THE NEW INDIANA BUSINESS CORPORATION LAW: 'RECKLESS' STATUTE OR NEW STANDARD?

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  • Source:
    Columbia Business Law Review, 1987/01/01, Vol: 1987, p233
  • Additional Information
    • Author:
      Paul F. Banta
    • Citation:
      1987 COLUM. BUS. L. REV. 233
    • Copyright:
      Copyright (c) 1987 Columbia Law School.
    • Abstract:
      INTRODUCTION Unable to secure adequate insurance for directors, corporations often have had trouble attracting qualified outsiders to serve on their boards. Without outside directors, shareholders would lack an important check on the power of inside management. A number of states, most notably Delaware and New York, have responded by enacting legislation addressing this problem. 1 While a variety of remedies have been offered, the solution adopted by the Indiana General Assembly was to change the liability rule in duty of care actions from a negligence standard to a "willful misconduct or recklessness" standard. 2 If the difficulty in obtaining insurance is a result of an increasing risk of liability for a breach of fiduciary duty, the problem can be remedied by making it more difficult to find a director liable in a derivative suit. "Fiduciary obligations of directors ought not be made so onerous that men of experience and ability will be deterred from accepting such office." 3 Provided Indiana's new liability rule does not leave shareholders without adequate protection, the new law should reverse the trend and return qualified directors to the board room. The wisdom of the new Indiana law is not obvious. By making it easier to put outside directors on the board, the law protects shareholders. In doing so, however, it reduces another longstanding shareholder protection, the deterrence caused by a negligence based liability rule. The provision will make derivative suits less effective as a means of checking management, but ...
    • Subject Terms:
    • Keywords:
      longstanding
      recklessness
      shareholders
      corporations
      introduction
      shareholder
      obligations
      legislation
      deterrence
      protection
    • Accession Number:
      edslexCB2F6068
  • Citations
    • ABNT:
      BANTA, P. F. The New Indiana Business Corporation Law: “Reckless” Statute or New Standard? Columbia Business Law Review, [s. l.], v. 1987, p. 233, 1987. Disponível em: . Acesso em: 15 out. 2019.
    • AMA:
      Banta PF. The New Indiana Business Corporation Law: “Reckless” Statute or New Standard? Columbia Business Law Review. 1987;1987:233. http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428. Accessed October 15, 2019.
    • APA:
      Banta, P. F. (1987). The New Indiana Business Corporation Law: “Reckless” Statute or New Standard? Columbia Business Law Review, 1987, 233. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428
    • Chicago/Turabian: Author-Date:
      Banta, Paul F. 1987. “The New Indiana Business Corporation Law: ‘Reckless’ Statute or New Standard?” Columbia Business Law Review 1987 (January): 233. http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428.
    • Harvard:
      Banta, P. F. (1987) ‘The New Indiana Business Corporation Law: “Reckless” Statute or New Standard?’, Columbia Business Law Review, 1987, p. 233. Available at: http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428 (Accessed: 15 October 2019).
    • Harvard: Australian:
      Banta, PF 1987, ‘The New Indiana Business Corporation Law: “Reckless” Statute or New Standard?’, Columbia Business Law Review, vol. 1987, p. 233, viewed 15 October 2019, .
    • MLA:
      Banta, Paul F. “The New Indiana Business Corporation Law: ‘Reckless’ Statute or New Standard?” Columbia Business Law Review, vol. 1987, Jan. 1987, p. 233. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428.
    • Chicago/Turabian: Humanities:
      Banta, Paul F. “The New Indiana Business Corporation Law: ‘Reckless’ Statute or New Standard?” Columbia Business Law Review 1987 (January 1, 1987): 233. http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428.
    • Vancouver/ICMJE:
      Banta PF. The New Indiana Business Corporation Law: “Reckless” Statute or New Standard? Columbia Business Law Review [Internet]. 1987 Jan 1 [cited 2019 Oct 15];1987:233. Available from: http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edslex&AN=edslexCB2F6068&custid=s8280428