Professor Bainbridge flags a panel on which Vice Chancellor Leo Strine, Jr. of the Delaware Chancery Court and the iconic lawyer Marty Lipton talk about directors and Delaware law. From the professor’s post, an excerpt:
Having just finished the final round of edits on an article on good faith in Delaware corporate law, I was struck by Strine’s comment that:
He stressed the interconnectedness between good faith and loyalty. “The definition of a loyal state of mind is good faith,” he said. How do you act loyally? You act, Strine said, in the good faith belief that what you’re doing is in the best interest of the corporation.
As an aspirational statement, that’s fine. But I’m persuaded that The Convergence of Good Faith and Oversight and the concommitant conflation of good faith and the duty of loyalty were serious errors by the Delaware courts.