Document Type
Article
Publication Date
1992
Abstract
When the American Law Institute's Corporate Governance Project meets this month, one of the most hotly debated agenda items is likely to be its new rules governing shareholder litigation, which are now up for final approval.
The proposed change means that corporate boards will now have to prove in court that a decision to dismiss a shareholder claim alleging self-dealing was in the corporation's best interest. In addition, the requirement for a formal "demand" on the board by shareholders will be uniform, rather than subject to excuse, as it is under Delaware law and in the majority of states.
Drafters of the proposal say it will allow courts necessary scrutiny of self-dealing; critics charge it will tie up corporate boards in needless litigation.
Debating the issue are the project's reporter, John C. Coffee, a Columbia University law professor, and Michael P Dooley, a University of Virginia law professor. Coffee says the proposals strike a balance between oversight and efficient operation, while Dooley contends that the new rules will drive up the settlement value of shareholder suits.
Disciplines
Business Organizations Law | Law
Recommended Citation
John C. Coffee Jr. & Michael P. Dooley,
Corporate Law: What Is the Impact of New ALI Proposals on Shareholder Litigation,
78(5)
A.B.A. J.
44
(1992).
Available at:
https://scholarship.law.columbia.edu/faculty_scholarship/4208
Comments
©1992 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.