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Following on my Weinberg Center blog post back on October 27, I write today to promote participation in a survey hosted by the University of Delaware’s John L. Weinberg Center for Corporate Governance on public company Rule 14a-8 shareholder proposals under the Securities Exchange Act of 1934, as amended. The survey website explains that the Weinberg Center “seeks to gather practical insights from companies, investors, and related professionals about the scope and effectiveness of the current federal shareholder proposal rule (Rule 14a-8).” I suspect that the referenced professionals include lawyers representing both public companies and shareholders, as well as other advisors to each. More information about the survey can be found on the website.

In the spirit of that October 27 blog post, I am appreciative of the effort to gather information from a wide variety of constituents. I have taught group-oriented change leadership to undergraduate honors students here at The University of Tennessee using design thinking methods, in which the first step is undertaking to empathize. This step involves the team researching, and endeavoring to understand, the needs of various stakeholders. One design thinking website describes this first stage of a group-oriented process of innovation through design thinking…

Back in June of 2024, in connection with the legislative debate in Delaware over the approval of § 122(18) of the General Corporation Law of the State of Delaware (DGCL § 122(18)), I authored a blog post in which I raised concerns about whether there was adequate understanding of the public policy impacts of the proposal to adopt DGCL § 122(18).  I then wrote:

I have one large and important question as Senate Bill 313 continues to move through the Delaware legislative process: do members of the Delaware General Assembly voting on this bill fully understand the large shift in public policy represented by the introduction of DGCL § 122(18)?  If so, then they act on an informed basis and live with the consequences, as they do with any legislation they pass that is signed into law.  If not, we all must work harder to enable that understanding.

Later that month, I authored and published a second blog post that cross-referenced the earlier blog post and offered several policy-related values relevant to the proposal.

Two-and-a-half weeks ago, I found myself affected by similar concerns about the need for serious, thoughtful policy engagement in Delaware.  The occasion was the Gala Celebration…

It was great to see many of you last week in Los Angeles for the National Business Law Scholars conference at UCLA Law. It was, as always, a positive whirlwind of activity. The array of panels and topics was, as usual impressive. The full agenda can be found here. Michael Dorff and his team did an amazing job of welcoming (and feeding!) us throughout the two days of sessions. As a former host of the conference, I know how tough that can be. We all owe them a debt of gratitude.

I was fortunate to be able to both participate in the opening plenary on the recent changes to Delaware corporate law and also present some of my research and ideas on ESG and corporate compliance.

In the former, I invoked Larry Hammermesh’s amazingly insightful 2006 article in the Columbia Law Review. If you haven’t ever–or recently–read it and are researching or writing about Delaware lawmaking, it is a “must read.” As I noted in the plenary session at the conference, Tennessee attempts to emulate the key parts of the process Larry describes as and when it can. In addition to sharing some of my own views about…

As you may recall, Ann and I got a bit wound up last summer about the Delaware General Assembly’s consideration of Delaware S.B. 313 (and, within it, the proposed addition of § 122(18) of the General Corporation Law of the State of Delaware (“DGCL”)). We each offered brief oral testimony and even wrote letters to the Delaware House Judiciary Committee, which you can find here and here.

A comrade in that effort, Mark Lebovitch, has taken time to reflect a bit on the crazy summer that brought a new and troubling corporate purpose to Delaware’s venerable corporate law and to prognosticate about the future impact of DGCL § 122(18).  The result?  Soap Opera Summer: Five Predictions About DGCL 122(18)’s Effect on Delaware Law and Practice.  The abstract follows.

Predictability and stability are often cited as leading reasons for why Delaware’s corporate law system is world renowned and widely emulated, giving the First State dominance in the competition for domiciling business entities. The first half of 2024 was anything but predictable and stable in Delaware’s legal community. Rarely has an amendment to the Delaware General Corporation Law (“DGCL”) triggered as much public debate as SB 313, which became effective…

Many in the business law world have been following the saga involving the adoption of  S.B. 313 by Delaware’s General Assembly last week.  S.B. 313 adds a new § 122(18) to the General Corporation Law of the State of Delaware (DGCL) that broadly authorizes corporations to enter into free-standing stockholder agreements (not embodied in the corporation’s charter) that restrict or eliminate the management authority of the corporation’s board of directors.  See my blog posts here and here and others cited in them, as well as Ann’s post here.

In the floor debate on S.B. 313 last Thursday in the Delaware State House of Representatives, a proponent of the legislation stated that fiduciary duties always trump contracts.  That statement deserves some inspection in a number of respects.  I offer a few simple reflections here from one, limited perspective.

The historical centrality of corporate director fiduciary duties (which were the fiduciary duties referenced on the House floor) is undeniable.  Those who have taken business associations or an advanced business course with me over the years know well that I emphasize in board decision making that the directors’ actions must be both lawful and consistent with their fiduciary duties in order to…

Further to Ann’s post on Sunday sharing the text of her comment letter on Delaware’s S.B. 313 (and more particularly the proposal to add a new § 122(18) to the General Corporation Law) and my post on § 122(18) last week, I share below the text of my comment letter to the Delaware State House of Representatives Judiciary Committee.  Although Ann and I each got one minute to deliver oral remarks at the hearing held by the Judiciary Committee on Tuesday, 60 seconds was insufficient to convey my overarching concerns–which represent a synthesis and characterization of selected points from my post last week.  The comment letter shared below includes the prepared remarks I would have conveyed had I been afforded additional time.

Madame Chair and Committee Members:

I appreciated the opportunity to speak briefly at today’s hearing. As I explained earlier today, although I am a professor in the business law program at The University of Tennessee College of Law, my appearance before the committee relates more to my nearly 39 years as a corporate finance practitioner, which has included bar work (most recently and extensively in the State of Tennessee) proposing and evaluating corporate and other business…

Like so many others, I have wanted to say a word about West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 311 A.3d 809 (Del. Ch. 2024).  My angle is a bit different from that of many others.  It derives from my 15-year practice background, my 24-year law teaching background, and my 39-year bar service background.  It focuses on a doctrinal analysis undertaken through a policy lens.  But I want to note here the value of Ann Lipton’s existing posts on Moelis and the related proposed addition of a new § 122(18) to the General Corporation Law of the State of Delaware (DGCL).  Her posts can be found here, here, here, and here.  (Sorry if I missed one, Ann!)  Ben Edwards also published a related post here.  They (and others offering commentary that I have read) raise and touch on some of the matters I address here, but not with the same legislative policy focus.

I apologize at the outset for the length of this post.  As habitual readers know, long posts are “not my style” as a blogger.  This matter is one of relatively urgent legislative importance, however, and I am eager…

I just came back on Sunday from the 2024 Law and Society Association Annual Meeting in Denver.  It was, as always, a stimulating few days.  A number of us business law profs were in attendance.  The corporate and securities law collaborative research network (CRN46) habitually organizes several programs.  This year was no exception.  I was privileged to be featured in two.  But I will say more on my participation in the conference later.

Today, I want to highlight an interesting piece that was presented at the conference during one of the CRN46 paper panels: “The Original Meaning of Equity “ by Asaf Raz (forthcoming in the Washington University Law Review).  The SSRN abstract follows:

Equity is seeing a new wave of attention in scholarship and practice. Yet, as this Article argues, our current understanding of equity is divided between two distinct meanings: on one side, the federal courts, guided by the Supreme Court, tend to discuss equity as the precise set of remedies known at a fixed point in the past (static equity). On the other, state courts—most prominently, in Delaware—administer equity to preserve the correct operation of law in unforeseeable situations (substantive equity). Only the latter…

Today’s guest post comes to us from Anthony Rickey of Margrave Law:

The Thanksgiving weekend witnessed a debate between former Attorney General William Barr and attorney Jonathan Berry and Vice Chancellor Travis Laster over whether Delaware risks “driving away” corporations through “flirtation with environmental, social and governance [“ESG”] investment principles.”  Reuters reports that Chancellor McCormick further criticized Barr’s article at a Practicing Law Institute event, and Vice Chancellor Will  commented in a Bloomberg Law interview.  Professor Stephen Bainbridge has published two posts on the controversy.

When giants wrestle, wise men stay out from underfoot.  Nonetheless, I think the debate merits a close look because, however much I agree with Vice Chancellor Laster on matters of doctrine, I suspect that similar articles will become more common in the future.  Three factors influence my prediction:  a) Delaware has weakened its reputational bulwark against accusations of partisanship, b) the influence of politics in corporate law has increased (largely via ESG) and c) other states are now seeking to differentiate themselves from, rather than imitate, the Delaware Court of Chancery.

Delaware Dissolves One of Its Fundamental Corporate Law Pillars

The heart of Barr’s argument is that Delaware risks following “many blue states [that] are…

Friend-of-the-BLPB Tom Rutledge alerted me earlier today to a Thomson Reuters piece on the TripAdvisor reincorporation litigation that quotes not one but two of our blogger colleagues: Ann Lipton and Ben Edwards (in that order).  Ann is quoted (after a mention and quotation of one of her recent, more entertaining tweets) on the Delaware judicial aspects of the case.  Ben is quoted on the Nevada corporate law piece.  So great to see these two offering their legal wisdom on this interesting claim.

Ann’s tweet (perhaps predictably) offers a different “take” on Nevada law than Ben’s press statements.

Ann: “I tell my students, Nevada is where you incorporate if you want to do frauds . . . .” 

Ben: “The folks here are people acting in good faith, trying to do what’s right – not cynically racing to the bottom . . . .”

And then Ben gets the last word: “Nevada . . . has become a home for billionaires leaving Delaware in a huff.”

Beautiful.