This is the 25th year that the Tulane Corporate Law Institute has presented a seminar in New Orleans that attracts corporate litigators and M & A lawyers from around the country to discuss the latest developments in corporate law. Members of Delaware’s Supreme Court and Court of Chancery by far represent the largest number of jurists from one state on the panel presentations. Delaware Supreme Court Chief Justice Myron Steele is providing the keynote address today entitled “Delaware and M&A: Looking Forward”. Vice Chancellor Donald Parsons is on a panel discussing recent corporate decisions from Delaware. Other panels include Justice Ridgely and Justice Jacobs, as well as Chancellor Strine and Vice Chancellor Glasscock. I plan to update this post throughout the afternoon on March 21 and during the morning of March 22.
UPDATE: A few highlights of the keynote address by Chief Justice Steele:
– The duty of good faith should not stand alone as a concept but acknowledge that one cannot act loyally without at the same time acting in good faith.
– His Honor’s comments are, he emphasized, made on his own behalf and not on behalf of the court.
– It is a presumption in Delaware that the first-filed plaintiff receives some deference as to choice of forum; not to be confused with the doctrine of forum non conveniens. He also mentioned comity as a concept to address multi-jurisdiction litigation.
– Task Force of state and federal judges and practitioners around the country who are expected to prepare a handbook to guide judges and lawyers regarding multi-jurisdiction litigation.
– Equity v. Predictability; and Implied Covenant of Good Faith and Fair Dealing: This implied covenant as a gap-filler should be used sparingly. Note that 75% of companies now chartered in Delaware are alternative entities. – Vice Chancellor Laster’s decision in ASB, 50 A.3d 434, 440 (highlighted on these pages here), is in the Chief Justice’s view, the best explanation of distinction between good faith as a common law duty and as part of the contractual implied duty of good faith and fair dealing.
– His Honor says more focus should be placed on the doctrine of stare decisis. He notes that 90% of all appeals from Chancery are affirmed and that the common law system may not be perfect, but as Churchill said, it’s the best we have.
UPDATE II: Rick Alexander of the Morris Nichols firm in Wilmington discussed proposed new legislation predicted to pass the Delaware legislature by the summer. First is a “medium-form merger” amendment to the DGCL to provide a simpler way to address “top up options”. Also, a new “benefit corporation” statute is expected to become law in Delaware this summer. This allows a for-profit corporation to balance the interest of maximizing shareholder value with other considerations, but it must be a specified public beneficiary. Only shareholders can sue. Business judgment rule protection is available for compliance with statute. There is also a reporting requirement, but no requirement for optional third-party standards to apply. Twelve states already have a version of this. Of course, this type of private ordering is already available in the alternative entity context. In order to convert an existing corporation, it requires a 90% shareholder approval.
Another new proposed change to the Delaware corporate statute is a new DGCL Section 204, designed to be a safe harbor for defective corporate acts such as over-issuance of shares. Also, a new Section 205 will give Chancery jurisdiction to address defective corporate acts. Vice Chancellor Parsons commented on cases that have addressed current limitations on its ability to fix defective corporate acts in light of potential barriers such as laches. There also was a discussion of In Re Complete Genomics, Inc. Shareholder Litig., C.A. No. 7888-VCL (Del. Ch. Nov. 9, 2012),(Transcript), that addressed ability of board to enter into an agreement without a “fiduciary out”.
Highlights of prior years at the Tulane seminars can be found on these pages here.