Reporter:
Edward B. Rock, New York University School of Law, New York, NY
Associate Reporters:
Jill E. Fisch, University of Pennsylvania Carey Law School, Philadelphia, PA [to July 2023]
Marcel Kahan, New York University School of Law, New York, NY
Elisabeth de Fontenay, Duke University School of Law, Durham, NC [from September 2023]
Table of Contents
Section Page
Project Status at a Glance ....................................................................................................................... xiii
Foreword ................................................................................................................................................. xiv
Reporters’ Memorandum ......................................................................................................................... xv
Projected Overall Table of Contents ........................................................................................................ xvi
Chapter 1. Definitions
§ 1.13. Director .......................................................................................................................................... 1
§ 1.27. Officer ............................................................................................................................................ 2
Chapter 5. Duty of Loyalty
Introductory Note ....................................................................................................................................... 5
§ 5.02. Interested Transactions Involving a Director or Officer .................................................................. 5
§ 5.05. Use by a Director or Officer of Corporate Position ...................................................................... 33
§ 5.06. Use by a Director or Officer of Corporate Property or Corporate Information ............................. 43
§ 5.07. Taking of Corporate Opportunities by Directors or Officers ......................................................... 52
§ 5.08. Competition with the Corporation ................................................................................................ 71
§ 5.11. Tender Offers by Controller Followed by Freeze-Out Mergers .................................................... 80
§ 5.16. Transfer of Voting Equity Securities by Controller; Controller’s Duty of Care in the Transfer of Securities ................................................................................................................................................. 88
Appendix A. Black Letter of Tentative Draft No. 2 .............................................................................. 95
Appendix B. Black Letter of Sections Approved by Membership ................................................... 101
Tentative Draft No. 2 contains material from Chapter 1, Definitions, and Chapter 5, Duty of Loyalty. The membership voted to approve this draft at the 2024 Annual Meeting subject to the discussion at the Meeting and editorial prerogative. This material may be cited as representing the Institute’s position until the official text is published.
Table of Contents
Section Page
Project Status at a Glance ....................................................................................................................... xiii
Foreword ................................................................................................................................................. xiv
Reporters’ Memorandum ......................................................................................................................... xv
Projected Overall Table of Contents ........................................................................................................ xvi
Chapter 1. Definitions
§ 1.13. Director .......................................................................................................................................... 1
§ 1.27. Officer ............................................................................................................................................ 2
Chapter 5. Duty of Loyalty
Introductory Note ....................................................................................................................................... 5
§ 5.02. Interested Transactions Involving a Director or Officer .................................................................. 5
§ 5.05. Use by a Director or Officer of Corporate Position ...................................................................... 33
§ 5.06. Use by a Director or Officer of Corporate Property or Corporate Information ............................. 43
§ 5.07. Taking of Corporate Opportunities by Directors or Officers ......................................................... 52
§ 5.08. Competition with the Corporation ................................................................................................ 71
§ 5.11. Tender Offers by Controller Followed by Freeze-Out Mergers .................................................... 80
§ 5.16. Transfer of Voting Equity Securities by Controller; Controller’s Duty of Care in the Transfer of Securities ................................................................................................................................................. 88
Appendix A. Black Letter of Tentative Draft No. 2 .............................................................................. 95
Appendix B. Black Letter of Sections Approved by Membership ................................................... 101
Tentative Draft No. 2 contains material from Chapter 1, Definitions, and Chapter 5, Duty of Loyalty. The membership voted to approve this draft at the 2024 Annual Meeting subject to the discussion at the Meeting and editorial prerogative. This material may be cited as representing the Institute’s position until the official text is published.
TABLE OF CONTENTS
Section Page
Project Status at a Glance ............................................................................................ xiv
Foreword ....................................................................................................................... xv
Reporters’ Memorandum .............................................................................................. xvi
Projected Overall Table of Contents ............................................................................ xviii
CHAPTER 1
DEFINITIONS
§ 1.10.Controller ................................................................................................................. 1
§ 1.23. Interested ................................................................................................................ 7
§ 1.24. Independent ........................................................................................................... 19
CHAPTER 2
THE OBJECTIVE OF A CORPORATION
§ 2.01. The Objective of a Corporation .............................................................................. 25
CHAPTER 4
DUTY OF CARE AND THE BUSINESS JUDGMENT RULE
Introductory Note ............................................................................................................... 59
§ 4.01. The Duty of Care ................................................................................................... 60
§ 4.02. The Business Judgment Rule ................................................................................ 67
CHAPTER 5
DUTY OF LOYALTY
§ 5.01. The Duty of Loyalty ................................................................................................ 83
§ 5.02. Interested Transactions Involving a Director or Officer .......................................... 87
§ 5.10. Interested Transactions Involving a Controller ..................................................... 116
Appendix. Black Letter of Tentative Draft No. 1 ......................................................... 132
Tentative Draft No. 1 contains Sections from Chapter 1, Definitions; Chapter 2, The Objective of the Corporation; Chapter 4, Duty of Care and the Business Judgment Rule; and Chapter 5, Duty of Loyalty. The membership voted to approve §§ 1.10, 1.23, 1.24, 2.01, 4.01, 4.02, 5.01, and 5.10 of this draft at the 2022 Annual Meeting, subject to the discussion at the Meeting and editorial prerogative. This approved material may be cited as representing the Institute’s position until the official text is published.
TABLE OF CONTENTS
Section Page
Project Status at a Glance ............................................................................................ xiv
Foreword ....................................................................................................................... xv
Reporters’ Memorandum .............................................................................................. xvi
Projected Overall Table of Contents ............................................................................ xviii
CHAPTER 1
DEFINITIONS
§ 1.10.Controller ................................................................................................................. 1
§ 1.23. Interested ................................................................................................................ 7
§ 1.24. Independent ........................................................................................................... 19
CHAPTER 2
THE OBJECTIVE OF A CORPORATION
§ 2.01. The Objective of a Corporation .............................................................................. 25
CHAPTER 4
DUTY OF CARE AND THE BUSINESS JUDGMENT RULE
Introductory Note ............................................................................................................... 59
§ 4.01. The Duty of Care ................................................................................................... 60
§ 4.02. The Business Judgment Rule ................................................................................ 67
CHAPTER 5
DUTY OF LOYALTY
§ 5.01. The Duty of Loyalty ................................................................................................ 83
§ 5.02. Interested Transactions Involving a Director or Officer .......................................... 87
§ 5.10. Interested Transactions Involving a Controller ..................................................... 116
Appendix. Black Letter of Tentative Draft No. 1 ......................................................... 132
Tentative Draft No. 1 contains Sections from Chapter 1, Definitions; Chapter 2, The Objective of the Corporation; Chapter 4, Duty of Care and the Business Judgment Rule; and Chapter 5, Duty of Loyalty. The membership voted to approve §§ 1.10, 1.23, 1.24, 2.01, 4.01, 4.02, 5.01, and 5.10 of this draft at the 2022 Annual Meeting, subject to the discussion at the Meeting and editorial prerogative. This approved material may be cited as representing the Institute’s position until the official text is published.