A director’s responsibilities in serving on a corporate board are attended by substantial personal financial risks—not least of which is the specter of shareholder litigation. Exculpatory charter provisions, such as Section 102(b)(7) of the Delaware General Corporation Law, provide a basis for dismissal of certain breach of fiduciary duty claims brought derivatively by shareholders.
On May 14, 2015, in In re Cornerstone Therapeutics Inc. Stockholder Litigation, the Delaware Supreme Court considered interlocutory appeals from two cases and held that a plaintiff bringing a damages action challenging an interested transaction subject to entire fairness review must plead a non-exculpated claim against disinterested, independent directors. Indeed, this pleading standard is required “regardless of the underlying standard of review for the board’s conduct—be it Revlon, Unocal, the entire fairness standard, or the business judgment rule.”
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