The Draft Restatement prescribes the composition and activities of boards of directors. Based on his experience as a member of several corporate boards, the author is convinced that these requirements would have a harmful impact on corporate governance.
The Draft Restatement impedes directors' responses to the corporation's needs by stipulating the number and role of independent directors and mandating monitoring activities, by requiring a "rational basis" for business judgments, and by relaxing procedural barriers to derivative suits. These formal requirements emphasize restraint at the expense of effective governance. The board of directors should remain free to meet the changing demands of the modern corporation.
Bryan F. Smith,
Corporate Governance: A Director's View,
37 U. Miami L. Rev.
Available at: http://repository.law.miami.edu/umlr/vol37/iss2/7