DIRECTOR AND OFFICER FIDUCIARY DUTIES & LIABILITY First Run Broadcast: April 19, 2016 1:00 p.m. E.T./12:00 p.m. C.T./11:00 p.m. M.T./10:00 a.m. P.T. (60 minutes) The decisions of directors and officers of private companies are closely scrutinized. The shareholder or owner base is smaller in private companies and the decisions directors and officers make are often more impactful on the fortunes of its owners. Both classes of agents – directors and officers – are subject to a range of fiduciary duties, some of which may be heightened or even diminished by agreement. Duties of care and loyalty, and the corporate/organizational opportunity doctrine, can be the basis of litigation when shareholders or members of an organization dispute the business of financial decisions of directors and officers. Understanding the scope of these duties and how they may be modified are essential for effective management and the entity’s success. This program will provide you with a practical guide to the fiduciary duties of private company directors and officers, how they apply across business entities and transactions, and how these duties can be modified. Fiduciary duties of directors and officers of private companies – C Corps, S Corps and LLCs Duties imposed by law, the company’s founding documents, or particular transactional circumstance Duty of care, duty of loyalty, and the corporate/organizational opportunity doctrine What duties can be waived or modified under law – and which cannot? Conflicts of business interests, resolution, and drafting modifications Special issues involving minority-interest stakes in closely held companies Indemnification and other sources of liability limitation for officers and directors Speaker: Thomas W. France is a partner in the Tysons Corner, Virginia office of Venable, LLP, where his practice focuses on corporate transactions, securities law, financial and banking regulatory matters. He has substantial experience in mergers and acquisitions, public and private offerings of equity and debt, franchise transactions, joint ventures and corporate reorganizations. Mr. France received his B.A., summa cum laude, from Oregon State University and his J.D., cum laude, from Washington and Lee University School of Law.
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The decisions of directors and officers of private companies are closely scrutinized. The
shareholder or owner base is smaller in private companies and the decisions directors and
officers make are often more impactful on the fortunes of its owners. Both classes of agents –
directors and officers – are subject to a range of fiduciary duties, some of which may be
heightened or even diminished by agreement. Duties of care and loyalty, and the
corporate/organizational opportunity doctrine, can be the basis of litigation when shareholders or
members of an organization dispute the business of financial decisions of directors and officers.
Understanding the scope of these duties and how they may be modified are essential for effective
management and the entity’s success. This program will provide you with a practical guide to the
fiduciary duties of private company directors and officers, how they apply across business
entities and transactions, and how these duties can be modified.
Fiduciary duties of directors and officers of private companies – C Corps, S Corps and
LLCs
Duties imposed by law, the company’s founding documents, or particular transactional
circumstance
Duty of care, duty of loyalty, and the corporate/organizational opportunity doctrine
What duties can be waived or modified under law – and which cannot?
Conflicts of business interests, resolution, and drafting modifications
Special issues involving minority-interest stakes in closely held companies
Indemnification and other sources of liability limitation for officers and directors
Speaker:
Thomas W. France is a partner in the Tysons Corner, Virginia office of Venable, LLP, where
his practice focuses on corporate transactions, securities law, financial and banking regulatory
matters. He has substantial experience in mergers and acquisitions, public and private offerings
of equity and debt, franchise transactions, joint ventures and corporate reorganizations. Mr.
France received his B.A., summa cum laude, from Oregon State University and his J.D., cum
laude, from Washington and Lee University School of Law.
VT Bar Association Continuing Legal Education Registration Form
Please complete all of the requested information, print this application, and fax with credit info or mail it with payment to: Vermont Bar Association, PO Box 100, Montpelier, VT 05601-0100. Fax: (802) 223-1573 PLEASE USE ONE REGISTRATION FORM PER PERSON. First Name ________________________ Middle Initial____Last Name___________________________
Director and Officer Fiduciary Duties & Liability Teleseminar
April 19, 2016 1:00PM – 2:00PM
1.0 MCLE GENERAL CREDITS
PAYMENT METHOD:
Check enclosed (made payable to Vermont Bar Association) Amount: _________ Credit Card (American Express, Discover, Visa or Mastercard) Credit Card # _______________________________________ Exp. Date _______________ Cardholder: __________________________________________________________________
VBA Members $75 Non-VBA Members $115
NO REFUNDS AFTER April 12, 2016
Vermont Bar Association
CERTIFICATE OF ATTENDANCE
Please note: This form is for your records in the event you are audited Sponsor: Vermont Bar Association Date: April 19, 2016 Seminar Title: Director and Officer Fiduciary Duties & Liability Location: Teleseminar - LIVE Credits: 1.0 MCLE General Credit Program Minutes: 60 General Luncheon addresses, business meetings, receptions are not to be included in the computation of credit. This form denotes full attendance. If you arrive late or leave prior to the program ending time, it is your responsibility to adjust CLE hours accordingly.
Change of Control Transactions – Implicates duties of care and liability
Standards of Review: Under Delaware law, there are generally three
standards against which the courts will measure director conduct in a
change in control transaction:
– business judgment rule -- for a decision to remain independent or to approve a transaction not involving a sale of control;
• policy that a court will not second guess the valid business judgment of an informed board
– enhanced scrutiny -- for a decision to adopt or employ defensive measures or to approve a transaction involving a sale of control; and
– entire fairness -- for a decision to approve a transaction involving management or a principal shareholder or for any transaction in which a plaintiff successfully rebuts the presumptions of the business judgment rule.
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Fiduciary Duties: Standards of Conduct
Rejecting an Offer - the business judgment rule applies
The Board must determine in the exercise of its business
judgment whether the offer is in the best interests of the
corporation and its stockholders.
Directors must have a reason for rejecting the offer – even in a
closely-held corporation.
Defensive Measures – enhanced scrutiny will be applied if the Board
employs defensive measures in response to a takeover bid
Directors must satisfy two tests before the business judgment
rule applies: (1) did the directors have reasonable grounds for
believing that a danger to corporate policy or effectiveness
existed, and (2) was the action reasonable in relation to the
threat posed.
May not be likely in the case of a closely-held corporation
In Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., the
Delaware Supreme Court imposed an affirmative duty on the
board of directors to seek the highest value reasonably
obtainable to the stockholders when a sale of the company
becomes inevitable.
The duty established in Revlon was restated in Paramount
Communications Inc. v. QVC Network Inc., in which the
Delaware Supreme Court further explained the extent of
enhanced scrutiny:
• The consequences of a sale of control impose special obligations on the directors of a corporation. In particular, they have the obligation of acting reasonably to seek the transaction offering the best value reasonably available to the stockholders. The courts will apply enhanced scrutiny to ensure that the directors have acted reasonably.