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Article on Good Faith in Corporate Law Co-Authored by Member of Delaware Court of Chancery

By Francis G. X. Pileggi, Esq.

A paper on the role of good faith in corporate governance was recently penned by leading practitioners of Delaware corporate law, including one member of the Delaware Court of Chancery. The Harvard Law School Corporate Governance Forum highlights the article here.

An excerpt follows:

In the paper, the authors outline their views as follows:

We conclude, consistent with the Delaware Supreme Court's recent decision in Stone v. Ritter, that in the American corporate law tradition, the basic definition of the duty of loyalty is the obligation to act in good faith to advance the best interests of the corporation. What this article also shows is that the duty of loyalty has traditionally been conceived of as being much broader than the duty to avoid acting for personal financial advantage. The duty of loyalty also precludes acting for unlawful purposes, and affirmatively requires directors to make a good faith effort to monitor the corporation's affairs and compliance with law.

The full title is: "Loyalty's Core Demand: The Defining Role of Good Faith in Corporation Law.'  It was co-authored by Leo E. Strine, Jr., who is a Vice Chancellor of the Delaware Court of Chancery and Senior Fellow of the Program of Corporate Governance at Harvard Law School, and by Lawrence A. Hamermesh, R. Franklin Balotti and Jeffrey M. Gorris.
 

Full post as published by Delaware Corporate and Commercial Litigation Blog on March 18, 2009 (boomark / email).