Law Commons^™

Corporate Political Contributions As Bad Faith, Joseph K. Leahy

University of Colorado Law Review

A shareholder who objects to a corporate political contribution can file a derivative lawsuit to challenge that contribution as a breach of management's duty of loyalty to the corporation. Such a lawsuit will face long odds, however, if it is founded upon a traditional theory for breach of the duty of loyalty, like waste or self-dealing. Yet, there is a better theory for a shareholder to employ when filing suit to challenge a corporate political contribution: bad faith.

Bad faith is a better basis for challenging a corporate political contribution than either waste or self-dealing because bad faith is a …