Abstract
Corporate director liability is undergoing a dramatic change in the United States through enactment of liability limitation statutes by state legislatures. One impetus for legislative intervention in common law pronouncements of director liability has been a 1985 Delaware case, Smith v. Van Gorkom, which held the directors of Trans Union Corporation personally liable to shareholders for negligently approving a cash-out merger. The Van Gorkom decision, from the state historically known as the haven for corporate enterprises, articulated a more exacting duty of care for corporate directors and signaled a retreat from traditional formulations of the business judgment rule. A majority of state legislatures across the country have responded to concerns about director liability exposure by enacting statutes that, in one way or another, shield corporate directors from personal liability for breaching their duty of care towards the corporation. In adopting such statutes, legislatures also have been influenced by the rising cost and uncertain availability of director and officer ("D&O") liability insurance and the ability of corporations to attract and retain high caliber board members." The Utah Legislature followed this national trend by adopting The Liability Limits of Corporate Directors Act of 1987 ("Act").
Recommended Citation
Gilson, James D.
(1988)
"Utah's Statute Permitting Limits on Corporate Directors' Liability: A guide for Lawyers and Directors,"
Utah Law Review: Vol. 1988:
No.
4, Article 3.
Available at:
https://dc.law.utah.edu/ulr/vol1988/iss4/3