Washington and Lee University School of Law Emeritus Professor Lyman Johnson contributed to the CLS Blue Sky Blog, Columbia Law School’s blog on corporations and capital markets.
Johnson’s post is titled “The Three Fiduciaries of Delaware Corporate Law — and Eisenberg’s Error.”
Delaware corporate law differs from other areas where fiduciary obligations apply – such as agency, LLCs, partnerships, and trusts. Three distinct actors owe fiduciary duties – executive officers, directors, and controlling shareholders – and numerous aspects of their duties greatly differ. But Delaware corporate law is not unique in the way many believe. Conventional wisdom holds that, uniquely, corporate law’s standards of conduct (fiduciary duties) diverge from judicial standards of review, the latter being more deferential. Yet, the two sets of standards often converge and are identical. The supposed distinction is not uniformly accurate, and unenforceable standards of conduct may not be “law” at all where standards do diverge.
You can read the entire piece online at the Blue Sky blog.