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How Many Fiduciary Duties Are There In Corporate Law?, Julian Velasco
How Many Fiduciary Duties Are There In Corporate Law?, Julian Velasco
Julian Velasco
Historically, there were two main fiduciary duties in corporate law, care and loyalty, and only the duty of loyalty was likely to lead to liability. In the 1980s and 1990s, the Delaware Supreme Court breathed life into the duty of care, created a number of intermediate standards of review, elevated the duty of good faith to equal standing with care and loyalty, and announced a unified test for review of breaches of fiduciary duty. The law, which once seemed so straightforward, suddenly became elaborate and complex. In 2006, in the case of Stone v. Ritter, the Delaware Supreme Court rejected …
Fiduciary Duties And Fiduciary Outs, Julian Velasco
Fiduciary Duties And Fiduciary Outs, Julian Velasco
Julian Velasco
Fiduciary outs are virtually ubiquitous in acquisition agreements, but almost unheard of in other contexts. This is because the fiduciary out is an inherently problematic device. Although it is not intended to do so, it almost necessarily transforms an agreement into an option in the hands of one party. Nevertheless, fiduciary outs make sense in the context of acquisition agreements. This is because fiduciary outs are essentially contractual proxies for fiduciary duties. As such, they have the same purpose: to protect shareholders from abuse at the hands of directors. Fiduciary outs do this in the context of acquisition agreements by …
The Law Of Corporate Purpose, David Yosifon
The Law Of Corporate Purpose, David Yosifon
David G. Yosifon
Delaware corporate law requires corporate directors to manage firms for the benefit of shareholders, and not for any other constituency. Delaware jurists have been clear about this in their case law, and they are not coy about it in extra-judicial settings, such as speeches directed at law students and practicing members of the corporate bar. Nevertheless, the reader of leading corporate law scholarship is continually exposed to the scholarly assertion that the law is ambiguous or ambivalent on this point, or even that case law affirmatively empowers directors to pursue non-shareholder interests. It is shocking, and troubling, for corporate law …
Law And Legal Theory In The History Of Corporate Responsibility: Corporate Personhood, Lyman P.Q. Johnson
Law And Legal Theory In The History Of Corporate Responsibility: Corporate Personhood, Lyman P.Q. Johnson
Lyman P. Q. Johnson
This paper, part of a larger scholarly project, addresses one of four areas – i.e., the emergence of corporate personhood – where, historically, law has both influenced and mirrored cultural expectations concerning corporate responsibility. The other areas (treated elsewhere) are corporate purpose, corporate regulation, and corporate governance. Corporate personhood is a subject of longstanding and recurring interest that, notwithstanding it has been a settled concept since the 19th century, continues to vex and excite, as seen in the U. S. Supreme Court’s splintered 5-4 decision in the 2010 case of Citizens United v. Federal Election Commission. The decades-long debates about …
Enduring Equity In The Close Corporation, Lyman P.Q. Johnson
Enduring Equity In The Close Corporation, Lyman P.Q. Johnson
Lyman P. Q. Johnson
This Article develops the theme of change/sameness in corporate law. Written to commemorate the thirty-fifth anniversary of Wilkes v. Springside Nursing Home, Inc., the Article argues that the equitable fiduciary duties so central to Wilkes endure today in the close corporation precisely because equity, by its nature, is so exquisitely adaptive – under constantly changing circumstances − to the ongoing pursuit of a just ordering within the corporation. Unlike fixed legal rules – which are categorical, static, and do not take sufficient account of changes wrought by time or human arationality – equity is malleable and timely as it reckons …