There is a minor uproar over the recent Delaware decision that some suggest holds the directors of a Delaware corporation to a higher standard of corporate governance when the corporation’s business is in a foreign country. In a bench ruling declining to dismiss a derivative suit, the court said in In re Puda Coal Stockholders Litigation, Del. Ch. C.A. 6476-CS (February 6, 2013):
“If you’re going to have a company domiciled for purpose of its relations with investors in Delaware and the assets and operations of the company are situated in China that, in order for you to meet your obligation of good faith, you better have your physical body in China an awful lot. You better have in place a system of controls to make sure that you know that you actually own the assets. You better have the language skills to navigate the environment in which the company is operating. You better have retained accountants and lawyers who are fit to the task of maintaining a system of controls over a public company.”
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