bottom-line requirement in Delaware

2026Riley—a financial services firm—an Audit Committee tasked 102 See Marchand v. Barnhill, 212 A.3d 805, 821 (Del. 2019) (“Caremark does have a bottom-line requirement that is important: the board must make a good faith effort—i.e., try—to put in place a reasonable board-level system of monitoring and reporting.”). 103 Id. 104 Caremark, 698 A.2d at 971 . 105 See supra notes 47-55 and accompanying text; Compl. ¶ 447 (quoting the Audit Committee’s charter, which charged the Committee with “carry[ing] out its oversight responsibility,” “review[ing] the Company’s policies with respect to risk assessm

2025Jan. 19, 2017)). 49 Marchand v. Barnhill, 212 A.3d 805, 821 (Del. 2019). 50 Id. 51 Id. at 824 . 15 existence of a system to some indicia of effectiveness when determining whether a board made the required good faith effort.52 This bottom-line requirement calls for a substantive analysis at the pleading stage.

2022As the Delaware Supreme Court recently reminded, “directors have great discretion to design context- and industry-specific approaches tailored to their companies’ businesses and resources.”97 Although a board has great latitude in crafting and implementing its risk-monitoring and reporting system, “Caremark does have a bottom-line requirement that is important: the board must make a good faith effort—i.e., try—to put in place a reasonable board-level system of monitoring and reporting.”98 To avoid rendering this bottom-line requirement “a chimera,”99 this court must look beyond the mere existe

2021But Caremark does have a bottom-line requirement that is important: 85 Stone v. Ritter, 911 A.2d 362, 370 (Del. 2006). 86 Id. 87 Reiter v. Fairbank, 2016 WL 6081823 , at *7 (Del.

2026These oversight mechanisms demonstrate that the Demand Majority did not “utterly fail[] to implement any reporting or information system or controls”—the exacting standard required to plead bad faith. 108 Indeed, a Caremark claim of this variety will fail where a plaintiff concedes the existence of an active audit committee, rather than alleging the company lacked one or that it devoted “patently inadequate time to its work.”109 The “existence of [such] board-level systems of monitoring and oversight[,]” including “a relevant committee” and “the board’s use of third-party monitors, auditors, o

2019As with any other disinterested business judgment, directors have great discretion to design context- and industry-specific approaches tailored to their companies’ businesses and resources.103 But Caremark does have a bottom-line requirement that is important: the board must make a good faith effort—i.e., try—to 101 Desimone v. Barrows, 924 A.2d 908, 935 (Del.