Jessica DiNapoli and Tom Hals

(Reuters) – Twitter Inc (NYSE)’s directors of board can rely on Elon Musk’s social media platform to stop them, however, they must consider whether the price is more important than any other factors if they want to sell, according to corporate governance experts.

Last week, Musk offered $43 billion to San Francisco’s company. It is currently reviewing the offer. Musk (NASDAQ:) Inc is the richest man in the world and Tesla CEO. He has stated that he would like to create a Twitter “arena of free speech”, cheering Twitter critics and alarming people who are concerned about bullying and hate speech.

People familiar with the situation say that Musk’s offer is likely to be rejected by Twitter’s board before April 28th, when it reports first quarter earnings. Even though Twitter’s bankers said the offer was fair and the directors of the company have the right to reject it. However, professors and corporate governance lawyers stated that board directors can choose not to accept the proposal if they feel the platform would be better off following its current content strategy.

However, this would be different if Twitter’s board decided that it wanted to investigate a sale. This could happen because of more bids or if it decides to invite acquisition bids.

Delaware corporate law, which is where Twitter is incorporated, states that shareholders are the main consideration once a company has launched a sale process. If existing shareholders cash out, board directors cannot consider what will happen to the company.

“All these culture and discourse and democracy considerations fall by wayside because that’s not going to benefit shareholders anymore,” said Ann Lipton, a professor at Tulane Law School.

Twitter and Musk spokespersons did not respond immediately to our requests for comment.

Because the bid was not solicited, legal discretion rests with board directors on how they handle it. Brian Quinn from Boston College Law School said that directors may refuse to meet Musk if they feel the company’s culture and content are more in line with long-term investor interests.

Quinn explained that Musk could turn Twitter into a hellscape of free speech if they believe so.

The likelihood that Twitter will explore selling will depend on the quality of its offers.

Thoma Bravo LP, a private equity company, contacted Twitter last Thursday to indicate interest in a challenge Musk’s offer. But sources said that it is not certain that such an offer will come about, Reuters was told. Other buyout companies have also contacted Twitter since then to express interest in acquiring Musk’s stock, sources said.

A FOUNDER IS NOT AVAILABLE TO PROTECT IT

Different from other peers Snap Inc Twitter (NASDAQ:), and Facebook (NASDAQ.) owners Meta Platforms Inc. Twitter founders do not have supervoting shares and can reject any deal, even though it is viable or lucrative. Twitter took a poisonous pill to block Musk’s plan to increase his share to over 15% by negotiating with the board.

Twitter is vulnerable because it does not have a system for moderation that could survive under new ownership. Twitter hasn’t set up an independent review process to make its decisions. However, users have the right to appeal to it if they are locked out or suspend their accounts.

Meta on the other side has created an Oversight Board to allow users to appeal Facebook’s decisions about removing or leaving up content. The Oversight Board’s decisions are binding.

Twitter may face backlash from its shareholders if they don’t explore selling the company. Musk tweeted that he wanted all shareholders to be able to speak out regardless of their board’s opinions. Musk may challenge the board at the 2023 shareholder meeting by proposing his slate of nominees. If successful, this could force the company into a sale.

Experts in corporate governance say that Twitter can still look after the interests of its stakeholders, other than shareholders, unless it decides to sell.

Eric Talley of Columbia Law School said, “You can explicitly point to non-shareholder constituencies to support your justification for trying to stop the takeover.”