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As it strives to keep up with trends through its retail business, The Gap, Inc. has also found itself at the forefront of the latest trend in shareholder activism: shareholders [...]

BACKGROUND As part of its ongoing review of the Model Act's provisions, the Committee is proposing amendments to section 2.02 to permit a corporation to include in its articles of [...], The Corporate Laws Committee of the ABA Business Law Section (the "Committee") develops and proposes changes in the Model Business Corporation Act (the "Model Act"). The Committee has approved, on second reading, proposed amendments to section 2.02 (the "Amendments"), relating to officer exculpation, and invites comments from interested persons. Comments should be addressed to Steven M. Haas, Chair, Corporate Laws Committee, Hunton Andrews Kurth LLP, 951 E. Byrd Street, Richmond, VA 23219, or sent to him by e-mail at shaas@hunton.com. Comments should be received by April 1, 2024, in order to be considered by the Committee before adoption of the Amendments on third reading.

Contents I. Introduction 1048 II. The Circuit Split over Intra-Corporate Forum Provisions 1054 A. The Rise of Intra-Corporate Forum Provisions 1055 B. The Consequent Surge in Borak Claims 1058 C. [...], J.I. Case Company v. Borak is perhaps unique in contemporary Supreme Court jurisprudence. Section 14(a) of the Securities and Exchange Act of 1934, as implemented by Rule 14a-9, broadly prohibits misrepresentations in proxy statements, but does not expressly recognize a private right of action to enforce the statute. Borak purported to fill that gap and is commonly cited to support the existence of both an implied direct private right of action and an implied derivative private of action to enforce Section 14(a). But the law governing implied private rights has changed dramatically since Borak was issued in 1964. Courts today are far less inclined to recognize implied private rights. Indeed, the Supreme Court has expressly "abandoned" and denigrated Borak's logic. Justices describe Borak as "aberrant" and "erroneous," while influential circuit judges call it "derelict." Nonetheless, Borak has not been formally reversed. Thus, Borak curiously and uncomfortably stands as repudiated but controlling law. Notwithstanding this questionable pedigree, Borak now generates a consequential circuit split over the enforceability of forum selection provisions requiring that all derivative claims be litigated in the courts of a corporation's chartering state. Because these forum provisions effectively preclude federal derivative shareholder litigation under Section 14(a), the Seventh Circuit ruled that they are unenforceable as a matter of both federal securities law and Delaware corporate law. Citing the pre-publication draft of this Article, the Ninth Circuit reached precisely the opposite conclusion. The resulting circuit split offers an opportunity to reexamine Borak in light of six subsequent decades of Supreme Court precedent. That precedent establishes that corporate forum provisions waiving derivative Borak claims are valid and enforceable. More forcefully, Borak's implication of a federal derivative Section 14(a) claim would likely fail to survive further Supreme Court review. The prospect thus arises that if the Supreme Court addresses this circuit split over the enforceability of forum selection provisions, much more could be at stake: the Court could easily use the occasion to squarely overrule Borak, at least with regard to the implication of a federal derivative Section 14(a) claim. But, in any event, the Seventh Circuit's reliance on Borak was clearly mistaken. Where shareholders can bring (i) Borak claims either as direct or class actions to recover any damage they personally suffered and (ii) derivative actions under state corporate law to recover damage suffered by the corporation, then a third lawsuit, asserting an implied federal derivative Borak claim, does nothing to benefit the corporation, its shareholders, or society more broadly. It simply propagates wasteful litigation designed to advance the parochial interests of plaintiff's counsel seeking a share of attorneys' fees.

The Corporate Laws Committee of the ABA Business Law Section (the "Committee") develops and proposes changes in the Model Business Corporation Act (the "Model Act"). The Committee has approved, on [...]

INTRODUCTION To say that environmental, social, and governance (ESG) investing is now a major phenomenon is to understate the facts. As of 2020, there were 836 registered investment companies using [...], The question addressed in this article is whether the board's Caremark obligations should be extended to encompass oversight of corporate performance with environmental, social, and governance (ESG) issues. In other words, should the board face potential liability not just for failing to ensure that the company has adequate reporting and monitoring systems in place to ensure compliance with ESG-related legal requirements, but also to monitor ESG risks in areas where corporate compliance would be voluntary or aspirational. The article concludes that Caremark should not be so extended.

Ashareholders' rights and obligations in a Florida corporation generally derive from two main sources: the corporation's governing documents, such as articles of incorporation, bylaws, and any shareholder agreements; and, those [...]

I. INTRODUCTION 550 II. FANNIE MAE AND FREDDIE MAC BACKGROUND 550 A. An Origin Story 551 B. The Move to a Government Sponsored Enterprise 552 C. The Creation of Freddie [...]

I. INTRODUCTION II. THE ORIGINS OF TODAY'S INTENSE FOCUS ON EESG III. TOWARD AN INTEGRATED, EFFICIENT, AND EFFECTIVE APPROACH TO CORPORATE COMPLIANCE AND EESG IV. A PRACTICAL WAY TO THINK [...], With increased calls from investors, legislators, and academics for corporations to consider employee, environmental, social, and governance factors ("EESG") when making decisions, boards and managers are struggling to situate EESG within their existing reporting and organizational structures. Building on an emerging literature connecting EESG with corporate compliance, this Essay argues that EESG is best understood as an extension of the board's duty to implement and monitor a compliance program under Caremark. If a company decides to do more than the legal minimum, it will simultaneously satisfy legitimate demands for strong EESG programs and promote compliance with the law. Building on that insight, we explain how boards can marry existing corporate compliance programs with budding EESG progams. By integating compliance and EESG, corporations can meet growing societal demands in an effective and efficient manner that capitalizes on existing structures. Lastly, we address how EESG and corporate compliance responsibilities should be allocated at the board and senior management level. Instead of separating compliance and EESG oversight, this Essay suggests that boards embrace a functional approach, delegating similar compliance and EESG oversight to the same committee and managers. By situating EESG within the board's existing fiduciary duties, this Essay provides academics, legislators, investors, and managers with a novel framework to conceptualize EESG while also offering a path forward for boards struggling to place the current EESG movement within their existing corporate structure.

INTRODUCTION In the mid- to late-1990s, there was unprecedented legislative activity to offer unincorporated business owners liability shields protecting them from personal liability for the obligations of the firm. In [...], Simply by forming LLCs, entrepreneurs now unwittingly lock themselves in to perpetual entities that offer them no liquidity and present them with costly procedural obstacles to enforcing both their agreement among themselves and their statutory rights. Even in at-will LLCs that are member-managed, recent LLC acts deny members both a right to dissolve and a right to be bought out. While thus locking members in, these acts deny them standing to bring many if not most of their claims among themselves or against the firm. In swinging so dramatically toward a corporate model, recent acts have failed to consider the presumptive intent of small groups of entrepreneurs who operate informally and expect to have a direct role in management. At least in the case of member-managed LLCs, legislatures should reinstate more appropriate default rules and courts should be receptive to claims that members never intended their relationships to have such harsh consequences.

Contents I. Introduction 2 II. The Caremark Opinion in Context 3 III. The Good Faith Grounding of the Caremark Doctrine 6 IV. Good Faith Cases After Caremark 7 V. The [...], Chancellor Allen's famous and prescient 1996 opinion in Caremark will soon be twenty-five years of age. It has more than stood the test of time. Indeed, it has become gospel as an enduring corporate governance doctrine and a dynamic driver of modern-day oversight and compliance requirements. Although it did not become enshrined as a major Delaware Supreme Court precedent until the Stone v. Ritter Delaware Supreme Court decision in 2006, Chancellor Allen's 1996 Caremark dictum enjoyed from the outset the international respect of a precedent that had the imprimatur of a Delaware Supreme Court holding. In this article we analyze the Caremark opinion itself, including the key and lasting importance of Chancellor Allen's sua sponte invocation of the United States' Organizational Sentencing Guidelines. He correctly concluded that the Sentencing Guidelines provide "powerful incentives for corporations to have in place compliance programs... and to take voluntary remedial efforts." He parlayed those "powerful incentives" into the conclusion that the proper exercise of good faith requires that "a director's obligation includes a duty to assure that a corporate information and reporting system... exists, and that the failure to do so under some circumstances may... render a director liable for losses caused by non-compliance with applicable legal standards. [But]... only a sustained or systematic failure of the board to exercise oversight--such as an utter failure to attempt to assure a reasonable information and reporting system exists--will establish the lack of good faith that is a necessary condition to liability." While Caremark/Stone state that there is theoretical exposure of directors to liability for violation of their duty of loyalty if they "utterly" fail in good faith to implement and monitor an internal information system (i.e., oversight protocols), such Delaware litigation liability is rare and hard to plead/prove. But recent Delaware cases at the pleading stages have framed parameters where this theoretical exposure might or might not become a real concern of the boards of directors, particularly where there is little or no board involvement and/or where "red flags" are ignored. Moreover, there are developments at the federal and scholarly levels that flesh out the oversight obligations of corporations, alternate entities, and their governing bodies. These developments, coupled with Delaware fiduciary duty principles, tend to inform boards of directors that they need to ensure their management has a robust oversight protocol. In short, the directors need to carry out effective oversight/monitoring, including awareness of and effective addressing of red flags. The tension is that board oversight must occur without directors micromanaging the operations of the firm, which traditionally is a management responsibility. This article undertakes a deep dive into the exploration and clarification of these developments. We also suggest some best practices that might tend to mitigate exposure to liability.