Experts and the Defense of Reliance in Delaware Corporate Law

In all aspects of corporate life—from creation to expansion and from restructuring to demolition—experts are available to advise directors, managers, shareholders, financiers, and other participants. In particular, directors often rely on, for example, accounting firms to review financial statements, attorneys to assess the legality of dividends, compensation consultants to assess the fairness of bonuses, rating agencies to rate debt, investment banks to advise on transactions, and a variety of analysts.

Corporate laws typically contain “reliance provisions,” which entitle directors and, sometimes, officers to rely on experts and, therefore, avoid liability, as long as certain requirements are met. In my article, … Read more