The Coinbase ruling underscores the pivotal role played by special litigation committees in derivative disputes, highlighting how they can influence the course of litigation even when board members face conflicts. By design, the SLC empowers selected directors to investigate the claim and decide whether to pursue, settle, or terminate the action, giving the derivative defendant a potent governance tool.
The decision highlights how independent SLC oversight can insulate the board from conflicts while shaping litigation strategy and outcomes. That control over investigation and recommendation can affect settlements, verdicts, and corporate governance reforms.
The ruling signals that SLCs will remain a central governance weapon in derivative actions. It could influence regulatory scrutiny and how companies structure oversight during disputes.
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