Delaware Update: Confidentiality of Corporate Records, Board of Directors Oversight, Shareholder Derivative Claims
Analyzing Recent Cases and the Impact on Corporate Practice
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Corporate Law
- event Date
Wednesday, April 8, 2020
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine the most significant recent court decisions affecting Delaware corporate law. The panel will explain how these changes can impact the release of corporate records, the oversight obligation of boards of directors in "mission-critical" issues, and shareholder derivative actions going forward.
Mr. Leavengood is a partner in the firm's Corporate Group. His practice focuses primarily on corporate and commercial litigation in the Delaware Court of Chancery, which includes experience in litigating stockholder class and derivative actions, as well as actions for appraisal, indemnification, and inspection of books and records. Mr. Leavengood also has experience in counseling boards of directors and special board committees of Delaware corporations with respect to issues of fiduciary duty and internal corporate governance.
Mr. Davis focuses his practice on corporate law. He advises boards of directors and special committees in regard to fiduciary duty issues in various contexts, and he has extensive experience restructuring financially distressed enterprises, both inside and outside of bankruptcy. He is a member of the firm's Transactional & Securities, Bankruptcy & Business Reorganizations, and Private Equity & Venture Capital Practices. He frequently represents buyers and sellers in mergers and acquisition transactions, from management buy-outs to combinations of large public companies.
Delaware is the state of incorporation for 66% of the Fortune 500 and over half of all companies whose securities trade on the NYSE and other exchanges. Delaware's Supreme Court and Court of Chancery are the preeminent venues for resolving various corporate disputes. Recently, there were several decisions related to essential aspects of corporate law.
Lebanon County Employees’ Retirement Fund v. AmerisourceBergen Corp. sets out to interpret DGCL Section 220 by analyzing the prerequisites that must be satisfied in order to pursue an inspection, including those prerequisites that are not explicitly outlined in the statue. The case also illustrates that Section 220 is often more complicated than first anticipated.
In Marchand v. Barnhill, the Delaware Supreme Court elaborated on the monitoring, reporting, and oversight obligations imposed on directors, as originally articulated in the Caremark decision. In light of the court’s guidance in Marchand, corporate counsel will need to ensure that boards, particularly for companies in highly regulated industries, have implemented an oversight system and are appropriately involved in the reporting system.
Finally, the Delaware Supreme Court affirmed the dismissal of a shareholder's suit against the directors of Uber Technologies Inc. because the shareholder-plaintiff failed to make a pre-suit demand on Uber’s board of directors. The court applied the Rales test while distinguishing the facts from the Disney derivative litigation of the early 2000s.
Listen as our authoritative panel discusses these critical cases of fundamental corporate principals as determined by the Delaware courts and looks towards the landscape of future decisions by the Delaware judiciary.
- Overview of current cases decided by Delaware Supreme Court and Chancery Court
- Lebanon and DGCL 220
- Statutory requirements
- Prerequisites beyond the statute
- Proper purpose
- Credible basis requirement
- Scope of documents for production
- Developments regarding Directors' Caremark duty to monitor where comprehensive laws govern the company's mission-critical operations
- Marchard v. Barnhill and In re Clovis Oncology
- Boards of companies in highly regulated industries must actively monitor and oversee compliance with the regulatory environment
- Enhanced risk of personal liability for directors
- Steps to take in light of decisions
- Requirements for derivative actions and current application of Rales test
- Cases on the horizon for Delaware judiciary
The panel will review these and other high priority issues:
- What are the prerequisites under Section 220 for a successful claim in light of the decision in Lebanon County?
- In light of Marchand, what advice will directors need to create an oversight system that complies with the requirements under Caremark?
- How can a shareholder retain his or her rights to proceed against a board in a derivative action?
- What best practices should a corporate board follow to ensure compliance with current Delaware case law?
