Delaware Permits Exculpation of Officers

Delaware Permits Exculpation of Officers

August 11, 2022, Covington Alert

On August 1, 2022, amendments to the Delaware General Corporation Law (“DGCL”) took effect that permit corporations to eliminate or limit the personal liability of officers for claims of breach of the fiduciary duty of care. Historically, the DGCL has allowed corporations to exculpate directors from breach of fiduciary duty of care claims, if the corporation’s certificate of incorporation includes an exculpation provision. The amendments have now expanded that exculpation authority to corporate officers.

We discuss the new officer exculpation in further detail and outline considerations for boards of directors of Delaware corporations that are weighing whether to extend exculpation to officers.