Legal News

Corporate Law: How Much Longer Will Delaware Reign?

By Dan Slater

In an early scene from Oliver Stone’s 1987 film, “Wall Street,” Gordon Gekko puts down his cigarette, steps onto a treadmill in his art-bedecked office, and launches into the following monologue: “OK gang, looks like we’re going over 5% in Teldar, start the lawyers on a tender offer and 13D . . . . They’re gonna fight, they got Myers and Thromberg doing their legal, they make Nazis look like nice guys…” Then we hear Natalie, Gekko’s British secretary, say, “Mr. Gekko, the conference call is ready. Mr. Sugarman and Mr. Lorenzo in Delaware. Mr. Bernard in Los Angeles. Mr. Jackson and Ms. Rosco in London. They’re all on.”

Delaware? It’s a great detail in the movie. Even Stone understood the importance of the First State’s law to a 1980’s-era corporate raider. But, 20 years later, is the preeminence of Delaware corporate law in jeopardy from incursions by Congress? That’s the question asked by this piece in yesterday’s News Journal, a Delware publication.

The argument for the development of a sort of federal corporate law, which has been made before, goes something like this: To attract business to the state, the Delaware legislature elevates the interest of corporate management over shareholders in areas such as insider trading and proxy voting. Sooner or later, the thinking goes, in an era of skyrocketing executive pay and corporate scandal, Congress will act against this.

Vice Chancellor Leo Strine shrugs it off. “There’s a lot of things that keep me up at night related to my work,” says Strine, “but the possibility of [a federal corporate law] isn’t one of them.”

Hey, Delaware junkies, the floor is yours. What are the pros and cons of a federal corporate law?

Full post as published by Law Blog - WSJ.com on March 03, 2008 (boomark / email).