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2 results

  • 3 - The Three Fiduciaries of Delaware Corporate Law—and Eisenberg’s Error

  • from Part I - Identifying Fiduciaries and Their Duties
  • Edited by Arthur B. Laby, Jacob Hale Russell
  • Book:
    Fiduciary Obligations in Business
    Published online:
    20 August 2021
    Print publication:
    09 September 2021, pp 57-73

  • Summary

    This chapter argues that corporate law is unique in a way that is not widely recognized, and is not unique in the way it is widely thought to be. First, unlike other fields of law where fiduciary obligations play a key role, in corporate law, not one, not two, but three distinct actors owe fiduciary duties—executive officers, directors, and controlling shareholders. The beneficiaries of those actors' duties, the reasons for imposing duties, and the scope and demands of fiduciary duties differ for the three actors. Thus, there is not a singular duty of care and loyalty in Delaware corporate law, but multiple variations of those duties owed by multiple actors. Delaware has a law of fiduciaries, not a fiduciary law. Second, this chapter challenges the supposed standard of conduct-standard of review divergence first hailed in 1993 by Professor Melvin Eisenberg as unique to corporate law.The construct was descriptively inaccuratewhen Professor Eisenberg first wrote, it has been little used by the Supreme Court since then, and the standards often converge rather than diverge.

  • Standard of Conduct or Standard of Review? Examination of an African Business Judgment Rule under South Africa's Companies Act 71 of 2008

  • Brighton M Mupangavanhu
  • Journal:
    Journal of African Law / Volume 63 / Issue 1 / February 2019
    Published online by Cambridge University Press:
    18 January 2019, pp. 127-150
    Print publication:
    February 2019

  • This article highlights that section 76(4)(a) of South Africa's Companies Act, which reflects the business judgment rule (BJR) concept, is a standard of review, providing a means of determining whether a director has met his or her undertakings under section 76(3). The article suggests that section 76 should be titled “Standards of conduct and review” instead of referring only to standards of conduct. It draws a clear distinction between standards of conduct (including the personal financial interests disclosure requirements) on one hand, and a standard of review on the other. After tracing the traditional international requirements of BJR, the article analyses the decision-making requirements under section 76(4)(a). It concludes that, while section 76(4)(a) compares favourably with US and Australian laws, the omission of a good faith requirement is unfortunate since that is a critical component of decision-making. The article proposes that good faith and proper purpose under section 76(3)(a) should form part of the section 76(4)(a) requirements.