Should Boards Eliminate Corporate Officer Liability for Fiduciary Duty Breaches?

Corporate partner Doug Raymond authored an article for Directors & Boards titled “Should Boards Eliminate Corporate Officer Liability for Fiduciary Duty Breaches?” that addresses states amending their corporate laws to allow corporations to eliminate the risk of personal liability for a director’s breach of the duty of care.

Raymond explains that protections for both directors and officers are not automatic but must be included by the corporation in its certificate of incorporation and lists the specified exceptions. He notes that the expanded provision protects corporate officers in the same way as directors, except that corporations cannot limit the liability of their officers for breaches of fiduciary duty arising out of claims brought by the corporation or on its behalf.

Despite these considerations, Raymond suggests that boards may want to pause before rushing to extend this liability shield to the senior officers of the corporation.