An excellent read for short and sweet analysis of directors' legal risks:
Reducing Directors’ Legal Risk
from Harvard Business Review (online version)
April 2007
by Michael Klausner
The recent spate of shareholder lawsuits over option backdating has outside directors reflecting, once again, about their own liability risk. How vulnerable are they if, despite their honest oversight efforts, management breaks the law? The good news is that unless outside directors engage in self-dealing (which seems to have happened in some backdating cases), they are at far lower risk than most would imagine, and they can take steps to reduce their exposure even further . . .
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