Providing an Effective Remedy in Shareholder Suits Against Officers, Directors, and Controlling Persons

Corporate officers, directors, and controlling persons occupy a fiduciary relationship toward the corporation and its shareholders in the exercise of control over corporate affairs. This fiduciary obligation requires that officers, directors, and controlling persons act in good faith and perform their offices in the best interests of the corporation and its shareholders and not to their own advantage. When this duty is breached, a shareholder may bring an action against these fiduciaries, either in his own name or derivatively for the benefit of the corporation. Under present law, however, it may be impossible for an American court to secure jurisdiction over a foreign person occupying such a fiduciary relationship. Furthermore, even if a foreign fiduciary is subject to the jurisdiction of a domestic court, present law allows judgments against such persons to remain unsatisfied, unless the foreign defendant has assets in the United States apart from his interest in a domestic corporation.