Law Commons^™

Delaware's "Expanding Duty Of Loyalty" And Illegal Conduct: A Step Towards Corporate Social Responsibility, David Rosenberg

David Rosenberg

Courts and legal scholars have long agreed that approval of illegal activity constitutes a violation of a corporate director’s fiduciary duties to the shareholders. While directors’ fiduciary obligations have traditionally been divided into the duties of care, loyalty and good faith, recent decisions in the Delaware courts have narrowed them down into a fairly broadly defined single duty of loyalty. Therefore, in order for shareholders to bring a lawsuit against directors for approving illegal activity, they must claim that the directors acted disloyally, even in situations where the directors believed that their decision would benefit the corporation and the shareholders. …