Sunday, May 20, 2018

ICYMI: #corpgov Weekend Roundup (May 20, 2018)

May 20, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, May 16, 2018

ICYMI: #corpgov Midweek Roundup (May 16, 2018)

May 16, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Monday, May 14, 2018

A Bit More on Executive Private Lives and Fiduciary Duties

I always have loved the game of tag, and I love a challenge.  More importantly, I love a conversation about business law . . . .

Last week, Steve Bainbridge posted a follow-on to posts written by Ann and me on the application of fiduciary duties to the private lives of corporate executives.  As Steve typically does in his posts, he raises some nice points that carry forward this discussion.  In a subsequent Tweet, Steve appears to invite further conversation from one or both of us by linking to his post and writing "Tag.  You're it."

Screenshot 2018-05-14 22.50.35
I do want to make two additional points.  First, I offer an endorsement of something Steve wrote in his post.  Specifically, Steve asks (with a small typo corrected): 

 . . . to what extent should a board have Caremark duties to monitor a CEO's private life. Personally, I think Caremark is not limited to law compliance programs. A board presented with red flags relating to serious misconduct--especially misconduct in a sphere of life directly related to the corporation's business (think Weinstein)--has a duty to investigate. But, again, does that mean the board should hire private investigators to track the CEO 24/7?

I agree that a board's duty to monitor is not limited to compliance programs.  Stone v. Ritter makes it plain that the duty to monitor arises from a director's obligation of good faith, situated within the duty of loyalty.  Assuming no "intent to violate applicable positive law" or an intentionally failure to act in the face of a known duty to act (demonstrating a conscious disregard for his duties)," however, under Disney, a failure to monitor in this context likely would not rise to the level of bad faith unless the board "intentionally acts with a purpose other than that of advancing the best interests of the corporation"--which seems unlikely (although someone with more time and creativity than I have at the moment may be able to spin out some relevant facts).  Of course, the Delaware Supreme Court could add to the Disney list of actions not in good faith . . . .  But absent any of that, it is unlikely that a board of directors' failure to monitor an executive's private life will result in liability for a breach of the duty of loyalty.

Second, I want to pass on a further thought on the debate--one that is not my own.  In an email message to me, co-blogger Stefan Padfield observed that corporate opportunity doctrine questions are fiduciary duty claims that extend into a fiduciary's private life--specifically, the fiduciary's usurpation of the opportunity for his or her private gain.  He also noted that from there the leap is not as far as it may seem to conceptualizing other aspects of an executive's private conduct as being within the scope of his or her fiduciary duties to the corporation.  This certainly provides more food for thought.

I want to thank Ann for stimulating all these ideas.  Her original post raised a nice question--one that obviously provokes and has encouraged engagement in thoughtful conversation.  While we have not yet resolved the issue, we have staked out some important ground that may be covered in extant or forthcoming cases.  As Ann's and Steve's posts point out, there are a number of intriguing fact patterns at the intersection of executives' private lives and fiduciary duties that may force courts to wrestle some of this to the ground.  I, for one, will be watching to see what happens.

May 14, 2018 in Ann Lipton, Corporate Governance, Corporations, Joan Heminway, Stefan J. Padfield | Permalink | Comments (4)

Sunday, May 13, 2018

ICYMI: #corpgov Weekend Roundup (May 13, 2018)

May 13, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, May 9, 2018

ICYMI: #corpgov Midweek Roundup (May 9, 2018)

May 9, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, May 6, 2018

ICYMI: #corpgov Weekend Roundup (May 6, 2018)

May 6, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, May 2, 2018

ICYMI: #corpgov Midweek Roundup (May 2, 2018)

May 2, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Monday, April 30, 2018

Social Enterprise and the Traditional For-Profit Corporation

My essay on the use of traditional for-profit corporations as a choice of entity for sustainable social enterprise firms was recently published in volume 86 of the UMKC Law Review.  I spoke on this topic at The Bryan Cave/Edward A. Smith Symposium: The Green Economy held at the UMKC School of Law back in October.  The essay is entitled "Let's Not Give Up on Traditional For-Profit Corporations for Sustainable Social Enterprise," and the SSRN abstract is included below:

The past ten years have witnessed the birth of (among other legal business forms) the low-profit limited liability company (commonly known as the L3C), the social purpose corporation, and the benefit corporation. The benefit corporation has become a legal form of entity in over 30 states. The significant number of state legislative adoptions of new social enterprise forms of entity indicates that policy makers believe these alternative forms of entity serve a purpose (whether legal or extra legal).

The rise of specialty forms of entity for social enterprise, however, calls into question, for many, the continuing role of the traditional for-profit corporation (for the sake of brevity and convenience, denominated “TFPC” in this essay) in social enterprises, including green economy ventures. This essay argues that TFPCs continue to be a viable—and in many cases desirable or advisable choice of entity for sustainable social enterprise firms. The arguments presented are founded in legal doctrine, theory, and policy and include both legal and practical elements.

Somehow, I managed to cite to four BLPB co-bloggers in this single essay: Josh, Haskell, Stefan, and Anne.  Evidence of a business law Vulcan mind meld?  You decide . . . .  

Regardless, comments, as always, are welcomed as I continue to think and write about this area of law and practice.

April 30, 2018 in Anne Tucker, Business Associations, Corporate Governance, Corporations, Haskell Murray, Joan Heminway, Joshua P. Fershee, Social Enterprise, Stefan J. Padfield | Permalink | Comments (2)

Sunday, April 29, 2018

ICYMI: #corpgov Weekend Roundup (Apr. 29, 2018)

April 29, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, April 25, 2018

ICYMI: #corpgov Midweek Roundup (Apr. 25, 2018)

April 25, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, April 22, 2018

ICYMI: #corpgov Weekend Roundup (Apr. 22, 2018)

April 22, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, April 18, 2018

ICYMI: #corpgov Midweek Roundup (Apr. 18, 2018)

April 18, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, April 15, 2018

ICYMI: #corpgov Weekend Roundup (Apr. 15, 2018)

April 15, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, April 11, 2018

ICYMI: #corpgov Midweek Roundup (Apr. 11, 2018)

April 11, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, April 8, 2018

ICYMI: #corpgov Weekend Roundup (Apr. 8, 2018)

April 8, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, April 4, 2018

ICYMI: #corpgov Midweek Roundup (Apr. 4, 2018)

April 4, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, April 1, 2018

ICYMI: #corpgov Weekend Roundup (Apr. 1, 2018)

April 1, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, March 28, 2018

ICYMI: #corpgov Midweek Roundup (Mar. 28, 2018)

March 28, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Sunday, March 25, 2018

ICYMI: #corpgov Weekend Roundup (Mar. 25, 2018)

March 25, 2018 in Stefan J. Padfield | Permalink | Comments (0)

Wednesday, March 21, 2018

ICYMI: #corpgov Midweek Roundup (Mar. 21, 2018)

March 21, 2018 in Stefan J. Padfield | Permalink | Comments (0)