Stone v. Ritter

DEL. Supreme Court Decision in Stone v. Ritter

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The Stone decision formalizes the discussion that appeared in Caremark regarding potential liability of directors into a holding that directors may be liable for the damages resulting from legal violations committed by employees of a corporation, if directors fail to implement a reporting or information system or controls or fail to monitor such systems. The court places this duty of directors squarely within the duty of loyalty. The decision also provides a view of those factors that the court will use in deciding whether the board oversight of the company’s compliance program was adequate to prevent liability to the directors.

* In Re Caremark Int’l Inc. Derivative Litigation, 698 A.2d 959, 970 (Del. Ch. 1996).

* Stone v. Ritter, 911 A.2d 362 (Del. 2006).

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Reference Info:Decision | State, 3rd Circuit, Delaware | United States


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