USA Law and Practice Contributed by: Matt Hurd, Melissa Sawyer and Scott Crofton, Sullivan & Cromwell LLP
specific requirements on how these evaluations should be conducted. Nasdaq does not require its listed companies to conduct a board evalu - ation. Ethics and Code of Conduct Stock exchange rules and the federal securities laws require listed companies to adopt a code of conduct applicable to their directors, officers and employees, addressing matters relating to conflicts of interest, fair dealing, compliance with law and enforcement of the code of conduct. Any waivers of the code of conduct for directors or executive officers are required to be publicly disclosed. Corporate Governance Guidelines Any company listed on the NYSE must adopt and disclose corporate governance guidelines that address certain matters, including: • director qualification standards and responsi - bilities; • director access to management and inde - pendent advisers; • director compensation; • director orientation and continuing education; • management succession; and • the annual performance evaluation of the board and its committees. 2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance In Delaware, directors and officers of a corpo - ration owe fiduciary duties of care and loyalty to the corporation and its stockholders. Certain other states have adopted constituency stat - utes pursuant to which directors and officers of corporations are, in certain circumstances, per - mitted to consider the interests of constituents
other than stockholders, such as customers, employers, the community, suppliers or credi - tors. Similar fiduciary duties are typically owed by the partners in a general partnership, the general partners in a limited partnership and the man - agers or managing members, as applicable, in an LLC. However, unlike with corporations, Dela - ware and certain other states permit these fidu - ciary duties to be limited or eliminated entirely in the entity’s organisational documents. Duty of Care The duty of care requires a director to act in an informed and considered manner and take the care that a prudent businessperson would take when considering a business decision. To sat - isfy this duty, a director should review all mate - rial information reasonably available and have sufficient time to consider such information in advance of making a decision on behalf of the corporation. A director should also be afforded the opportunity to ask questions of management and outside advisers and should take advantage of this opportunity in the event the director does not understand something or believes there is an omission. A director is also entitled to rely upon information provided by management and outside advisers in satisfying this duty, unless the director has knowledge that the reliance is unwarranted. Duty of Loyalty The duty of loyalty requires a director to act in the best interests of the corporation and its stockholders rather than in the director’s own self-interest or the interests of some other con - stituency, such as a particular stockholder. To satisfy this duty, a director should either avoid situations involving a conflict of interest or dis -
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