I’m blogging live from the 21st Annual Tulane Corporate Law Institute, a two-day seminar on corporate law that brings together scholars, practitioners and judges who want to explain, and to learn about the latest developments in corporate law. There is always a large contingent of Delaware lawyers and judges. I will only be posting about selective and subjective tidbits that I think would be of the most interest to those who read these pages looking for the latest updates in Delaware corporate law. Several others are also blogging this seminar today, e.g., here and here.
One of the morning panels was titled: “Shareholder Activism, Board Governance and the Role of State Law in the Age of Uncertainty.” Moderators of the panel were David Katz of Wachtell Lipton and Faiza Saeed of Cravath, Swaine and Moore.
Among the panel members are Delaware Supreme Court Chief Justice Myron Steele.
The topics addressed by the panel included:
“The Role of Delaware v. ‘Federal’ Corporate Law”.
The Chief Justice suggested that the future role of state law in corporate governance ultimately will be determined by the Federal government. [Note that this is not an official transcript and this post is the result of my notes that may not be a complete summary of the presentation by any panel member.]
His Honor said that Delaware’s approach is to find a balance between accountability and authority, and to allow shareholders and directors to talk about what improvements can be made on an incremental basis. My take on a few other soundbites from His Honor follow:
• His is concerned that the changes at the federal level will be the result of a frenzied race to make some change without the application of thoughtfulness. His preference is to allow the states to continue to lead the change.
• He mentioned a reference to a seminar last week at Notre Dame Law School where a panelist mentioned a federal statute that could be used to impose criminal liability for breach of fiduciary duty. One of the concerns is the lack of consistency in an approach that allows the many federal courts to define fiduciary duty according to 1,300 different federal district judges’ views in applying, potentially, the different definitions from one or more of the 50 states on fiduciary law.
• He said that a board is entitled under Delaware law to consider other constituencies, such as the community impact in a merger context, as long as they document their reasons, even though Delaware does not have a statute like some other states have, that expressly allows a board to consider the community.
• In reply to a question, His Honor expressed his personal hope that before acting too hastily, Congress would consider whether the systemic failure experienced in the financial markets and other sectors of the economic downturn, is due to corporate governance problems or whether it is more a problem of faulty federal regulation–or simply inappropriate, excessive risk-taking.