Directors and Officers (1993—1996)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.
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.
Advising Corporate Directors After the Savings and Loan Disaster
Harris Weinstein, 48(4): 1499–1507 (Aug. 1993)
The savings and loan and bank failures of recent years have generated extensive litigation testing theories of liability applicable to directors of depository institutions. The author, formerly Chief Counsel of the Office of Thrift Supervision, argues that the traditional business judgment rule should prevail over simple negligence theories advanced by the FDIC and the RTC. By resting on post hoc reexaminations of business decisions, the simple negligence theory fails to take adequate account of the risk inherent in business decisions and unduly inhibits the service of qualified persons as corporate directors.
Organization of a Mutual Fund
Victoria E. Schonfeld and Thomas M.= J. Kerwin, 49(1): 107–61 (Nov. 1993)
This Article addresses some of the fundamental legal and business considerations that arise in connection with the organization of an open-end registered investment company known as a mutual fund. The Article highlights the concerns of the fund's sponsor (usually its investment adviser or distributor) in structuring and distributing the mutual fund. It also addresses issues faced by the fund's directors and officers and the entities that provide management and other services to the fund.
Understanding and Avoiding Corporate and Executive Criminal Liability
Dan K. Webb, Steven F. Molo, and James F. Hurst, 49(2): 617–68 (Feb. 1994)
This Article discusses the rapidly evolving topic of corporate and executive criminal liability. It describes the principles and practical considerations governing its imposition and the ramifications for conviction under the new Federal Organizational Sentencing Guidelines. Finally, it discusses corporate compliance programs and how they can be used to limit exposure to corporate criminal liability.
Corporate Director's Guidebook—1994 Edition
committee on Corporate Laws, 49(3): 1243–89 (May 1994)
The Corporate Director's Guidebook, published in 1978, has proven to be an insightful and useful road map for directors of publicly held corporations. This second edition revises and expands the Guidebook, including coverage of the operations of committees of the board. To a great extent, corporate directors constitute the targeted audience; however, lawyers should find the revised Guidebook helpful in educating clients and in reviewing recent developments in corporate law and practice.
Delaware Fiduciary Duty Law after QVC and Technicolor: A Unified Standard (and the End of Revlon Duties?)
Lawrence A. Cunningham and Charles M. Yablon, 49(4): 1593–1628 (Aug. 1994)
The authors argue that the Delaware Supreme Court's decisions in Paramount Communications, Inc. v. QVC Network, Inc ., 637 A.2d 34 (Del. 1994), and Cede <&> Co. v. Technicolor, Inc ., 634 A.2d 345 (Del. 1993), reflect a movement in Delaware fiduciary law away from doctrinal fragmentation and toward a single more unified standard of director conduct, imposing upon all corporate directors a single, highly general obligation of good faith and fair dealing based upon reasonably informed judgment. The logic of the decisions and this new unified standard imply that the so-called Revlon duty—an affirmative legal obligation to conduct a fair auction for the company and to sell it to the highest bidder—no longer exists under Delaware law. A new standard, requiring enhanced scrutiny to ensure that management actions achieve the best value reasonably available to shareholders, will apply to all management actions in takeover situations and other extraordinary transactions as well.
The Squeeze on Directors—Inside Is Out
James M. Tobin, 49(4): 1707–60 (Aug. 1994)
With the decline in takeover frenzy, the primary focus for most corporate boards has shifted to examination of general corporate performance over time—not single event transactions such as takeover defense mechanisms or change of control proposals. Currently, the primary pressure is on outside directors and comes from advocacy by institutional investors, their advisors, and those members of the media and government who are sympathetic to institutional investors' causes. Activist focus today is on developing standards of performance for corporations and their boards and management that will improve share values and investment return over time. The business judgment rule provides limited guidance in this environment. The fiduciary-duty concepts underlying this rule are more relevant but are too general to provide either guidance or comfort. This Article explores the business practices likely to form the basis for fulfillment of director duties. These practice standards currently emphasize a pro-active role for outside directors as a principal means for improved corporate performance.
The Professional Board
Ira M. Millstein, 50(4): 1427–43 (Aug. 1995)
The role of a director, especially of a major corporation, should demand time, energy, and intelligent comprehension of the corporation's affairs. Among other things, directors should have a serious understanding of what underlies major policy decisions, strategic plans, and the mechanisms for incentivizing performance from the boardroom to the factory floor. To perform such functions, directors are being transformed from amateur to professional status. The author discusses the need for and implications of professionalism.
Directors and Officers Indemnification and Liability Insurance: An Overview of Legal and Practical Issues
Joseph P. Monteleone and Nicholas J. Conca, 51(3): 573–634 (May 1996)
This Article surveys the law regarding indemnification of corporate directors and officers, highlighting the important provisions of Delaware's indemnification statute, which governs most corporations in the United States. The authors then turn to a discussion of directors and officers liability insurance, including a detailed description of typical policy terms, conditions, and exclusions. The Article closes with an overview of the recent case law regarding the much-debated allocation issue.