Shareholders vs. Stakeholders: The Business Roundtable’s Redefinition of Corporate Purpose, Fiduciary Duties, and the Ethical Obligations of Lawyers

Monday, November 25, 2019 | 6:00 pm – 8:00 pm


Program Chair:
Robert T. Miller
Professor of Law and F. Arnold Daum Fellow in Corporate Law, University of Iowa College of Law and Fellow and Program Affiliated Scholar, Classical Liberal Institute, New York University School of Law

  • Most lawyers believe that the corporate laws of most states, including Delaware, require that directors act, within the law, to maximize the value of the shareholder-owners’ investment in the corporation. Similarly, the principles of corporate governance published by the Business Roundtable, which represents many of the largest corporations in America, long stated that directors should seek to maximize shareholder value. In August of this year, however, the Business Roundtable issued a statement “redefining” the purpose of the corporation “to promote an economy that serves all Americans.” The new statement refers to “a fundamental commitment to all of our stakeholders” and mentions customers, employees, suppliers, communities and shareholders. The Council of Institutional Investors responded, stating that the Roundtable’s new principles “undercut notions of managerial accountability to shareholders” and, “while it is critical to respect stakeholders,” directors should also “have clear accountability to company owners.”

    This panel will explore this issue—shareholders vs. stakeholders—from several perspectives. In particular, the panel will consider what the fiduciary duties of directors are in relation to shareholders and other corporate constituencies, including the key question of when and how directors are permitted to consider the interests of stakeholders other than shareholders. For instance, under the stakeholder model, would constituencies other than shareholders be able to bring actions against directors for breaches of fiduciary duty? The panel will also consider the important questions of professional responsibility raised by stakeholder theory: if an attorney represents a corporation and the corporation has obligations to stakeholders other than shareholders, how does this affect the attorney’s professional obligations to the corporation? Do attorneys ever have duties to stakeholders, whether shareholders or some other corporate constituency? Finally, the panel will consider the larger policy issues involved in this question, including how the issues of shareholders vs. stakeholders affect general matters of corporate governance, the functioning of markets, and the performance of the economy as a whole.

    Live Program & Webcast: $99 for Members | $199 for Nonmembers

    Members who are Recent Law Graduates, Newly Admitted Lawyers (admitted for the first time in any state or country 2017-2019), Judges, or attorneys that practice within the Government, Academic or Not-for-Profit sectors attend this program for free.

  • Ken Bertsch
    Executive Director, Council of Institutional Investors

    Anthony E. Davis
    Clyde & Co US LLP

    Joel Friedlander
    Friedlander & Gorris, P.A.

    Sabastian V. Niles
    Wachtell, Lipton, Rosen & Katz

    Honorable Karen Valihura
    Justice, Delaware Supreme Court

  • 6:00 pm – 6:20 pm Current Delaware and New York Law
    Overview of corporate purpose and fiduciary duties of directors in relation to maximizing shareholder value and the interests of other corporate constituencies, such as employees, customers, suppliers, creditors, and the communities in which the corporation operates. The effect of the triggering of Revlon duties on the directors’ duties.Panel
    6:20 pm – 6:30 pm Constituency Statutes
    A discussion of certain jurisdictions other than Delaware and New York.Panel
    6:30 pm – 6:40 pm Basic Principles of Stakeholder Theory and the Business Roundtable Statement of August 19, 2019, “Re-defining” the Purpose of the Corporation
    Topics to be covered include origin and development of stakeholder theory in academia, the principles announced by the Business Roundtable, Martin Lipton “New Paradigm,” and the response of the Council of Institutional Investors.Panel
    6:40 pm – 7:10 pm Potential Legal Effects of Adopting the Stakeholder Model
    A discussion of whether the model is legal in Delaware or New York, the existence (or not) of fiduciary duties to stakeholders other than shareholders, potential liability of directors for following (or not following) the stakeholder model.Panel
    7:10 pm – 7:30 pm Short-Term vs. Long-Term Problem
    The relevant strictures of Delaware and New York law, pressures to maximize from short-term results, assessment of the seriousness of the problem, and devices and strategies to mitigate the problem (if it really exists).Panel
    7:30 pm – 8:00 pm Ethical Considerations
    The importance of attorney’s always being completely clear as to who his or her client is, the classic problem of attorneys representing a corporation advocating for the interest of the CEO or the board, and new issues generated by stakeholder theory, such as whether attorneys representing corporations need to take account of the interests of constituencies other than shareholders in advising clients about their duties or even in performing their own duties to the corporation.Panel

  • CLE Credit
    New York:
     2.0 Total: 1.0 Professional Practice, 1.0 Ethics
    New Jersey:
     2.4 General
     2.0 Total: 1.0 General, 1.0 Professional Responsibility
     2.0 Total: 1.5 General, 0.5 Professional Responsibility

  • Sponsoring Association Committee:
    Corporation Law, Robert T. Miller, Chair
    Professional Responsibility, Wallace L. Larson, Chair

    Sponsorship Opportunities are Available! Please Contact:
    Angie Avila, Manager, Membership Outreach and Sponsorships | (212) 382-6608 |