http://blogs.law.harvard.edu/corpgov/2008/02/13/does-a-director-qua-director-have-standing-to-sue-derivatively/ Sponsored by the HLS Corporate Governance Program Mon, 23 Nov 2009 18:31:21 -0500 http://wordpress.org/?v=2.8.4 hourly 1 http://blogs.law.harvard.edu/corpgov/2008/02/13/does-a-director-qua-director-have-standing-to-sue-derivatively/comment-page-1/#comment-17188 Stephen Bainbridge Thu, 14 Feb 2008 01:54:20 +0000 http://blogs.law.harvard.edu/corpgov/2008/02/13/does-a-director-qua-director-have-sta#comment-17188 I've waffled on this issue for years. Although director standing remains very much the minority position, it has a certain attraction. Recall that shareholders do not own the corporation. Instead, they are merely one of many corporate constituencies bound together by a complex web of explicit and implicit contracts. To be sure, by virtue of their contractual status as residual claimants, shareholders ought to have standing to pursue suits that lower the value of that claim. If we view the directors as the corporation’s Platonic guardians, however, perhaps the directors ought to have prior standing to litigate injuries to the corporation. On the other hand, given the strong efficiency justifications for corporate law’s emphasis on the board as a collective, perhaps we ought to discourage directors from acting as lone rangers. I’ve waffled on this issue for years. Although director standing remains very much the minority position, it has a certain attraction. Recall that shareholders do not own the corporation. Instead, they are merely one of many corporate constituencies bound together by a complex web of explicit and implicit contracts. To be sure, by virtue of their contractual status as residual claimants, shareholders ought to have standing to pursue suits that lower the value of that claim. If we view the directors as the corporation’s Platonic guardians, however, perhaps the directors ought to have prior standing to litigate injuries to the corporation. On the other hand, given the strong efficiency justifications for corporate law’s emphasis on the board as a collective, perhaps we ought to discourage directors from acting as lone rangers.

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