Index
Delaware General Corporation Law (DGCL)
Summary
Over 60% of Fortune 500 companies are incorporated in Delaware because its corporate laws offer unparalleled liability protection and legal predictability for directors and executives.
Rights & Rules
- 01.A corporation can include a provision in its charter eliminating the personal liability of its directors for monetary damages resulting from a breach of fiduciary duty (the 'exculpatory clause').
- 02.Corporate disputes are not heard by a jury; they are heard by judges with extensive corporate law expertise in the 'Delaware Court of Chancery.'
- 03.Directors have broad legal protections under the 'business judgment rule,' which assumes they acted in good faith unless proven otherwise.
Penalties
- 01.Directors are NOT protected from liability if they intentionally violate the law, act in bad faith, or extract an improper personal benefit (e.g., embezzlement).
Verified Citations
Delaware Code Title 8 (DGCL) Section 102(b)(7)
Source"A provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director: (i) For any breach of the director's duty of loyalty..."