US Corporate Law
- Legal mechanisms shaping director conduct
Total amount of words: 2682
Contents
ABBREVIATIONS 1 INTRODUCTION
1.1 1.2 1.3 1.4 Introductory remarks Aim and scope Material and limitations Disposition
1 2
2 2 2 3
2 3 4 5 6
DELAWARE GENERAL CORPORATION LAW FIDUCIARY DUTIES OF THE BOARD OF DIRECTORS "DUTY" OF GOOD FAITH THE BUSINESS JUDGMENT RULE ANALYSIS AND DISCUSSION
4 5 7 9 11 13 14
BIBLIOGRAPHY TABLE OF CASES
Abbreviations
i.e. DGCL id est Delaware General Corporation Law
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1 Introduction
1.1 Introductory remarks
US corporate law can be understood as a way of balancing two competing interests. On the one side, there is the need to allow corporations freedom and flexibility to conduct business operations. On the other side, there is the continuous risk that the same freedom and flexibility will be abused in ways which will harm the stakeholders of a corporation. These interests are vital and also inherently incompatible, thus requiring efficient legal mechanisms. These legal mechanisms include the directors' duties of loyalty and care, the "duty" of good faith and the business judgment rule.
1.2 Aim and scope
The aim of this paper is to describe and analyze the directors' duties of loyalty and care, the "duty" of good faith and the business judgment rule. The analysis aims provide some remarks on whether the mentioned legal mechanisms manage to achieve the desired balance of the above mentioned interests.
1.3 Material and limitations
The paper utilizes books, articles, case law and to some extent statutory law when describing and analyzing the chosen legal mechanisms.
The paper is limited to four legal mechanisms, namely the directors' duties of loyalty and care, the "duty" of good faith and the business judgment rule. Furthermore the paper focuses on Delaware law and therefore excludes federal law. Lastly, the paper primarily addresses conflicts between
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shareholders and directors, thus...