Litigation

Delaware Corporate Law Re-examined 40 Years Post-1967 Major Revision

By Francis G. X. Pileggi, Esq.

A veritable treasure trove arrived in today's mail inside the current issue of the Delaware Lawyer magazine. The issue is devoted to a re-examination of the Delaware General Corporation Law (DGCL) by assorted luminaries from Delaware as well as those from New York and elsewhere who spend more time in Delaware Chancery Court fighting about the nuances and meaning of the DGCL than many Delaware lawyers do.

Here is the Table of Contents that lists the articles. Several argue for proposed changes to the DGCL  and other articles assert that the status quo is just fine. They are short articles that are easy, quick reading, but nevertheless this publication is "must reading" for anyone interested in:  where the DGCL has been, where it is now, and where it is heading.

Although it was not easy to pick one, if I had to choose my favorite among the articles, it would be the one by legal legend R. Franklin Balotti, and co-authored by Donald A. Bussard and Thomas A. Uebler. The concluding paragraph indicates the important and far-reaching theme of this short piece, as follows:

"Unless a court must determine the validity of a self-dealing transaction before it considers a director's equitable conduct and potential liability, [DGCL Section] 144 should not be considered when determining director liability. Until the General Assembly instructs otherwise, Section 144 should be limited to the purpose expressed by Professor Folk 40 years ago--validation of self-dealing transactions."

The current issue was edited by Vice Chancellor Leo Strine, Jr. of the Delaware Chancery Court. Among the articles is a transcript of a recent conversation among those who worked with Professor Folk on the 1967 revisions of the DGCL, and who provide insights into the reasons behind the revisions. The articles in the current issue of the magazine, in one sense, serve a purpose similar to what occurred in Delaware during the "Summer of Love", to the extent that  many of the leading lights of the corporate bar have explained how they think the DGCL should be updated and revised to keep up with the current developments--in a major way, as opposed to the updates that are made each and every year to the DGCL in a manner that is not considered akin to a complete overhaul.

Here is a recent, related post that describes background materials in connection with the 1967 revision of the DGCL that is made available by Prof. Larry Hamermesh at the Widener University Law School.

Full post as published by Delaware Corporate and Commercial Litigation Blog on April 07, 2008 (boomark / email).