The John L. Weinberg Center for Corporate Governance of the University of Delaware recently put on a great program with two very timely and important presentations. One on how companies and their boards can navigate the turbulent waters surrounding calls for the entity to speak out on cultural and other “hot button” topics–some of which may be directly related to the business of that entity–some not. And second, a very lively panel discussion of the modern day use of special litigation committees to review derivative claims and litigation. Links to videos and other materials from this fantastic presentation may be accessed here.
And . . . Yet Another Minute About Minutes
Over the years we have used this blog to highlight Delaware case law where the topic of corporate minutes has played a material role in the way the court has reviewed the actions of a board of directors. Those posts can be found here under the tag “minutes.”
Recently, The Honorable Leo E. Strine, Jr. (Ret.), the former Chief Justice and Chancellor of Delaware, posted a short summary on the Harvard Law School Forum on Corporate Governance of a more comprehensive paper he has written on this topic titled: “Minutes are Worth the Minutes: Good Documentation Practices Improve Board Deliberations and Reduce Regulatory and Litigation Risk” forthcoming in the Fordham Journal of Corporate and Financial Law.
Spending some time reading Chief Justice Strine’s article is well-“Worth the Minutes” invested, as he has done a great job of surveying the case law and highlighting the methods and means for generating corporate minutes that will most likely withstand scrutiny and give confidence to the court in the governance actions taken at such meetings.
Do New Delaware General Corporation Law Exculpation Amendments Trigger a Mandatory Class Vote for Changes to Charters?
In August 2022, a number of amendments to the provisions of the Delaware General Corporation Law (DGCL) went into effect. One amendment of note is the extension of Section 102(b)(7)’s exculpation provisions, which now permit corporations to eliminate or limit the personal liability of specified officers for direct claims of breach of the fiduciary duty of care. As a result, several Delaware corporations have amended their charters to extend the Section 102(b)(7) clauses to those senior corporate officers specified under the newly amended statute. Naturally, these actions bring a new issue for the courts to determine: What is the requisite stockholder approval to implement these charter amendments?
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Corporate Governance In Chapter 11 – Business As Usual, With Possible Exceptions
Under the Bankruptcy Code, a debtor in possession operates its business “as usual” during the pendency of a case. Likewise, in most cases, prepetition corporate governance practices and procedures should continue post-petition. In fact, as Judge Sontchi recently held in In re SS Body Armor I, Inc., Case No. 10-1125(CSS) (Bankr. D. Del. April 1, 2015), the right of a shareholder to compel a shareholders’ meeting for the purpose of electing a new board of directors continues during bankruptcy. Absent “clear abuse,” the automatic stay of 11 U.S.C. § 362 is inapplicable.`
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A Minute About Minutes
Drafting minutes of meetings—particularly for meetings of boards of directors or special committees of boards—is an art rather than a science, and while there are certainly many ways to accurately record the proceedings, understanding the ways minutes might be used later is very important.
In the world of Delaware corporate law, minutes of board meetings often play a pivotal role in shareholder litigation challenging the acts of the directors. Indeed, in a recent high-profile decision in which the Court of Chancery refused to enjoin the annual meeting for Sotheby’s in the face of a vigorous proxy fight, the Vice Chancellor’s opinion remarks upon the contents of board minutes on several occasions, and in a manner that provides some practical tips for consideration when drafting minutes. See, Third Point LLC v. Ruprecht, et al., C.A. Nos. 9469-VCP; 9497-VCP, Mem. Op. (Del. Ch. May 2, 2014).