2008 • Volume 33 • Number 3

Defining the Shareholder’s Role, Defining a Role for State Law: Folk at 40

Robert B. Thompson

How should Delaware position its corporations statute to maintain the First State’s preeminence in corporate law, which it has enjoyed throughout the four decades since the last comprehensive revision of the statute? This article suggests Delaware is vulnerable in a way that was not particularly visible in 1967, not from any of the other forty-nine states, but from the federal government. Delaware has made it too easy for the federal government, through something resembling a stealth preemption, to occupy more of corporate governance. The federal move has occurred in areas of shareholder and officer roles, which are relatively underdeveloped in the Delaware statute. Federal law has been the realm within which most of the debate has occurred regarding issues like shareholder power to initiate agenda items for a stockholder’s meeting, shareholder nominations for the board of directors, and shareholder proposed bylaws. Filling the shareholder space will require a more complete specification of the shareholder role than that which has occurred until now, but should remain consistent with Delaware’s traditional approach to corporate law and its trust of directors. Shareholder voting can best be seen, not by analogy to citizens in our civil polity, but as performing an error-correction function when directors are conflicted or otherwise disabled in acting for the corporation.