Worlds In Collision – Agency Law And A Director’s Fiduciary Duties

Some of you may recall the consternation that arose when former Chancellor Chandler seemed to classify directors as agents of the shareholders. Unisuper, Ltd. v. News Corp., No. 1699 (Del. Ch. Dec. 20, 2005) (“the board’s power — which is that of an agent’s with regard to its principal — derives from the shareholders, who are the ultimate holders of power under Delaware law.”). Less than a month later the Chancellor clarified his remarks as follows:

The board of directors owes fiduciary duties to the shareholders. In the Opinion, this Court referred generally to agency law principles to illustrate why the nature and purpose of fiduciary duties is to serve as a shield for shareholders, not as a sword for directors to use against shareholders as a group. Although the Opinion employed agency law principles to illustrate by analogy the gap filling nature of fiduciary duties, it did so in an effort pointedly to reject defendants’ effort to invoke the board’s fiduciary duties as a muzzle to silence shareholders.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins Leck Gamble Mallory & Natsis LLP | Attorney Advertising

Written by:


Allen Matkins Leck Gamble Mallory & Natsis LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.