In a shareholder claim against the former global head of HR at McDonald’s, the Delaware Chancery Court has held that liability for breach of the duty of oversight, which Delaware courts had previously extended only to corporate directors, can also extend to corporate officers, as well. In addition, in a separate part of the opinion that may not gain as much attention as the duty of oversight ruling, the same court also held that a breach of fiduciary duty claim can be alleged against an officer based on sexual harassment allegations. The court’s January 25, 2023 opinion in this case, a copy of which can be found here, is likely to be the subject of scrutiny, commentary, and controversy.
Continue Reading Breach of the Duty of Oversight Liability Extends to Officers as Well as Directors
As a result of a host of recent developments – including the War in Ukraine, trade tensions with China, and growing issues involving digital assets – several long-standing regulatory regimes have become increasingly important for companies and their executives. These regulatory regimes include U.S. sanctions, export controls, anti-money laundering (AML) and anti-bribery and corruption laws. According to a recent memo from the Skadden law firm entitled “Why Directors and Executives Need to Pay Attention to Sanctions, Money Laundering, and Export Rules” (
One of the fundamental principles of corporate law – in the U.S., as well as in other countries – is that a corporate entity has a legal existence separate and apart from its shareholders, officers, and directors, and that the individuals cannot be held personally liable for the debts and obligations of the company. However, in a recent extraordinary and noteworthy decision, the Irish High Court, applying Irish law, pierced the corporate veil in finding two Irish directors and two shadow directors personally liable in connection with a multinational fraud scheme. As discussed below, the decision underscores the importance of directors’ duties and their obligations to be informed about their companies’ operations. A copy of the Court’s October 28, 2022 decision can be found 
On October 26, 2022, the SEC adopted final rules implementing the Dodd-Frank Act’s requirement for issuers to recover from current and former executives compensation that was erroneously paid due to an accounting restatement. The final rules require securities exchanges to adopt listing standards that will require listed companies to implement and disclose policies requiring the erroneously paid compensation to be recovered, on a “no fault” basis – that is, without regard to whether any misconduct occurred or whether an executive bears responsibility. The SEC’s Release covers a broad range of topics, including — importantly for readers of this blog — considerations relating to indemnification or insurance for the clawed-back compensation. The SEC’s October 26, 2022 press release about the new rules can be found 
In numerous prior posts I have examined efforts by plaintiffs’ attorneys to try to impose civil liability on corporate executives in D&O claims following cyber security incidents. Two recent cases show that, in addition to potential civil litigation liability exposure, corporate executives may also face potential regulatory liability and even criminal liability exposure for cyber security incidents at their company. The two recent cases are discussed in an October 27, 2022 memo from the White and Case law firm, 
As readers of this blog know, there have been important case law developments in Delaware concerning boards’ duty of oversight. In the following guest post, the authors review the key recent developments and consider the practical implications for boards. The authors of this paper are: Sebastian M. Alia, Deputy General Counsel, Hudson Insurance Group; H. Stephen Grace, Ph.D., President, H.S. Grace & Company, Inc.: Alvin H. Fenichel, CPA, Senior Advisor, H.S. Grace & Company, Inc.; and Joseph P. Monteleone, Esq., Partner, Weber Gallagher. A version of this article previously was published in the ACC Docket. I would like to thank the authors for allowing me to publish their articles on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
In prior posts on this site (for example