http://blogs.law.harvard.edu/corpgov/2006/12/22/directors-ignore-majority-shareholder-malfeasance-at-their-peril/ Sponsored by the HLS Corporate Governance Program Thu, 03 Dec 2009 00:10:43 -0500 http://wordpress.org/?v=2.8.4 hourly 1 http://blogs.law.harvard.edu/corpgov/2006/12/22/directors-ignore-majority-shareholder-malfeasance-at-their-peril/comment-page-1/#comment-21 Andrew Clearfield Sun, 21 Jan 2007 23:35:08 +0000 http://blogs.law.harvard.edu/corpgov/2006/12/22/directors-ignore-majority-shareholder#comment-21 Good! It is about time that the law in Delaware enshrines the concept that directors are responsible to all shareholders. Not only is this an important precedent for any controlled company, it is also important that directors of all public companies be reminded--again and again--that the 'collegiality' of the board room does not extend to condoning management activities clearly contrary to the interests of minority shareholders. While the definition of what falls within the "business judgment rule" will always escape precision, directors must be aware that it is possible to step over the line, and that merely going along with the chairman is not necessarily a bar to liability. Only when directors no longer feel that they work 'for' the chairman will governance be put on a solid footing. Good! It is about time that the law in Delaware enshrines the concept that directors are responsible to all shareholders. Not only is this an important precedent for any controlled company, it is also important that directors of all public companies be reminded–again and again–that the ‘collegiality’ of the board room does not extend to condoning management activities clearly contrary to the interests of minority shareholders. While the definition of what falls within the “business judgment rule” will always escape precision, directors must be aware that it is possible to step over the line, and that merely going along with the chairman is not necessarily a bar to liability. Only when directors no longer feel that they work ‘for’ the chairman will governance be put on a solid footing.

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