Wachtell Lipton's "Oversight and Compliance Reminder" imparts a number of key takeaways from a recent Delaware Supreme Court decision (Merchand v. Barnhill) and the DOJ's recently published guidance on corporate compliance programs (reported on here - see "DOJ"), neither of which made new law but both of which serve as important reminders of ordinary course expectations of directors that play out in the way of the company's processes, policies, reporting structures, resource allocations, and recordkeeping practices.
Among the key takeaways:
- Directors must identify key business risks, establish a system of board-level compliance monitoring and reporting to oversee the management of those risks, and make a good faith effort to ensure that the system is working effectively.
- Board minutes and - if relevant - board committee minutes, should reflect the board's oversight activities. If oversight is conducted by a committee (or multiple committees), processes and recordkeeping should encompass regular committee reports to the board and an appropriate level of full board review.
- Boards should have unfettered access to the company's compliance management - whose status, resources and autonomy should be commensurate with the importance of the role, and should ensure they are provided and act on (as appropriate) the types of information that enable effective oversight.
Access additional information & resources on these topics on our Director Duties & Liabilities, Compliance & Ethics, Corporate Secretary's Office, and DOJ Compliance & Enforcement pages. This post first appeared in the weekly Society Alert!