Fiduciary Duties of Officers of Corporations

by Practical Law Corporate & Securities

A Practice Note providing guidance on the fiduciary duties of corporate officers under Delaware law. This Practice Note explains the principle that officers owe the same duties of care and loyalty as directors, and addresses the significant increase in fiduciary duty claims against officers, especially in class action merger litigation. It delves into the unresolved question of whether officer conduct is judged by a gross negligence standard under the business judgment rule or a simple negligence standard, noting the judicial trend toward the former. This Practice Note also explores other crucial duties, including the duty of oversight and the application of Caremark claims to officers. The Practice Note covers statutory protections such as indemnification and officer exculpation for duty of care breaches under Section 102(b)(7) of the Delaware General Corporation Law (DGCL), as well as jurisdictional rules for nonresident officers.