HOT TOPIC

DIRECTOR LIABILITY
» Context

How does the dynamic market context of laws, regulations, community values and market conditions, feed into the changing landscape of director’s duties and liability.

Related issues include:
• duties of skill, care and diligence
• fiduciary duties and best interests
• D&O insurance
• and even, apologies [my bad or sincere regrets? How do you acknowledge regret for actions or for results, to preserve or begin to rebuild relationships and reputation, without attracting new legal responsibility?]
» In the News [please contact us for further archival references]
Jul/Aug07 New Department of Justice Guidelines on Corporate Prosecutions. Does the Song Remain the Same? On December 12, 2006, Deputy Attorney General Paul McNulty issued a memorandum titled “Principles of Federal Prosecution of Business Organizations” (…) consider nine factors in deciding whether to charge a business entity:
(1) the nature and seriousness of the offense;
(2) the pervasiveness of wrongdoing within the company;
(3) the company’s history of similar conduct;
(4) the company’s timely and voluntary disclosure of wrongdoing, and its willingness to cooperate in the investigation of its agents;
(5) adequacy of its compliance program;
(6) remedial actions, including any efforts to implement an effective compliance program or improve an existing one;
(7) collateral consequences, including disproportionate harm to shareholders or other innocent parties;
(8) adequacy of prosecution of responsible individuals; and
(9) adequacy of alternative remedies, such as civil or regulatory enforcement. Business Law Today @p.49.
19Jun07 Why Should We Focus on the Protection of Minority and Individual Shareholder Rights? Speech by SEC Commissioner: Remarks Before the CNMV Corporate Governance and Securities Markets Conference. By Commissioner Roel C. Campos (Madrid, Spain) In the U.S. and the U.K., the so-called Anglo-Saxon legal tradition has developed and enforceable principle of fiduciary duties to all shareholders (…) In civil law countries, such as most of continental Europe, the fiduciary principle is far less developed and the rules-based approach in such countries permits in many cases the controlling shareholder to extract private benefits at the expense of minority shareholders. [www.sec.gov]
14May07 Fortune 500 executives serving on outside boards in 2006 dropped by 35% over 1990 (265 to 358: James Drury Partners report) Report attributes “over controlled, over managed, over inspected” perceived as a problem by CEOs [cp other reports indicating liability generally, from duty of care and litigation]. Total board seats filled by CEOs (due to multiple directorships in some cases) fell over 50% from 794 to 375. Pensions & Investments (v35no.10 at 22, Burr,B.)
» Briefing Notes - © The Governance Counsel™ (2007)