terminate any ongoing negotiations or transactions if it determines that they no longer align with the company’s strategic goals or that new information has emerged that significantly alters the transaction’s terms.
Special committee clause with establishment of advisory roles
This version allows for the establishment of advisory roles within the committee.
The special committee may appoint advisors, including legal, financial, and industry experts, to assist in its deliberations. These advisors will provide expert guidance but will not have voting rights within the committee.
Special committee clause with scope of investigation
This version outlines the scope of the committee's investigation.
The special committee shall conduct a thorough investigation into the proposed transaction, including financial, legal, and operational due diligence. The committee will report its findings to the Board, along with any recommendations for moving forward.
Special committee clause with authority to negotiate conditions
This version grants the committee authority to negotiate terms and conditions.
The special committee is authorized to negotiate the terms and conditions of any transaction, including pricing, payment structure, and timelines, subject to the Board’s approval of the final agreement.
Special committee clause with protection of minority shareholders
This version includes provisions to protect minority shareholders.
The special committee will ensure that any proposed transactions do not unfairly disadvantage minority shareholders. The committee will review the terms to ensure they reflect fair treatment for all shareholders, particularly in the event of a sale or merger.
Special committee clause with composition of members
This version specifies the composition of the special committee.
The special committee will be composed of [X] members of the Board of Directors, including at least [X] independent directors who have no conflicts of interest regarding the proposed transaction.
Special committee clause with conflict resolution process
This version outlines a conflict resolution process for committee members.
In the event of a conflict of interest among committee members, the affected member will be required to recuse themselves from the discussion and decision-making process. Any disputes regarding conflicts will be resolved by the Board of Directors.
Special committee clause with specific deadline for decision-making
This version includes a deadline for the committee's decision.
The special committee will make its final decision regarding the proposed transaction within [X] days of its formation. The committee will present its recommendations to the Board of Directors before the deadline.
Special committee clause with requirement for independent legal counsel
This version includes the requirement for independent legal counsel.
The special committee is authorized to retain independent legal counsel to advise it on the legal aspects of the proposed transaction, ensuring that the committee’s actions are compliant with applicable laws and regulations.
Special committee clause with public disclosure obligations
This version includes disclosure obligations for the committee’s activities.
The company will disclose any significant decisions or activities undertaken by the special committee in a timely manner, in accordance with applicable securities regulations. This may include filing reports with regulatory authorities or making announcements to shareholders.
Special committee clause with indemnification of members
This version includes indemnification for committee members.
The company will indemnify members of the special committee against any liabilities or legal expenses incurred in the course of their duties, provided that the committee member acted in good faith and in the best interests of the company.
Special committee clause with provision for external audits
This version includes provisions for an external audit.
The special committee may request an external audit of any financial data or transactions related to its investigation. The results of the audit will be shared with the Board and relevant stakeholders as part of the committee’s decision-making process.
Special committee clause with power to approve compensatory agreements
This version grants the committee power to approve compensation packages.
The special committee shall review and approve any compensatory agreements associated with the transaction, including severance packages for executives or retention bonuses. These approvals must align with the company’s compensation policies and shareholder interests.
Special committee clause with confidentiality agreements
This version includes confidentiality provisions for the committee.
All members of the special committee, as well as any advisors or consultants, shall sign confidentiality agreements to protect sensitive company information related to the transaction or issue under review.
Special committee clause with oversight of due diligence process
This version includes oversight of the due diligence process.
The special committee shall oversee the due diligence process for the proposed transaction, ensuring that all relevant information is thoroughly reviewed. The committee will also be responsible for ensuring that any identified risks are properly mitigated before proceeding.
Special committee clause with transparency to shareholders
This version includes provisions for transparency to shareholders.
The special committee will provide regular updates to shareholders regarding its activities and the progress of the transaction. Shareholders will be informed of any material changes to the proposed transaction, and the committee will solicit shareholder feedback where appropriate.
Special committee clause with external financial advisor engagement
This version includes the engagement of external financial advisors.
The special committee may engage an independent financial advisor to assess the value of the proposed transaction, evaluate the financial terms, and provide expert guidance on the financial impact of the transaction on the company and its shareholders.
Special committee clause with establishment of decision criteria
This version includes criteria for decision-making.
The special committee will establish clear decision-making criteria for evaluating the proposed transaction. These criteria may include financial impact, strategic alignment, shareholder value, and the risk profile of the transaction.
Special committee clause with conflict of interest disclosure
This version includes conflict of interest disclosure requirements.
Any member of the special committee with a potential conflict of interest in the proposed transaction must disclose the conflict to the Board of Directors. The affected member will be required to recuse themselves from any decision-making related to that transaction.
Special committee clause with provisions for reporting
This version includes reporting obligations for the committee.
The special committee will report to the Board of Directors at least once a month during the review process, providing updates on the progress of the investigation and any findings that could impact the proposed transaction.
Special committee clause with authority to modify terms
This version includes authority to modify the terms of a transaction.
The special committee has the authority to modify the terms of the proposed transaction, including adjusting the pricing, payment terms, and structure, as it deems necessary to protect the interests of the company and its shareholders.
Special committee clause with the right to cancel transactions
This version includes the right to cancel proposed transactions.
The special committee may cancel any transaction under review if it determines that the terms are no longer favorable to the company, or if new information arises that significantly alters the viability of the transaction.
Special committee clause with regular reviews of ongoing transactions
This version includes regular reviews of ongoing transactions.
The special committee will conduct periodic reviews of any ongoing transactions to ensure they remain aligned with the company’s strategic goals. If the committee finds that the transaction no longer serves the company’s best interests, it will recommend its termination.
Special committee clause with approval of related party transactions
This version grants the committee the authority to approve related party transactions.
The special committee is empowered to review and approve any related-party transactions that may arise during its work. The committee will ensure that such transactions are conducted at arm’s length and are in the best interests of the company and its shareholders.
Special committee clause with external legal counsel
This version includes provisions for external legal counsel.
The special committee may engage external legal counsel to assist in its review of legal matters related to the proposed transaction. Legal counsel will provide advice on regulatory compliance, contractual obligations, and any legal risks associated with the transaction.
Special committee clause with shareholder input
This version allows for shareholder input into the committee's decisions.
The special committee will consider feedback from shareholders during its deliberations, particularly on matters that may significantly impact shareholder interests. Shareholders will have the opportunity to submit their comments or concerns in writing before the committee makes a final recommendation.
Special committee clause with mandate to ensure fair treatment
This version includes a mandate to ensure fair treatment for all shareholders.
The special committee is tasked with ensuring that any transaction it reviews is fair to all shareholders, particularly minority shareholders. The committee will evaluate the terms of the transaction to ensure equitable treatment and minimize potential conflicts of interest.
Special committee clause with selection of independent valuation experts
This version allows the committee to select independent valuation experts.
The special committee is authorized to select independent valuation experts to assess the financial terms of the transaction. The valuation report will be shared with the Board of Directors and will form the basis of the committee's recommendation.
Special committee clause with periodic progress reports
This version requires the committee to provide periodic updates.
The special committee will provide progress reports to the Board of Directors on a quarterly basis, detailing the steps taken, any challenges encountered, and the status of the ongoing investigation into the proposed transaction.
Special committee clause with authority to change transaction terms
This version includes the authority to modify the terms of a transaction.
The special committee has the authority to modify the terms and conditions of the proposed transaction if it determines that adjustments are necessary to protect the interests of the company and its shareholders.
Special committee clause with ability to initiate third-party negotiations
This version allows the committee to initiate negotiations with third parties.
The special committee is authorized to initiate negotiations with third parties on behalf of the company, including potential buyers, merger partners, or financiers. The committee will negotiate the terms and conditions of any agreement, subject to Board approval.
Special committee clause with establishment of a working group
This version allows the committee to establish a working group.
The special committee may form a working group consisting of members of the company’s management team and external advisors to handle the day-to-day details of the transaction review process. The working group will report directly to the committee.
Special committee clause with approval for capital expenditures
This version includes authority for approving capital expenditures.
The special committee is empowered to review and approve any capital expenditures related to the proposed transaction. These expenditures must be consistent with the company’s overall business strategy and financial capabilities.
Special committee clause with due diligence oversight
This version includes oversight of the due diligence process.
The special committee will oversee the company’s due diligence process related to the proposed transaction. This includes reviewing financial, legal, and operational aspects of the transaction to identify any risks or issues that may need to be addressed.
Special committee clause with ability to reject transactions
This version includes the committee’s authority to reject transactions.
The special committee has the authority to reject any transaction that it deems detrimental to the company or its shareholders. Any rejection must be documented with a clear explanation of the reasons for the decision, which will be shared with the Board and relevant stakeholders.
Special committee clause with specific performance targets
This version includes performance targets for the committee’s work.
The special committee will set performance targets related to the transaction review process, including timelines, financial thresholds, and strategic objectives. The committee will regularly assess its progress toward achieving these targets and adjust its approach if necessary.
Special committee clause with mandate for full disclosure
This version requires full disclosure of the committee’s activities.
The special committee will provide full disclosure of its activities and findings to the Board of Directors and shareholders. This includes providing access to meeting minutes, reports, and any correspondence related to the transaction review process.
Special committee clause with voting rights on key matters
This version includes voting rights for committee members on key matters.
Members of the special committee shall have voting rights on key matters under review, such as the approval of the transaction, selection of advisors, and final recommendations to the Board of Directors. A majority vote of the committee members will determine the outcome.
Special committee clause with authority to modify committee structure
This version allows the committee to modify its own structure.
The special committee has the authority to modify its structure and operating procedures as necessary to effectively address the issues at hand. Any changes to the committee’s structure must be approved by the Board of Directors.
Special committee clause with reporting to regulators
This version includes the requirement to report to regulatory authorities.
The special committee shall ensure that any regulatory filings or disclosures required in connection with the transaction are completed in a timely and accurate manner. This may include reporting to securities regulators, antitrust authorities, or other relevant government bodies.
Special committee clause with ability to negotiate with management
This version allows the committee to negotiate with management.
The special committee is authorized to engage in direct negotiations with the company’s management team regarding the terms and structure of the proposed transaction. The committee will ensure that management’s interests are aligned with those of the shareholders.
Special committee clause with confidentiality for advisors
This version includes confidentiality provisions for external advisors.
All external advisors engaged by the special committee must sign a non-disclosure agreement (NDA) to protect confidential company information. Advisors will be required to maintain confidentiality throughout the duration of their engagement and beyond.
Special committee clause with final approval by Board of Directors
This version includes final approval by the Board.
While the special committee has significant authority to review and negotiate transactions, all final decisions must be approved by the full Board of Directors. The Board will review the committee’s recommendations and make a final determination on whether to proceed.
Special committee clause with rights to extend review period
This version allows the committee to extend its review period.
The special committee may extend the review period for a proposed transaction if additional time is needed to complete due diligence, address issues, or consult with external advisors. The committee will notify the Board and shareholders if the review period is extended.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.