Download this Paper Open PDF in Browser

When the Government is the Controlling Shareholder: Implications for Delaware

28 Pages Posted: 23 Sep 2010 Last revised: 2 Oct 2010

Edward B. Rock

New York University School of Law

Marcel Kahan

New York University School of Law; European Corporate Governance Institute

Date Written: September 23, 2010

Abstract

When the federal government is the controlling shareholder, the doctrine of sovereign immunity transforms the legal structures of accountability. Procedurally, the government and its agents can only be sued in federal court. Substantively, claims must be brought within one of the statutory waivers of sovereign immunity (the Federal Tort Claims Act, the Tucker Act, or the Administrative Procedure Act). Although in the right circumstances plausible claims could be brought in Delaware against the directors of a government-controlled Delaware corporation, we argue that Delaware should avoid a confrontation with Washington, and that the best way to do so is to take advantage of the flexibility provided by Delaware Court of Chancery Rule 19.

Keywords: Delaware, Journal, Corporate Law, Corporate, Chancery Rule 19, Controlling shareholder, Government, Sovereign immunity, Government-controlled, Federal government

Suggested Citation

Rock, Edward B. and Kahan, Marcel, When the Government is the Controlling Shareholder: Implications for Delaware (September 23, 2010). Delaware Journal of Corporate Law (DJCL), Vol. 35, No. 2, p. 409, 2010. Available at SSRN: https://ssrn.com/abstract=1681744

Edward B. Rock (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Marcel Kahan

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6268 (Phone)
212-995-4341 (Fax)

European Corporate Governance Institute ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Paper statistics

Downloads
118
Rank
200,898
Abstract Views
1,141