Fiduciary Duty Directors

News & Analysis as of

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - Remember to Update Your Risk Disclosure on an Ongoing Basis - The staff of the Securities and Exchange Commission (SEC) issued guidance reminding mutual funds, exchange traded funds, and other...more

2015 Georgia Corporation and Business Organization Case Law Developments

This survey covers the legal principles governing Georgia businesses, their management and ownership. It catalogs decisions ruling on issues of corporate, limited liability company and partnership law, as well as transactions...more

Blog: How to Handle Changes on Your Board of Directors

Board members tend to stay with companies for a relatively long time, but, like employees, sometimes it makes sense for a board member to leave. Here is what I try to do when a board member departs: - Clear...more

Court Holds That An Officer Can Negotiate New Employment Without Breaching Fiduciary Duties

In Great American Food Chain, Inc. v. Andreottola, a corporate officer and director negotiated and accepted employment with a competitor while still employed with his prior employer. No. 3:14-CV-1727-BK, 2016 U.S. Dist. LEXIS...more

Court Of Chancery Explains Director Right To Information And What Communications Qualify As Corporate Books and Records

This is one of those scarce cases dealing with director access to a corporation’s books and records. After all, Delaware law provides directors with an almost unlimited right to a corporation’s records needed for them to...more

Inside M&A - October 2015

Overview of SPACs and Latest Trends - A number of recent successful business combination transactions involving special-purpose acquisition companies (SPACs) led by prominent sponsors have driven a resurgence in the SPAC...more

Insights: The Delaware Edition - October 2015

We are pleased to share with you the inaugural issue of Insights: The Delaware Edition, a periodic publication addressing significant Delaware deal litigation and corporation law developments. In This Issue: - Q&A...more

"Delaware Supreme Court Reaffirms Important Protections for Corporate Directors"

A trio of opinions from the Delaware Supreme Court, each authored by Chief Justice Leo E. Strine, Jr., has reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored...more

Ninth Circuit Affirms Dismissal of '40 Act Section 36(b) Excessive Fee Action Against Davis

The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of an amended complaint asserted by a shareholder of the Davis New York Venture Fund (the “Fund”) under section 36(b) of the Investment Company...more

Three Recent Delaware Decisions Highlight the Importance of Director Independence and Risks for M&A Financial Advisors

On September 28 and October 1, 2015, the Delaware Court of Chancery issued decisions in Caspian Select Credit Master Fund Limited v. Gohl, C.A. No. 10244-VCN and In re Zale Corporation Stockholders Litigation, C.A. No....more

A WARNing to Directors and Officers — Failure to give proper WARN Act notice may breach your fiduciary duty

At first glance, Stanziale v. MILK072011, looks like someone suing over a bad expiration date and conjures up images of Ron Burgundy proclaiming “milk was a bad choice.” But in actuality Stanziale is much more interesting: it...more

Court Poised To Decide Whether Directors Are Agents

Not quite four years ago, I wrote about whether directors are agents. The post was prompted by then Chancellor William B. Chandler III’s assertion...more

Delaware Expands Jurisdiction Over Directors

A recent but little-known decision by a Delaware court may have substantially expanded the state's jurisdiction over the directors of a Delaware corporation. Delaware has long had a director-consent-to-service statute: 10...more

Court Rules Unincorporated Association Aided Director’s Breach Of Fiduciary Duty

Nearly four years ago, I devoted this post about California’s Unincorporated Association Law. Typically, an unincorporated association is a club, church, or other social organization. A criminal street gang might also be an...more

Making the Most Out of Your Board Meeting

Many first-time entrepreneurs have never participated in a formal board meeting. After an initial round of financing, regular board meetings become a reality. Preparing for board meetings can be time consuming and daunting....more

SEC Sanctions Independent Trustees for Approving Mutual Fund Advisory Contract without Sufficient Information

Underscoring the need for independent trustees to act vigilantly, a recent SEC consent order issued in an enforcement action imposed discipline on a mutual fund's independent trustees, its investment advisor, and the...more

A Key Reminder to Directors of Delaware Corporations When Granting Equity Awards under an Equity Incentive Plan

Corporate directors routinely make decisions regarding their own compensation. If challenged by stockholders, such decisions are generally reviewed by Delaware courts under the onerous "entire fairness" standard, which...more

Director Compensation After Calma v. Templeton: Proactive Steps to Consider

Delaware case exposes director compensation to heightened “entire fairness” standard absent adequate stockholder ratification - The Delaware Court of Chancery recently decided a case that makes it easier for plaintiffs...more

Delaware Offers New Guidance on Enforcing Fiduciary Duties Owed to Insolvent Corporations

On May 4, 2015, Vice Chancellor Travis Laster of the Delaware Court of Chancery issued a decision in Quadrant Structured Products Co., Ltd. v. Vertin, analyzing creditors’ standing to bring derivative claims against directors...more

Back To The Future – Should Stock Incentive Plans Impose Grant Limits on Non-Employee Director Awards?

On April 30, 2015, the Court of Chancery of the State of Delaware rendered an important case decision in a procedural matter dealing with the equity compensation of non-employee members of a company’s board of directors (see...more

An Exercise of Business Judgment: Chancery Court Dismisses Shareholder Derivative Demand-Refused Case

Last week, Vice Chancellor Glasscock released an important decision dismissing a case under Rule 23.1 that was brought by a DuPont shareholder who alleged that the board improperly refused a demand to sue DuPont’s officers...more

Delaware Court Limits Stockholder Ratification Defense for Derivative Claim Challenging Director Compensation - Court Permits...

In Calma v. Templeton, et al., C.A. No. 9579-CB, (Del. Court of Chancery, April 30, 2015), the stockholders of Citrix Systems, Inc. (the “Company” or “Citrix”) had previously approved a compensation plan with few limits;...more

"Fairness of Director Awards Granted Under Market-Standard Equity Plans Comes Under Increased Scrutiny"

A Delaware court opinion issued late last week may subject equity grants to directors to increased judicial scrutiny (Calma v. Templeton, No. 9579-CB (Del. Ch. Apr. 30, 2015)). In Calma, the Chancery Court denied the...more

Avoiding Personal Liability: A Guide For Directors And Officers

According to the popular media, we are living in an era of corporate crime. Scandals like Enron, HealthSouth and WorldCom stretch so far back they seem like they are not even of this millennium. Among the milestones since...more

How Recent Fiduciary Duty Cases Affect Advice To Directors And Officers Of Delaware And Texas Corporations

The conduct of corporate directors and officers is subject to particular scrutiny in the context of business combinations (whether friendly or hostile), executive compensation and other affiliated party transactions,...more

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