Corporate Governance

Delaware's Top Five Worst Shareholder Decisions for 2010 (Conclusion)

By J Robert Brown Jr.

Shareholders in Delaware have a hard time getting a break.  It is highly likely that the law will continue to evolve in a management friendly fashion.  Moreover, as federal law increasingly intervenes into areas heretofore left to the states, the courts seem ready to respond.  Thus, it may be coincidental, but the poison pill cases from 2010 seem likely to interfere with the exercise of shareholder access. 

The long and the short of it is that tension between federal and state law will increase, with Delaware seen less and less as a neutral arbiter and more and more another interest group in the debate over the appropriate standards for corporate governance.  The views of the Delaware courts deserve to be heard; they  represent a serious repository of understanding of the governance process.  They also reflect the views of important constituencies in the debate.   But they are only one view and sometimes the wrong view. 

It will increasingly fall to the federal government not Delaware to resolve important governance issues.  It is the forum that will take into account all potential views rather than the views of one particular side. 

Full post as published by The Race to the Bottom on January 07, 2011 (boomark / email).