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Time to Check Your Director and Officer Insurance Coverage
It has become clear that not all D&O insurance coverages are created equal, and in many instances, your policy may not provide the coverage that you count on. Clearly, in recent years, liability exposure for corporate directors has significantly increased. Earlier, outside directors not only were thought to be shielded by the application of the business judgment rule, but also protected by liability exculpation provisions contained in articles of incorporation, indemnity provisions providing up to the maximum allowed by state law (and in many instances individual indemnification contracts), as well as D&O insurance coverage on top of or to supplement or fund those protections. The erosion of protection not only for outside directors but also directors and officers generally, is a direct result of the corporate scandals that have erupted over the last several years, in one case creating the largest corporate bankruptcy in history, all due in large measure to fraudulent activity on the part of some.
A Recent Case
A review of the recent case, In re Emerging Communications, Inc. — Shareholders Litigation in the Delaware Chancery Court, and the recent settlement activities involving WorldCom and Enron class action litigation provide a sample of the rather significant change in the landscape for corporate director personal liability. The call for “personal accountability” may become a new mantra, with resulting higher risk of personal liability. Of course, on top of these issues squarely sits the requirements of SOX, the enhanced duties and functions of the audit committee, particularly specialized expertise, the clear exposure for compensation practices arising out of Disney and Tyco and a host of other issues. Very recently, Abercrombie & Fitch Co. and certain of its directors were sued for corporate waste, breach of fiduciary duties of loyalty and good faith and the duty of disclosure, as a result of compensation arrangements with the CEO. Portions of the complaint, and virtually the entire case against directors, are based on the Compensation Committee Report contained in the proxy statement of the company. All of these events create the potential for enhanced liability exposure for directors. Given the recent hue and cry over executive compensation, compensation committee functions, like the functions of the audit committee, are coming under sharper focus.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.