Fiduciary Duties of Directors | Brian JM Quinn | February 22, 2013


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Fiduciary Duties of Directors

by Brian JM Quinn Show/Hide

Although the Delaware code – and the corporate codes of all the other states for that matter – do a good job of describing the corporate form and the mechanics of operating this form, with the exception of Section 144, the code says precious little about the standards to which boards of directors who are managing the corporation will be held. That is because corporate fiduciary duties are a product of the common law and not statute.

In the following sections we examine the various core duties of corporate directors. Although these duties are fewer in number than the fiduciary obligations of agents, they are entirely consistent.


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  1. 1 Show/Hide More Standards of Conduct and Standards of Review
    The question is often asked: to whom do corporate directors owe their duties? And, how are the actions of directors evaluated ex post by courts? In Trados, an excerpt of which follows, Vice Chancellor Laster describes the standards of conduct against which director action is measured as well as Delaware's various standards of reviews.
    1. 2.1 Show/Hide More Aronson v. Lewis
      Original Creator: Brian JM Quinn
      Statement of the Business Judgment Rule
    2. 2.3 Show/Hide More Williams v. Geier
      Original Creator: Brian JM Quinn
      Board decisions to amend the certificate of incorporation and business judgment protection.
    3. 2.4 Show/Hide More Smith v. Van Gorkom
      Original Creator: Brian JM Quinn
      The Duty of Care in the context of a corporate acquisition
    4. 2.6 Show/Hide More Malpiede v. Townson
      Original Creator: Brian JM Quinn
      Effect of 102(b)(7) provisions on litigation
    1. 3.2 Show/Hide More Dweck v. Nasser
      Original Creator: Brian JM Quinn
      How does the duty of loyalty play out in the context of corporate officers and directors.
    2. 3.3 Show/Hide More Entire Fairness
      Original Creator: Brian JM Quinn
      What is entire fairness? The court in Weinberger describes entire fairness as fair price and fair dealing.
      1. 3.3.1 Show/Hide More Weinberger v. UOP, Inc.
        Original Creator: Brian JM Quinn
        Entire Fariness (Fair price and fair dealing)
      1. 3.4.1 Show/Hide More Sutherland v. Sutherland
        Original Creator: Brian JM Quinn
        The role of 144 in providing a safe harbor for interested director transactions.
      2. 3.4.2 Show/Hide More Fliegler v. Lawrence
        Original Creator: Brian JM Quinn
        144 – interested director transactions
      1. 3.5.1 Show/Hide More Broz v. Cellular Info. Systems Inc.
        Original Creator: Brian JM Quinn
        Corporate Opportunity Doctrine
        1. Show/Hide More Stone v. Ritter
          Original Creator: Brian JM Quinn
      1. 3.7.1 Show/Hide More Stroud v. Grace
        Original Creator: Brian JM Quinn
        Duty of Candor and disclosure obligations under the DGCL
  2. 4 Show/Hide More Corporate Waste
    Original Creator: Brian JM Quinn
    Standard of review for corporate waste claims
    1. 4.1 Show/Hide More In Re The Goldman Sachs Group, Inc. Shareholder Litigation
      Original Creator: Brian JM Quinn
      Waste and the Waste Standard
      Steiner v. Meyerson, Del. Ch., C.A. No. 13139, Allen, C. (July 18, 1995), Mem. Op. at 2, 1995 WL 441999. As Chancellor Allen observed in Steiner, supra at p. 11:</p> waste theory represents a theoretical exception to the statement very rarely encountered in the world of real transactions. There surely are cases of fraud; of unfair self dealing and, much more rarely negligence. But rarest of all — and indeed like Nessie [of Loch Ness fame], possibly non existent — would be the case of disinterested business people making non fraudulent deals (non-negligently) that meet the legal standard of waste!
    2. 4.2 Show/Hide More Seinfeld v. Slager
      Original Creator: Brian JM Quinn
      1. Executive compensation and waste claims.
      2. Do boards face some liability for failure to minimize taxes?
      3. Business judgment
    1. 6.1 Show/Hide More In RE Celera Corporation Shareholder Litigation
      Original Creator: Brian JM Quinn
      Settlements and standards for voluntary settlements of shareholder litigation

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November 11, 2013

corporate fiduciary duties

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Brian JM Quinn

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