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It's in the bylaws of the corporation typically. Feduce duty lawsuits are very common and it certainly isn't a "myth".

by nceqs3 5y ago

pydry 5y ago
Within some constraints you can put whatever you want in your corporation's bylaws when you found it, including a directive not to make a profit should you so choose.
WillPostForFood 5y ago
Can you give an example of a company with it their bylaws? I’ve never seen it, and Facebook doesn’t. https://s21.q4cdn.com/399680738/files/doc_downloads/governance_documents/2019/Facebook-Amended-Restated-Bylaws.pdf https://s21.q4cdn.com/399680738/files/doc_downloads/governan...
- adventured 5y ago
  It's absolutely not typically in the bylaws of corporations, that they must seek to optimize for profit. The parent comment dances around the language of the premise. It's extraordinarily rare to put anything remotely close to that in the bylaws, because it's a super dumb way to set yourself up for entirely unnecessary legal problems in the future. The lawsuits may happen, however they also almost never win.
- crznp 5y ago
  It isn't necessarily in the bylaws, it comes with being a director of a Delaware corporation. https://corpgov.law.harvard.edu/2020/03/10/directors-fiduciary-duties-back-to-delaware-law-basics/ https://corpgov.law.harvard.edu/2020/03/10/directors-fiducia...
  - pydry 5y ago
    Profit isnt even mentioned there. Which paragraph were you referring to?
skybrian 5y ago
The myth part is that fiduciary duty != maximizing profits. There’s no quantity that you have to take a maximum of. You can’t spend the shareholder’s money on things that can’t be justified as business expenses, but that doesn’t keep companies from buying corporate jets or spending money on high-end travel. Or even just paying people more than they’re worth. Who’s to say what they’re worth? This is a special case where saying “business judgement rule” might not be enough to get Facebook out of trouble, though I’m sure Facebook’s lawyers will dispute that.
pyrrhotech 5y ago
Also, paying $5B to bail out your CEO and focusing on maximizing long term shareholder returns are far from mutually exclusive. Shareholders should be looking beyond a quarterly earnings report

It's in the bylaws of the corporation typically. Feduce duty lawsuits are very common and it certainly isn't a "myth".

by nceqs3 5y ago

It's in the bylaws of the corporation typically. Feduce duty lawsuits are very common and it certainly isn't a "myth".

Within some constraints you can put whatever you want in your corporation's bylaws when you found it, including a directive not to make a profit should you so choose.

WillPostForFood 5y ago

Can you give an example of a company with it their bylaws? I’ve never seen it, and Facebook doesn’t. https://s21.q4cdn.com/399680738/files/doc_downloads/governance_documents/2019/Facebook-Amended-Restated-Bylaws.pdf https://s21.q4cdn.com/399680738/files/doc_downloads/governan...

adventured 5y ago
It's absolutely not typically in the bylaws of corporations, that they must seek to optimize for profit. The parent comment dances around the language of the premise. It's extraordinarily rare to put anything remotely close to that in the bylaws, because it's a super dumb way to set yourself up for entirely unnecessary legal problems in the future. The lawsuits may happen, however they also almost never win.
crznp 5y ago
It isn't necessarily in the bylaws, it comes with being a director of a Delaware corporation. https://corpgov.law.harvard.edu/2020/03/10/directors-fiduciary-duties-back-to-delaware-law-basics/ https://corpgov.law.harvard.edu/2020/03/10/directors-fiducia...
- pydry 5y ago
  Profit isnt even mentioned there. Which paragraph were you referring to?

skybrian 5y ago

The myth part is that fiduciary duty != maximizing profits. There’s no quantity that you have to take a maximum of. You can’t spend the shareholder’s money on things that can’t be justified as business expenses, but that doesn’t keep companies from buying corporate jets or spending money on high-end travel. Or even just paying people more than they’re worth. Who’s to say what they’re worth? This is a special case where saying “business judgement rule” might not be enough to get Facebook out of trouble, though I’m sure Facebook’s lawyers will dispute that.

pyrrhotech 5y ago

Also, paying $5B to bail out your CEO and focusing on maximizing long term shareholder returns are far from mutually exclusive. Shareholders should be looking beyond a quarterly earnings report