This article questions whether decreasing accountability by directors for their negligence, either by limiting liability or relaxing standards of due care, necessarily promotes states' interests. Specifically, the article proposes that states enact legislation holding directors, for actions pertaining to major transactions, to a standard of liability more stringent than that imposed by statutes modeled after the Delaware example. The article principally identifies and responds to an array of potential objections against application of local standards of care to directors of foreign corporations. In particular, the article focuses on challenges that the statute exceeds the bounds of the enacting state's authority under settled principles of federalism. Although corporate tradition and culture have shied away from holding directors to standards of care imposed by states other than the state of incorporation, the weight of these conventions does not translate into legal impediments to the proposed outreach statute.
Circumventing Lax Fiduciary Standards: The Possibility of Shareholder Multistate Class Actions for Directors' Breach of the Duty of Due Care,
72 Neb. L. Rev.
Available at: https://digitalcommons.unl.edu/nlr/vol72/iss1/2