Keith Bishop on Fiduciary Duty

Nevada Legislature Approves Amendments To The State's Corporate Law

In prior posts, I have discussed some the changes that AB 239 would make to Nevada's corporate law. Last week, I testified in my individual capacity in support of the bill before the Senate Judiciary Committee. On Wednesday...more

5/23/2025 / Board of Directors , Business Court , Delaware , Fiduciary Duty , Mergers , Nevada , New Legislation , Proposed Amendments , Shareholder Rights

Judge Rules Shareholders Can Pursue Derivative Claim Following A "Conversion"

A year ago, I posited the question whether a derivative suit can survive a conversion. I raised that question in reference to Palkon v. Maffei, 2024 WL 678204 (Del. Ch. Feb. 20, 2024), in which the plaintiffs unsuccessfully...more

5/21/2025 / Business Entities , Corporate Conversions , Delaware General Corporation Law , Derivative Suit , Fiduciary Duty , Nevada , Securities Litigation , Shareholder Litigation , Shareholders , Standing

This Texas Case Illustrates Why Delaware Corporations Are Choosing Nevada

Bright-eyed Athena, the goddess of wisdom, was not birthed of a woman. Rather, she sprang from the head of Zeus after he swallowed Metis, the pre-Olympian goddess of wisdom...more

5/12/2025 / Business Judgment Rule , Business Litigation , Controlling Stockholders , Corporate Governance , Delaware , Fiduciary Duty , Mergers , Motion to Dismiss , Nevada , Shareholder Litigation

In More Bad News For Delaware, Nevada Legislature Proposes To Allow Jettisoning Jury Trials For "Internal Actions"

I have previously noted certain provisions of a bill amending Nevada's business entity statutes, AB239. See Nevada Bill Would Impose A Duty That Directors Be Informed and Nevada Bill Would Expressly Allow Directors To...more

5/2/2025 / Board of Directors , Business Entities , Business Litigation , Corporate Governance , Fiduciary Duty , Jury Trial , Litigation Strategies , Nevada , New Legislation , Shareholders

Nevada Supreme Court: Chapter 7 Filing Defeats Shareholder Breach Of Fiduciary Claim

Globe Photos, Inc. owned a portfolio of millions of images of celebrities and musicians, including Marilyn Monroe, the Beatles, and Jimi Hendrix, some taken by famous photographers such as Frank Worth. Despite these assets,...more

4/18/2025 / Appeals , Bankruptcy Court , Board of Directors , Breach of Duty , Chapter 7 , Commercial Bankruptcy , Delaware General Corporation Law , Derivative Suit , Fiduciary Duty , Shareholder Litigation

Delaware LLCs - "I See Trouble On the Way"

Delaware had barely birthed changes to Section 144 of its General Corporation Law when the Plumbers & Fitters Local 295 Pension Fund filed a complaint challenging those changes. The plaintiff seeks a declaration that the...more

4/9/2025 / Board of Directors , Business Entities , Constitutional Challenges , Delaware General Corporation Law , Fiduciary Duty , Limited Liability Company (LLC) , New Legislation , Operating Agreements , Publicly-Traded Companies , Shareholder Litigation

Unreasonableness Or Carelessness Is Insufficient To Prove Liability In Nevada

Nevada's exculpatory statute, NRS 78.138(7), requires a plaintiff to both rebut a statutory presumption of good faith and prove a breach of fiduciary duty involving intentional misconduct, fraud, or a knowing violation of the...more

4/8/2025 / Breach of Duty , Business Litigation , Corporate Governance , Corporate Misconduct , Corporate Officers , Directors , Fiduciary Duty , Nevada , Securities Litigation , Shareholder Litigation

Another Post SB21 Proposal To Reincorporate From Delaware To Nevada

The ink has barely dried on Delaware's hotly debated amendments to its General Corporation Law and already another company has proposed reincorporation in Nevada. In preliminary proxy materials filed yesterday with the...more

4/4/2025 / Board of Directors , Corporate Governance , Delaware General Corporation Law , Fiduciary Duty , Nevada , Publicly-Traded Companies , Regulatory Reform , Securities and Exchange Commission (SEC) , Shareholder Litigation , Shareholders

What Vice Chancellor Strine Got Wrong In Massey Energy Co.

Vice Chancellor Leo Strine famously wrote that "Delaware law does not charter law breakers". In re Massey Energy Co., 2011 WL 2176479, at *20 (Del. Ch. May 31, 2011). Professor William J. Moon picks up on this theme in a...more

3/24/2025 / Board of Directors , Constitutional Challenges , Corporate Governance , Corporate Misconduct , Delaware , Fiduciary Duty , Regulatory Reform , Regulatory Requirements

Court Applies Internal Affairs Doctrine Even Though Statute Refers Only To Directors

Courts are wont to say that Section 2116 of the California Corporations Code codifies the internal affairs doctrine. See Villari v. Mozilo, 208 Cal. App. 4th 1470, 1478 n.8 (Cal. Ct. App. 2012) (“Corporations Code section...more

3/12/2025 / Business Entities , California , Corporate Governance , Directors , Fiduciary Duty , Internal Affairs Doctrine , Jurisdiction , Liability , Statutory Interpretation

It Is More Than Conceivable That The Court Of Chancery Would Correct Statutory Law

The most distinguishing feature of Delaware law is that it is interpreted and applied by a court of equity. A recent post by Professor Stephen Bainbridge illustrates this point...more

2/21/2025 / Business Entities , Corporate Governance , Corporate Misconduct , Delaware , Equity , Fiduciary Duty , Judicial Authority , Shareholders , Statutory Interpretation

Nevada Bill Would Impose A Duty That Directors Be Informed

As I and others have pointed out, Nevada leans heavily on its statutes when it comes to corporate governance. Currently, NRS 78.135 provides...more

2/20/2025 / Board of Directors , Corporate Governance , Directors , Fiduciary Duty , Nevada , Shareholders

Is Pareto Optimality The Answer For Controlling Stockholder Transactions?

Yesterday's post concerned the Delaware Supreme Court's decision that the business judgment rule applied to TripAdvisor's decision to reincorporate in Nevada. Maffei v. Palkon, 2025 WL 384054 (Del. Feb. 4, 2025). This...more

2/6/2025 / Board of Directors , Business Judgment Rule , Controlling Stockholders , Corporate Governance , Delaware , Fiduciary Duty , Shareholder Litigation , Shareholder Rights , Shareholders , Voting Rights

Delaware Supreme Court Holds That While Timing May Not Be Everything, It Is Really Important When Looking For The Exit

Nearly one year ago, Vice Chancellor J. Travis Laster decided to apply Delaware's most onerous standard of review, entire fairness, to the decisions of TripAdvisor, Inc. and Liberty TripAdvisor Holdings, Inc. to reincorporate...more

2/5/2025 / Board of Directors , Business Entities , Corporate Governance , DE Supreme Court , Delaware , Delaware General Corporation Law , Entire Fairness Standard , Fiduciary Duty , Shareholders

Dropbox Discloses Plan To Move To Nevada

While it remains to be seen, 2025 may go down in history as the year of Dexit. A few weeks ago, I wrote that several companies that had filed proxy materials proposing to reincorporate from Delaware to Nevada. Last Friday,...more

2/3/2025 / Board of Directors , Business Entities , Corporate Governance , Corporate Transparency Act , Delaware , Disclosure Requirements , Fiduciary Duty , Publicly-Traded Companies , Securities and Exchange Commission (SEC) , Shareholders

As Predicted, Silicon Valley Bank Failure Will Test Fiduciary Duties Of Officers And Directors Under California Law

Late last year, I wrote that the the Board of Directors of the Federal Deposit Insurance Corporation had voted unanimously to approve the staff’s request for authorization to file a suit against six former officers and 11...more

1/31/2025 / Banking Regulators , Banking Sector , Board of Directors , California , Corporate Governance , Corporate Liability , Corporate Misconduct , Enforcement Actions , FDIC , Fiduciary Duty

Questioning Delaware's Control Over Controlling Stockholders

Delaware cases dealing with transactions involving controlling stockholders are often concerned with the standard of review to be applied. See, e.g., Tornetta v. Musk, 250 A.3d 793 (2019). Some cases engender a different...more

1/8/2025 / Corporate Governance , Corporate Misconduct , Delaware , Fiduciary Duty , Jurisdiction , Liability , Shareholder Rights , Shareholders

FDIC Plans To Sue Silicon Valley Bank And Holding Company Directors And Managers

Last week Kevin M. LaCroix reported that the Board of Directors of the Federal Deposit Insurance Corporation had voted unanimously to approve the staff’s request for authorization to file a suit against six former officers...more

12/24/2024 / Board of Directors , Choice-of-Law , Corporate Governance , Corporate Officers , FDIC , Fiduciary Duty , Shareholder Litigation , Shareholders

Court Rules That When Profits Are Hypothetical There Can Be No Civil Theft

Under California Penal Code Section 496(a) a person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or...more

12/3/2024 / Board of Directors , Corporate Governance , Corporate Misconduct , Corporate Officers , Derivative Suit , Fiduciary Duty , Shareholder Litigation , Shareholders

When Dismissing A Case Violates Due Process

When a shareholder sues derivatively, the shareholder is seeking relief not for itself, but for the corporation. Therefore, it should be expected that the shareholder is not free to compromise or dismiss the suit absent...more

11/4/2024 / Board of Directors , Breach of Duty , Corporate Governance , Corporate Misconduct , Corporate Officers , Derivative Suit , Fiduciary Duty , General Corporation Law , Nevada , Shareholder Litigation , Shareholders

Just What Are The Duties Of A Controlling Shareholder And How Should Claims Of Breach Be Brought?

In a recent post, Professor Stephen Bainbridge discusses the question of when a controlling shareholder owes fiduciary duties to minority shareholders. Knowing when controlling shareholder owes fiduciary duties is one thing,...more

10/23/2024 / Board of Directors , Breach of Duty , California , Corporate Governance , Corporate Officers , Derivative Suit , Fiduciary Duty , General Corporation Law , Shareholder Litigation , Shareholders

Court Finds Usurpation Of LLC Opportunity To Be Derivative

My last few posts have been devoted to the Court of Appeal's opinion in Tuli v. Specialty Surgical Center of Thousand Oaks, LLC, 2024 WL 4499271 (Oct. 16, 2024). The case relates to the plaintiff's "decade-long litigation...more

10/21/2024 / Breach of Duty , Business Disputes , Business Litigation , Derivative Suit , Fiduciary Duty , Limited Liability Company (LLC) , Misappropriation , Ownership Interest , Shareholders

Does Personal Animosity Vitiate The Business Judgment Rule?

Under the business judgment rule, "a director is not liable for a mistaken business judgment which is made in good faith and in what he or she believes to be in the best interest of the corporation, where no conflict of...more

10/17/2024 / Breach of Duty , Business Judgment Rule , Business Litigation , California , Derivative Suit , Fiduciary Duty , General Corporation Law , Limited Liability Company (LLC)

Is Your Directors And Officers Liability Coverage Illusory?

Many corporations pay significant amounts for directors and officers liability policies. Commonly referred to as D&O policies, these policies usually involve three sides. Directors and officers are likely to have the most...more

9/16/2024 / Board of Directors , Breach of Duty , Corporate Governance , Corporate Officers , Derivative Suit , Fiduciary Duty , Insurance Litigation , Policy Terms , Shareholder Litigation , Shareholders

Does The SEC's Jurisdiction Really Extend To Any Person?

Last week, the Securities and Exchange Commission announced that it had settled charges against a broker-dealer and two investment advisers for impeding their clients from reporting securities law violations to the SEC. ...more

9/9/2024 / Broker-Dealer , Confidential Information , Confidentiality Agreements , Fiduciary Duty , Investment Adviser , Investment Management , Jurisdiction , Securities and Exchange Commission (SEC) , Whistleblowers

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