Delaware law provides parties with significant flexibility to restrict or eliminate fiduciary duties in LLC agreements. Sophisticated parties regularly take advantage of this flexibility by eliminating fiduciary duties of members and directors of LLCs. These same parties, however, often choose not to extend these waivers to officers of the LLCs, often stemming from a desire to ensure that officers still have a fiduciary duty to be loyal to the LLC. A new ruling from the Delaware Court of Chancery highlights the unintended consequences of excluding officers from the scope of the fiduciary duty waiver.
Continue Reading New Delaware Ruling Highlights Unintended Consequences of Excluding Officers from Fiduciary Duty WaiversBoards of Directors
Bringing an End to “Derivative” Section 14(a) Claims – Without Waiting for the Supreme Court to Weigh In
By Mark E. McDonald & Roger A. Cooper on
Much has been written lately about a circuit split on the question whether a company’s forum selection bylaw mandating shareholder derivative lawsuits be brought in Delaware state court trumps a federal lawsuit asserting a derivative claim under Section 14(a) of the Securities Exchange Act of 1934 (which can only be asserted – if at all – in federal court). The Seventh Circuit answered this question “no”[1] while the Ninth Circuit sitting en banc answered “yes,”[2] in both cases over vigorous dissents. Many have speculated that the U.S. Supreme Court may weigh in to resolve this clear circuit split.
Continue Reading Bringing an End to “Derivative” Section 14(a) Claims – Without Waiting for the Supreme Court to Weigh InDerivative Claim Against Shell’s Board by Climate-Change Activist Shareholder is Refused Permission to Proceed
By James Brady‑Banzet & Maurits Dolmans on
On February 9, 2023, NGO ClientEarth sued all eleven members of the board of directors of Shell plc before the English High Court, for allegedly failing to take steps to protect Shell against climate-change-related risks (see our alert memorandum of February 22, 2023). Our follow-up alert memorandum of April 17, 2023, also set out some answers to some common questions on derivative claims in the context of ESG litigation.
Continue Reading Derivative Claim Against Shell’s Board by Climate-Change Activist Shareholder is Refused Permission to ProceedCorwin Cleansing Denied In Action For Post-Closing Injunctive Relief Under Unocal
On May 1, 2023, the Delaware Court of Chancery addressed an unsettled question under Delaware law—whether a fully informed, uncoerced vote of disinterested stockholders (so-called “Corwin cleansing”[1]) can be applied to defeat claims to enjoin defensive measures under Unocal Corp. v. Mesa Petroleum Co.
Continue Reading Corwin Cleansing Denied In Action For Post-Closing Injunctive Relief Under UnocalCorporates Face Novel, Greater Risks from Debt Ceiling Impasse—Even if No Default Occurs
By Cleary Gottlieb on
As the threat of an unprecedented default in U.S. government debt plays out over the coming months, the United States is in uncharted territory.
Continue Reading Corporates Face Novel, Greater Risks from Debt Ceiling Impasse—Even if No Default OccursESG Litigation: Derivative Claims Against Directors: Q&A
By Cleary Gottlieb on
The litigation recently launched in England by the NGO, ClientEarth, against the members of the board of directors of Shell plc has generated a significant level of interest from organisations who wish to understand the implications for directors more generally. The claim raises novel issues regarding directors’ responsibilities for a company’s environmental impact, and questions about how environmental obligations should be implemented and enforced.
Continue Reading ESG Litigation: Derivative Claims Against Directors: Q&ASelected Issues for Boards of Directors in 2023
We have once again asked our colleagues from around our firm to boil down the issues in their fields that boards of directors and senior management of public companies will be facing in the coming year. In the following pages, we present the results for 2023 – focused updates on 18 topics that will surely feature at the top of board agendas throughout the year.
Continue Reading Selected Issues for Boards of Directors in 2023