Corporate Governance (1993)
The Emergence of Corporate Governance as a New Legal Discipline
E. Norman Veasey, 48(4): 1267–70 (Aug. 1993)
In this symposium introduction, the author comments on the emergence of corporate governance as a legal discipline and outlines the process by which the ALI's Principles of Corporate Governance reached its final form. The ALI Corporate Governance Project is only one part of the Symposium and only one aspect of the emerging field of corporate governance.
An Overview of the Principles of Corporate Governance
Melvin Aron Eisenberg, 48(4): 1271–96 (Aug. 1993)
This Article begins by briefly discussing the background and architecture of the ALI's Principles of Corporate Governance. It then explores one or two central provisions in each of the substantive areas covered by the Principles, explains the policy reasons behind these provisions, and shows how these provisions restate the relevant law.
An Underview of the Principles of Corporate Governance
Richard B. Smith, 48(4): 1297–1311 (Aug. 1993)
The author recounts some of the process leading to the publication of the ALI's Principles of Corporate Governance and the issues and debates that led to the final language of key provisions, particularly those concerning derivative litigation. The relationship of the Principles to the MBCA and Delaware law is put in context.
Thanks, Myth, and Reality
Roswell B. Perkins, 48(4): 1313–17 (Aug. 1993)
The author, the president of the ALI from 1980 to 1993, expresses thanks to all those who contributed to the ALI Corporate Governance Project; outlines some of the history of the Project; and states that the final product, the Principles of Corporate Governance, adheres closely to the original prospectus for the project, written in 1978 by Ray Garrett.
Principles of Corporate Governance: One Viewer's Perspective on the ALI Project
Bayless Manning, 48(4): 1319–32 (Aug. 1993)
Reviewing the project and its fifteen-year history, the author finds that its unanticipated direction, enormous direct cost, astronomical investment in professional time, ponderous length and detail, and other (frequently acrimonious) difficulties were attributable to at least nine separate inherent problems. Viewed prospectively, although the content of the end product invites further litigation in a field already over litigated, its impact is not likely to be major, particularly as the real-world law governing investment and management of capital has, in the meantime, moved on.
CORPRO: A Committee That Became an Institution
Elliott Goldstein, 48(4): 1333–36 (Aug. 1993)
The Ad Hoc Committee on the ALI Corporate Governance Project, known familiarly as "CORPRO, " was formed to present the views of the Section of Business Law to the Reporters for the project. This Article provides the history of the relationship of CORPRO with the Reporters and other personnel of the ALI and the influence of CORPRO on the evolution of the project as evidenced by the final draft of the Principles of Corporate Governance.
Rejudging the Business Judgment Rule
R. Franklin Balotti and James J. Hanks, Jr., 48(4): 1337–53 (Aug. 1993)
In Aronson v. Lewis, 473 A.2d 805 (Del. 1984), and earlier cases, the Delaware Supreme Court characterized the business judgment rule as a "presumption" running in favor of directors. The authors question this characterization, examine its origins, and develop their interpretation of both the substantive and procedural aspects of the rule. ( Editor's note: Aronson was recently reversed by the Delaware Supreme Court's decision in Brehm v. Eisner, 746 A.2d 244 (Del. 2000)).
The Duty of Care, the Business Judgment Rule, and the American Law Institute Corporate Governance Project
Charles Hansen, 48(4): 1355–76 (Aug. 1993)
The Article discusses a corporate director's common law duty of care and the business judgment rule and then compares the law on these subjects with their treatment by the ALI in its Principles of Corporate Governance.
Conflicts of Interest and the ALI Corporate Governance Project— A Reporter's Perspective
Marshall L. Small, 48(4): 1377–92 (Aug. 1993)
The author reviews the evolution of statutory and case law relating to corporate conflicts of interest, and the manner in which the ALI's Principles of Corporate Governance has dealt with the subject, including the scope of judicial review of conflict-of-interest transactions and the significance of disinterested ratification of conflicts of interest.
The Effect of Disinterested Director Approval of Conflict Transactions Under the ALI Corporate Governance Project —A Practitioner's Perspective
John F. Johnston and Frederick H. Alexander, 48(4): 1393–1405 (Aug. 1993)
The policy perspective of the ALI's Corporate Governance Project with respect to conflict-of-interest transactions that have been approved by disinterested directors is very different from that of many practitioners and, more importantly, from that of the courts that have decided the relevant cases. This Article compares those perspectives.
New Myths and Old Realities: The American Law Institute Faces the Derivative Action
John C. Coffee, Jr., 48(4): 1407–41 (Aug. 1993)
Adopting a business judgment test with respect to most duty-of-care actions but a "reasonableness " test with respect to many duty-of-loyalty claims, the ALI's Principles of Corporate Governance seek to confine and focus the derivative action on enforcement of a limited range of duty-of-loyalty and related claims. The author outlines the trade-offs faced in the Principles and assesses the broader public policy issues underlying shareholder litigation.
Derivative Litigation: Current Law Versus The American Law Institute
Dennis J. Block, Stephen A. Radin, and Michael J. Maimone, 48(4): 1443–83 (Aug. 1993)
This Article examines the standard of judicial review governing determinations by independent directors, where these directors constitute a majority of the board, that derivative litigation against corporate directors and officers should not be pursued because such litigation will, for some bona fide corporate reason, not serve the best interests of the corporation. The current law on the issue is compared with treatment afforded the issue by the ALI in its Principles of Corporate Governance.
The Evolution of the Certifying Board
Ira M. Millstein, 48(4):1485–97 (Aug. 1993)
The era of managerial dominance in corporate governance is giving way to a more balanced and accountable corporate triad which includes boards of directors and shareholders. The author argues that, if this triad is to become truly balanced and accountable (and governmental regulation of corporate governance avoided), boards should continue to evolve toward becoming "certifying boards"—sufficiently strong, independent, and credible to certify to shareholders and other constituents that management is evaluated regularly and is fulfilling the board's expectations.
The Evolution of the 1992 Shareholder Communication Proxy Rules and Their Impact on Corporate Governance
Norma M. Sharara and Anne E. Hoke-Witherspoon, 49(1): 327–58 (Nov. 1993)
The SEC received a record number of comment letters regarding its revisions to the proxy rules governing shareholder communications. These changes were brought about in large part due to pressure from institutional investors. The authors summarize the rulemaking process and analyze the impact of the new rules, particularly with respect to institutional investors.