First Page
33
Abstract
Under In re Caremark Int’l Inc. Derivative Litig., decided in 1996, directors are required to oversee corporate compliance and can be liable for breaching their fiduciary duties if their oversight efforts do not suffice. Since it was decided, Caremark has been very influential, notwithstanding its high bar to liability. Notably, its influence far exceeds the actual probability that directors would be found liable under the doctrine. Instead, much of Caremark’s force is “soft,” through extra-legal mechanisms such as norms and pressures from various constituencies. Caremark clearly covers oversight for violations of law or regulation. But what, beyond those two things, might Caremark encompass? What about ethical violations? Or business risk? This Article argues that an expansion of Caremark’s scope to cover some ethical violations and some business risks is consistent with well-established principles of Delaware corporate law. This argument has implications for broader debates on the role litigation should play in corporate governance and the duties corporations owe to society at large.
Recommended Citation
Claire A. Hill & Zohreh Zakiani,
What Should Caremark Encompass?,
19 Brook. J. Corp. Fin. & Com. L.
33
(2024).
Available at:
https://brooklynworks.brooklaw.edu/bjcfcl/vol19/iss1/2
Included in
Business Organizations Law Commons, Law and Politics Commons, Law and Society Commons, Legal Ethics and Professional Responsibility Commons, Litigation Commons
