In nearly all narratives of how compliance has grown as a legal subject and field of practice in the last two decades, the Delaware Chancery Court’s decision in In re Caremark plays a featured role. Chancellor Allen’s opinion predicted the abandonment of the Delaware Supreme Court’s older and heavily criticized approach in Graham v. Allis-Chalmers, which had limited the board of directors’ compliance oversight obligation to situations where red flags were waving in the board’s face. It said (though entirely in dicta) that the board had an affirmative obligation to assure itself in good faith that the corporation had a system of internal reporting and compliance controls to monitor for illegal activities. Since that time, compliance has grown in size, scope and stature at nearly all large corporations.
Posted by Donald C. Langevoort (Georgetown University), on Thursday, March 29, 2018
Editor's Note: Donald C. Langevoort is Thomas Aquinas Reynolds Professor of Law at Georgetown Law School. This post is based on his recent article, forthcoming in the Temple Law Review, and is part of the Delaware law series; links to other posts in the series are available here.