The Metropolitan Corporate Counsel's November 2013 issue features an in-depth interview with Akin Gump corporate practice co-chair Frank Reddick on compliance. In “Corporate Counsel’s Guide to Compliance,” Reddick discusses, among other topics:
- Reduction of exposure to compliance failures: “The best protection starts with a clear articulation of the risk profile of the company. Managers should have a clear and consistent understanding of the firm’s risk philosophy – the amount of risk a company is willing to accept in pursuit of its business goals.”
- Theories of director liability: “…the potential for directors’ liability runs the gamut from potential liability for failure to put controls in place in the first instance, failure to improve controls once deficiencies are bought to the board’s attention, and failure to investigate once red flags arise or complaints are made.”
- The role of the business judgment rule in liability protection: “Several courts have commented that the Caremark case sets a very high standard before liability will be found. Delaware courts are generally reluctant to impose liability on directors simply because of a bad result and the hindsight that comes with looking back and realizing that something else should or could have been done to prevent the harm…Nevertheless, recent cases asserting Caremark claims against the absentee directors of foreign-based companies have made it clear that where a court has determined that egregious misconduct has occurred, it will not apply the business judgment rule.”
- Board membership for GC: “…in the case of a public company, it is best if that general counsel is from another company. Both the potential for conflicts and the views of the institutional shareholders services on the issue of members of management on the board and the limitations of their membership on certain committees all argue in favor of selecting among qualified individuals who are not employees of the company.”
To read the full interview, please click here.