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Abstract

In 1985, the Maine Legislature enacted an amendment to section 716 of the Maine Business Corporation Act which added the following paragraph to the statute: “In discharging their duties, the directors and officers may, in considering the best interests of the corporation and of its shareholders, consider the effects of any action upon employees, suppliers and customers of the corporation, communities in which offices or other establishments of the corporation are located and all other pertinent factors.” This amendment, commonly referred to as a non-shareholder constituency provision, is seen by some as affecting no great change in Maine's corporate fiduciary duty law. Two significant events have occurred, however, since the passage of this amendment which support a far broader interpretation of Maine's non-shareholder constituency provision. First, in 1987 the Maine Legislature again amended section 716 by adding the following new section: A director shall not be held personally liable for monetary damages for failure to discharge any duty as a director unless the director is found not to have acted honestly or in the reasonable belief that the action was in or not opposed to the best interests of the corporation or its shareholders. This section, which creates a statutory business judgment rule, when read in conjunction with the non-shareholder constituency portion of section 716, could allow directors to consider non-shareholder constituencies ahead of shareholders and still qualify for coverage under the business judgment rule. Allowing directors to put the interests of non-shareholder constituencies ahead of shareholders without recourse effects a significant departure from "existing law. Second, in 1989 the U.S. District Court for the District of Maine decided Georgia-Pacific Corp. v. Great Northern Nekoosa Corp. Which interpreted section 716. The court stated "Maine law suggests that the Directors of a corporation, in considering the best interests of the shareholders and corporation, should also consider the interests of the company's employees, its customers and suppliers, and communities in which offices of the corporation are located." Although clearly an incorrect reading of the language of the statute, and dicta besides, this interpretation is significant in that it is the only published opinion interpreting Maine's non-shareholder constituency statute. Neither the Maine Legislature nor the Maine Supreme Judicial Court has refuted the Georgia-Pacific interpretation, which comes close to creating a duty on directors to consider non-shareholder constituencies. This interpretation represents a significant departure from Maine fiduciary duty law. When considering these two events, especially in terms of how they would influence a Maine court attempting to interpret section 716, it becomes harder to argue that Maine's non-shareholder constituency statute has affected no change in Maine fiduciary duty law. The purpose of this Comment is to examine Maine's non-shareholder constituency statute and predict its effects on corporate fiduciary duty law in Maine.

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