The Duty of Disclosure for Corporate Officers: Avoiding Liability in the Face of Growing Litigation Trend

Tyler J. Leavengood, Jaclyn C. Levy and Justin T. Hymes
The Review of Securities & Commodities Regulation

In this article the authors outline the fiduciary duties of officers and directors under Delaware law and the limits of their protections from liability. They then turn to recent Delaware cases involving allegations against officers in M&A transactions for breach of the duty of disclosure. They close with practical guidance for officers in such transactions to mitigate the risk of liability.

In 2009, the Delaware Supreme Court eliminated any doubt as to whether officers of a Delaware corporation owe fiduciary duties to the corporation and its stockholders, confirming in Gantler v. Stephens that directors and officers owe the same duties. Yet, in the wake of the Gantler decision, there was not a sudden uptick in the number of decisions holding officers liable for breach of fiduciary duty. In the last two years, however, several decisions by Delaware courts have denied motions to dismiss claims against officers – acting solely in their officer-capacity – for breaches of the duty of care, and more specifically, for breaches of the duty of disclosure in connection with proxy statements relating to proposed transactions. Although the number of such decisions remains relatively small, they nevertheless serve as a warning to officers that their merger-related actions may be subjected to judicial review.

Media Contact

Lisa Altman, Jaffe PR, Senior Vice President

About Potter Anderson

Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 100 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.

Jump to Page

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.