DGCL § 102(b)(7). Exculpation

3/5/2024 pdw

Responding to the fallout of Smith v. Van Gorkom, the Delaware legislature adopted DGCL § 102(b)(7), which allows a corporation to adopt a charter provision that waives the directors' liability for monetary damages for a breach of the duty of care. This was later expanded to cover officers as well (though there are a few minor differences not worth raising here).

Most public companies have adopted these "exculpation" provisions, drastically reducing the number of duty of care claims and centering corporate fiduciary duty litigation on the duty of loyalty.

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