Corporate Governance 2026 Comparisons

The principal forms of business organisations in the United States (USA or US) are corporations, partnerships and limited liability companies (LLCs), which are all formed under state law.

Corporations

Corporations are separate legal entities owned by shareholders and governed by a board of directors, which oversees management and delegates day-to-day operations to officers. Shareholders generally have limited liability. Corporations are the most common vehicle for public companies, and are formed by filing a certificate or articles of incorporation with the relevant state authority.

For tax purposes, corporations are classified as C corporations or, if statutory requirements are satisfied, S corporations. C corporations are subject to entity-level taxation, whereas S corporations are pass-through entities (ie, tax transparent) with significant ownership and structural restrictions. Many states also permit variations, such as public benefit corporations and statutory close corporations. A public benefit corporation is organised for the purpose of a public benefit rather than for the primary purpose of enhancing shareholder value, while statutory close corporations have relatively fewer governance formalities.

Although corporations have more structural requirements than other entity forms, they represent the most common form for entities that have a formal management structure and are or intend to become publicly traded, as they provide a predictable and recognised legal structure, with limited liability for shareholders and perpetual existence.

Partnerships

Partnerships may be formed as general partnerships or limited partnerships. In a general partnership, partners typically share management authority and unlimited liability. Limited partnerships consist of one or more general partners with management authority and unlimited liability, and limited partners whose liability is generally limited to their investment and who typically do not manage the business. Partnerships are generally taxed as pass-through entities.

Limited Liability Companies

LLCs combine the limited liability protection of a corporation with flexible management and contractual freedom. They may be member-managed or manager-managed, as provided in the operating agreement, and may elect entity-level taxation or pass-through taxation. LLCs have fewer governance formalities than corporations, and fewer ownership restrictions. An LLC is formed by one or more members, by filing a certificate of formation with the secretary of state.

Sources of Corporate Governance Requirements

The United States does not have a single, unified corporate governance code. Governance requirements arise from a combination of state law and an entity’s organisational documents, federal securities laws, stock exchange listing standards, and proxy adviser and institutional investor voting policies.

State corporate law governs entity formation, internal governance, fiduciary duties and shareholder rights. Most public companies are incorporated in Delaware, whose General Corporation Law provides a mix of mandatory rules and default provisions that may be modified through an entity’s governing documents (for a corporation: a certificate or articles of incorporation, bylaws and any shareholders’ agreements). Many other states base their legislation and interpretation on Delaware law, but variations exist and the corporate governance laws of certain states, namely Nevada and Texas, are evolving to attract corporate domicile.

A general partnership and limited partnership are governed by a partnership agreement, and an LLC is governed by an LLC operating agreement.

Federal securities laws – including the Securities Exchange Act of 1934 (the Exchange Act), the Sarbanes-Oxley Act and the Dodd-Frank Act – impose disclosure-based governance requirements on public companies, and regulate matters such as audit committee composition, executive compensation disclosure and internal controls.

Stock exchange listing rules of the New York Stock Exchange (NYSE), Nasdaq and, more recently, the Texas Stock Exchange (which has roughly similar requirements) impose substantive governance requirements as a condition of listing, including regarding director independence, committee structures and codes of conduct.

Voting policies and best-practice guidelines issued by proxy advisory firms, institutional investors and governance organisations (such as the National Association of Corporate Directors and the Business Roundtable) are not legally binding but historically have materially influenced governance practices and shareholder voting outcomes.

Corporate Governance Requirements for Publicly Traded Companies

Public companies are subject to extensive governance requirements that exceed those applicable to private companies. These requirements are primarily mandatory and arise from federal securities laws and stock exchange listing standards, and are subject to limited exemptions.

Board composition and independence

Listed companies must maintain a board with a majority of independent directors. Independent committees are required for audit and compensation matters, and NYSE-listed companies must also maintain an independent nominating and corporate governance committee.

Audit committee

Audit committees must consist entirely of independent directors, who must meet enhanced financial literacy and independence standards. The audit committee has sole authority over the appointment, compensation and oversight of the independent auditor, and must oversee financial reporting and compliance processes.

Compensation committee

Compensation committees must be independent, operate under a written charter and have authority to retain independent compensation advisers, subject to independence assessments.

Ethics and governance guidelines

Listed companies must adopt codes of conduct, and NYSE-listed companies must publicly disclose corporate governance guidelines addressing board structure, succession and evaluation. The NYSE also requires its listed companies to perform annual self-evaluations of the board and mandatory committees.

Executive compensation and shareholder voting

Public companies must provide detailed executive compensation disclosure in their proxy statements and conduct advisory say-on-pay votes at prescribed intervals under the Dodd-Frank Act. This includes:

• a Compensation Discussion and Analysis (CD&A) section describing the company’s compensation philosophy and process;
• detailed tabular disclosure of compensation paid to named executive officers;
• pay ratio disclosure comparing CEO compensation to median employee compensation; and
• pay versus performance disclosure showing the relationship between executive compensation actually paid and the company’s financial performance.

Shareholder meetings

Public companies are required to hold annual shareholder meetings and comply with state law and proxy disclosure requirements in connection with proxy solicitations.

Statutory and listing requirements are mandatory. Proxy adviser policies and investor governance expectations are voluntary but have historically exerted significant practical influence.

Nasdaq’s 23/5 Stock Trading

In April 2026, the SEC approved Nasdaq’s proposal to expand trading hours to 23 hours a day, five days a week. Nasdaq targets a late 2026 launch for this proposal. The expansion of trading hours raises several practical considerations for listed companies, and corporate governance practices may change as a result of the market changes.

Vacated Board Diversity and Stayed Climate Disclosure Rules

In 2024, Nasdaq’s board diversity disclosure rules were judicially invalidated and have been removed. Separately, in March 2024, the SEC adopted climate disclosure rules for public companies but is now rescinding them in the face of judicial challenge. Neither set of rules is currently in effect.

In US corporations, the principal governing and managing bodies are the board of directors, board committees, officers and shareholders. The board holds ultimate responsibility for oversight and strategy, while officers manage day‑to‑day operations under delegated authority. Committees perform specialised oversight functions. State law generally permits, and corporate charters typically authorise, the board to delegate any of its powers to a committee of directors. Boards may also establish special-purpose committees (eg, a transaction committee for strategic transactions or a special litigation committee for derivative litigation) and delegate oversight responsibilities to them. Shareholders exercise limited governance rights, primarily through voting on fundamental matters, as further discussed in 2.2 Types of Decisions.

LLCs and partnerships are governed according to their operating or partnership agreements, with management authority vested in members, managers or general partners, as applicable.

For a discussion of the different entities and their respective foundations for governance, see 1.1 Corporate Forms and Governance Requirements.

Decisions Made by Governing/Managing Bodies

Boards of directors, including committees to which authority is delegated, approve major corporate actions, including mergers, significant financings, equity issuances, executive appointments, strategic plans and dividend declarations. Generally, decisions reserved for the board include:

• amending the certificate of incorporation and bylaws;
• issuing stock and granting equity;
• recommending actions to shareholders;
• filling vacancies on the board;
• approving a merger agreement or other material transactions, including engaging in a sale or distribution of all or substantially all of the company’s assets, borrowing or lending material amounts of money, declaring dividends, approving the company’s strategic direction, adopting an annual budget and financial objectives, appointing and establishing compensation or terminating the CEO and other senior officers;
• establishing board committees;
• delegating authority to officers and committees and others;
• adopting employee benefit plans;
• adopting significant corporate policies and major changes in accounting principles;
• retaining and overseeing the independent auditor; and
• indemnification.

Officers manage routine business operations.

Shareholders make decisions on certain key matters, including:

• director elections and removal;
• amendments to the certificate of incorporation and bylaws;
• fundamental corporate transactions (eg, mergers, sales of substantially all assets, acquisitions, dissolution);
• advisory votes on executive compensation;
• equity compensation plans; and
• auditor ratification.

LLC and partnership decision-making authority may be customised extensively by contract.

Boards and board committees act through resolutions adopted at meetings or by written consent, subject to quorum and voting requirements set by law and governing documents. Decisions are documented in meeting minutes prepared by the corporate secretary of the meeting. A majority of directors present at a meeting at which a quorum is present is typically required, unless bylaws specify otherwise. The board can also act by execution of unanimous written consents.

Officers act under delegated authority.

Shareholders act through meetings or, where permitted by state law and organisational documents, written consents. Shareholders may also submit shareholder proposals, privately or publicly engage with the board and/or management, or obtain representation on the corporation’s board, either by nominating director candidates for election by shareholders or by agreement with the board.

LLCs and partnerships follow the procedures specified in their governing agreements, which generally require no meetings.

US companies employ a single‑tier board structure with board-established committees. Boards may be classified or elected annually, subject to state law and organisational documents. A classified, or staggered, board is composed of directors that have different overlapping, multi-year terms so that not all the directors’ terms expire in the same year, both providing continuity and making it harder to replace the entire board at once. Classified boards have become less common due to evolving views in the institutional investor community regarding governance best practices.

Directors owe fiduciary duties of care and loyalty, and are responsible for oversight of business risk, policy-making and strategic guidance. Boards commonly include management and independent directors. Their independence is critical for legal benefits and conflict of interest transactions, and directors are generally permitted to rely, within reason, on information provided by management and outside advisers in satisfying fiduciary duties.

Key leadership roles include the chair of the board and, where the chair is a member of management such as the CEO, a lead independent director. Boards typically operate through standing and special committees, as discussed in 1.3 Companies With Publicly Traded Shares.

US companies face a mix of requirements and recommendations regarding board composition, driven primarily by SEC disclosure rules, stock exchange independence and financial literacy (for audit committee) standards, proxy advisory firm or investor voting guidelines and evolving investor expectations.

SEC rules require public companies to disclose their directors’ backgrounds, qualifications and skills. Companies must also disclose whether the CEO and board chair roles are combined or separated, and the rationale for their structure. See 5.2 Corporate Governance Arrangement Disclosure for more detail.

See 1.3 Companies With Publicly Traded Shares for a detailed discussion of the NYSE and Nasdaq board and committee composition requirements, and 3.5 Independence of Directors regarding independence.

Directors are elected by shareholders and may be removed (generally only by shareholder majority vote) in accordance with state law and governing documents. Removal standards differ depending on whether the board is classified or non-classified. Under Delaware law, directors of non-classified boards may only be removed by shareholders (with or without cause), with no exceptions other than those in the statute. Under Delaware law, director vacancies can be filled by the shareholders or by board action, unless otherwise specified in the company’s certificate of incorporation or bylaws.

Director eligibility requirements are generally set by governing documents and applicable law, subject to additional criteria in some regulated industries.

Officers are appointed and removed by the board, subject to contractual protections in the officer’s employment agreement.

Stock exchange rules require public companies to determine director independence, and impose heightened standards for audit and compensation committee members. Under NYSE rules, no director qualifies as independent unless the board of directors affirmatively determines that the director has no material relationship with the listed company, either directly or as a partner, shareholder or officer of an organisation that has a relationship with the company. Nasdaq rules are similar, providing that a director may not be considered independent if the director has a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgement in carrying out the responsibilities of a director.

Each of the stock exchanges also includes explicit relationships and arrangements that disqualify a director from being independent, including directors or their immediate family members:

• employed by or paid above certain amounts from the company;
• employed by another company which makes/receives payments above certain amounts from the company;
• employed by the company’s auditor; or
• employed by another company for which at least one of the listed company’s officers serves on that company’s compensation committee.

The SEC and stock exchanges require each public company to have an audit committee composed entirely of independent directors, subject to certain exceptions, under Rule 10A-3 under the Exchange Act. Audit committee members must not accept any consulting, advisory or other compensatory fee from the listed company or its subsidiaries, nor be affiliated with the listed company or its subsidiaries (other than by virtue of his or her director role). In addition, Nasdaq precludes a director who participated in the preparation of the financial statements of the company or its subsidiaries in the past three years from serving on the audit committee.

In determining the independence of compensation committee members, the board of directors must consider all factors specifically relevant to determining whether the director has a relationship to the listed company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including the source of the director’s compensation (including any consulting, advisory or other compensatory fees paid by the company to the director) and any affiliate relationships between the director and the company or any of its subsidiaries.

Conflicts of Interest and Related Party Transactions Rules

The stock exchanges require the audit committee, or another independent board committee, to:

• review and evaluate all related party transactions for potential conflicts of interest;
• oversee related party transactions; and
• prohibit any related party transaction if it is determined to be inconsistent with the interests of the company and its shareholders.

SEC rules require companies to disclose related party transactions, subject to certain minimum criteria, in which a related party has a direct or indirect material interest, and any related party transaction where its policies and procedures either did not require review, approval or ratification, or were not followed.

State law generally permits shareholders to challenge director-conflicted transactions as breaches of the duty of loyalty. To mitigate this risk, most states have enacted safe harbour provisions that shield such transactions from per se voidability when at least one of the following three conditions is satisfied:

• full disclosure of conflict-related material facts to the board, followed by approval from disinterested directors;
• full disclosure of conflict-related material facts to the shareholders, followed by approval from disinterested shareholders; or
• establishing that the transaction is fair to the corporation.

Delaware law, as amended in 2025, provides that transactions involving conflicted directors or officers or involving controlling shareholders, other than going-private transactions (which must satisfy a more stringent set of safe harbour procedures), can be protected from both equitable relief and damages liability if they are either approved by an independent board committee consisting of at least two non-conflicted directors, or approved or ratified by a majority of the votes cast by the corporation’s non-conflicted shareholders.

Directors and officers of US companies owe the core fiduciary duties of the duty of care and the duty of loyalty to the corporation and its shareholders. Other duties, such as the duties of good faith, confidentiality, candour, oversight and obedience of officers, are generally treated as obligations that stem from the fiduciary duties of care and loyalty.

Duty of Care

The duty of care involves responsible decision-making and ongoing oversight of corporate activities. Directors and officers must be fully and adequately informed, and must act in good faith, in a considered manner with the care that an ordinarily prudent person would exercise in a similar position and under similar circumstances. This includes making informed decisions, conducting reasonable inquiry as circumstances warrant, and relying appropriately on information from officers, employees and experts, unless the director has knowledge that reliance is unwarranted. The business judgement rule generally protects unconflicted directors and officers from liability for decisions made in good faith and with reasonable care.

Duty of Loyalty

Directors and officers must place the best interests of the corporation and its shareholders above their own or those of another stakeholder (different standards apply for public benefit corporations). Directors and officers must avoid:

• causing harm to the corporation;
• usurping corporate opportunities;
• engaging in conflicts of interest;
• competing with the corporation without proper approval;
• favouring one group of shareholders over another; and
• violating the law.

In Delaware, directors must make good-faith efforts to oversee the corporation’s operations through the implementation and monitoring of a board-level information and reporting system designed to keep the board informed of critical risks.

Business Judgement Rule

To permit directors to take reasonable risks for the benefit of the corporation, the business judgement rule presumes that disinterested and independent directors act on an informed basis and in the honest belief that the action was taken in the best interest of the corporation, unless a plaintiff can show that a majority of the directors did not meet the requirements that each director must:

• keep informed about the corporation and its decisions;
• act in good faith; and
• reasonably believe that the action or transaction was made in the best interest of the corporation.

If directors have fulfilled their duties of care and loyalty, their decisions will generally be protected by the presumption of the business judgement rule. However, if a plaintiff satisfies the burden of showing that directors failed to discharge the duty of care or the duty of loyalty, the board could lose the protections of the business judgement rule and its actions could be subject to a higher standard of judicial scrutiny.

In Delaware and many other states, similar fiduciary duties are typically owed by the partners in a general partnership, the general partners in a limited partnership and the managers or managing members, as applicable, in an LLC. However, Delaware and certain other states permit these duties to be limited or eliminated entirely in organisational documents.

Directors owe duties to the corporation and its shareholders. In insolvency, creditors replace shareholders as primary beneficiaries of duties and gain derivative standing as there is no direct duty to creditors. Directors of public benefit corporations must balance shareholder interests with specified public benefits and stakeholder considerations.

A breach of fiduciary duties can be enforced by shareholders through derivative actions, the corporation itself and, in certain cases, regulatory authorities such as the SEC.

Consequences of a breach may include:

• recovery of damages, depending on the nature of the breach and available protections;
• disgorgement of profits gained through improper use of their position or corporate assets;
• equitable remedies, such as injunctions to prevent harmful actions or rescind conflicted transactions;
• removal from office;
• bar from future service; and
• criminal and civil penalties.

See 3.6 Legal Duties of Directors/Officers regarding the primary standards of judicial review of board conduct.

Directors and officers may face claims for breach of fiduciary duty, statutory claims and regulatory enforcement, which may result in civil or criminal penalties, such as for federal securities law violations or ERISA violations. In bankruptcy, trustees or creditors may pursue claims against directors and officers for breaches of duty or fraudulent transfers.

Limiting Director/Officer Liability

Delaware law provides multiple mechanisms to limit director and officer liability.

Exculpation

The Delaware General Corporation Law allows corporations to include exculpatory provisions in their certificates of incorporation eliminating or limiting personal liability of directors and officers to the corporation or its shareholders for monetary damages for breaches of the duty of care but not for breaches of the duty of loyalty, acts or omissions committed in bad faith or involving intentional misconduct or knowing violations of law, transactions in which the director or officer received an improper personal benefit, or liabilities for payment of unlawful dividends or unlawful stock purchases or redemptions. This provision does not eliminate the underlying breach, meaning the court can still issue an injunction to provide relief. In addition, officers may not be exculpated for claims brought by or in the right of the corporation (ie, derivative actions).

Indemnification

Delaware law authorises corporations to indemnify and advance expenses to directors and officers if they act in good faith and in the best interests of the corporation with no reasonable cause to believe their behaviour was unlawful. Indemnification is not exclusive, and companies may expand indemnification rights beyond statutory minimums, though the enforceability of provisions exceeding state law limits remains unclear. However, indemnification has significant limitations in bankruptcy contexts, and federal securities laws prohibit indemnification or insurance for liabilities arising from fraud or intentional misconduct.

D&O insurance

Delaware law permits corporations to purchase insurance covering any liability asserted against directors or officers in their status as such, whether or not the corporation has power to indemnify them for the liability. D&O insurance is subject to limitations, such as exclusions for fraud or intentional misconduct, and may be affected by the financial health of the corporation (eg, bankruptcy).

Approvals Requirements

For US companies, remuneration, fees or benefits payable to directors and officers generally require approval by the board of directors, often delegated to the compensation committee.

In Delaware, board decisions regarding executive compensation are generally protected by the business judgement rule. However, a conflict of interest resulting in the application of the entire fairness standard may arise where directors approve compensation arrangements for themselves or for officers that are controlling shareholders of the corporation, requiring directors to demonstrate that the compensation was both procedurally and substantively fair to the corporation and its shareholders. Under this standard, directors face potential liability for breach of fiduciary duty, waste and unjust enrichment claims.

Shareholder approval is required for certain equity compensation plans and performance-based compensation arrangements (and material amendments to such arrangements) by stock exchange rules and federal securities laws, and failure to comply can result in:

• liability for directors and officers;
• invalidation of compensation arrangements;
• shareholder litigation;
• violation of exchange listing requirements; and
• regulatory enforcement actions.

Disclosure Requirements

US public companies are required to make extensive disclosures regarding compensation, fees and benefits payable to directors and officers, primarily under SEC rules and federal securities laws. Specifically, US public companies must disclose the compensation of their named executive officers (generally the CEO, CFO and three other most highly compensated executive officers) and directors in the company’s annual meeting proxy statement and the items listed below.

• Summary Compensation Table: three-year table for named executive officers showing salary, bonus, equity, non-equity incentives, pension value changes, deferred compensation earnings, other compensation and total compensation, plus narrative.
• Director Compensation Table: prior fiscal-year table showing each director’s cash, equity and other compensation, plus narrative.
• Pay Ratio Disclosure: disclose the CEO-pay to median employee-pay ratio, subject to limited exemptions.
• Pay for Performance: provide the required five-year pay-versus-performance table and narrative describing how compensation paid relates to performance.
• Hedging Disclosure: state whether directors, officers or employees may hedge company securities received as compensation.
• Potential Payments on Termination or Change in Control: describe circumstances triggering CEO termination or change-in-control payments, and provide estimated payouts.
• Nasdaq: disclose material terms of director/nominee compensation, including third-party payments.

Additional required disclosures include:

• Compensation Committee Report;
• executive compensation tables and related narrative (equity/bonus grants, year-end outstanding awards, option exercises and vested awards);
• pension and non-qualified deferred compensation;
• risk and overall compensation disclosure; and
• clawback disclosure.

See 1.3 Companies With Publicly Traded Shares for discussion of required CD&A.

The discussion below focuses on corporations, rather than other entity types. See 1.1 Corporate Forms and Governance Requirements and 2.2 Types of Decisions for further discussion.

Shareholders are the ultimate owners of a company. They vote on director elections and other fundamental matters required by law, and generally do not owe fiduciary duties to the company or other shareholders. However, a controlling shareholder, as determined under applicable state law, may owe fiduciary duties under certain circumstances (traditionally, in connection with an interested transaction), the scope of which varies by jurisdiction.

As further discussed in 1.2 Corporate Governance Legislation and Regulation, the relationship is governed by state corporate law, the company’s governing documents (including the certificate of incorporation, bylaws and shareholders’ agreements) and federal securities laws. These sources define key rights, including fiduciary duties and economic, voting and information rights, as well as related procedures. Public companies are also subject to additional rules and regulations, including federal proxy rules, exchange listing standards and other federal laws, such as Sarbanes-Oxley.

A complete shareholder list is generally not publicly available. Companies are typically required by state law to maintain a stock ledger and to permit shareholders to inspect it for proper purposes. For public companies, certain ownership information – such as beneficial owners of more than 5% and insider holdings – is disclosed through regulatory filings with the SEC.

Shareholders generally do not manage a company; management authority is vested in the board of directors and officers. Shareholders participate in governance in limited ways, and primarily exercise their governance rights through:

• electing directors;
• nominating board candidates (subject to any applicable advance notice requirements);
• voting on fundamental transactions (eg, mergers, charter amendments); and
• submitting proposals (including under SEC Rule 14a-8 for public companies).

Shareholders may negotiate for additional governance rights by contract, subject to compliance with applicable law. For example, Delaware law expressly permits shareholders’ agreements that restrict or direct corporate action, provided they are consistent with the certificate of incorporation and applicable law.

Shareholders may also influence management through private engagement with the board or through public campaigns, both of which are common strategies of activist investors.

Annual meetings are generally required under state law and, for public companies, under exchange listing standards. Special meetings may be held to address matters arising between annual meetings, such as mergers or charter amendments.

State law and the company’s governing documents establish the framework for meetings, including the following.

• Calling the meeting: typically by the board or designated officers. Shareholders may have limited, or no, ability to call special meetings.
• Notice: timing and delivery requirements are set by state law and the company’s governing documents (eg, Delaware generally requires ten to 60 days’ notice for annual meetings).

• Record date: determines which shareholders are entitled to vote.
• Quorum: usually a majority of outstanding voting shares, unless otherwise specified in the governing documents (subject to any statutory or listing minimums).

• Agenda and proposals: set by the board. Shareholder proposals and nominations must comply with any applicable advance notice bylaws (which most public companies have adopted).
• Proxy solicitation: governed by the federal proxy solicitation rules for public companies, including disclosure and anti-fraud requirements.
• Voting standards: set by state law and the company’s governing documents. Typically, plurality for director elections and majority (or higher) thresholds for fundamental transactions.
• Conduct of the meeting: the chair sets procedures for participation and order.
• Inspector of elections: Delaware law requires public companies to appoint an inspector of elections to oversee voting and certify results.

In Delaware, shareholders have the right to act by written consent without a meeting, unless action by written consent is prohibited by a company’s certificate of incorporation. In practice, many public companies prohibit shareholder action by written consent (with common exceptions for companies with controlling shareholders at the time of the IPO, where action by written consent may provide administrative convenience).

Shareholders may bring claims primarily against directors for breach of fiduciary duty, including derivative claims and direct claims.

• Derivative claims (on behalf of the company) are brought for harm to the corporation and recovery flows to the company (eg, misappropriation of assets, overpayment, dilution or oversight failures). These claims require compliance with procedural requirements, including demand on the board or pleading demand futility. In 2025, Texas authorised Texas-incorporated companies to impose a minimum ownership requirement (not to exceed 3%) to bring a derivative claim, which has recently been upheld by a Texas federal court.
• Direct claims (on behalf of the shareholder) are brought for personal harm distinct from the corporation or other shareholders (eg, inadequate merger consideration, voting interference, disclosure violations or other individualised harm). These claims do not require a pre-suit demand.

Additional remedies may include:

• appraisal rights, allowing dissenting shareholders to seek judicial determination of fair value of their shares in certain transactions – the availability of appraisal rights and the requirements to exercise such rights vary by state; and
• oppression claims for minority shareholders in closely held corporations, which are available in certain states.

Disclosure Obligations for Shareholders in Publicly Traded Companies

The primary public disclosure obligation for shareholders of public companies arises under Section 13 of the Exchange Act, which requires the filing of a Schedule 13D (or a shorter form 13G) for beneficial owners of more than 5% of a class of equity securities. A Schedule 13D is due within five business days of crossing the ownership threshold and requires robust disclosures, including:

• ownership details;
• purchase history;
• a description of the shareholder’s plans or proposals for the company; and
• any contracts relating to the securities.

Amendments are due within two business days to report any material change in facts, including any ownership change of 1% or more. Certain holders – primarily certain institutional investors, passive owners and pre-IPO owners – are eligible to file a shorter form Schedule 13G. 

Additional disclosure obligations for public company shareholders include the following.

• Section 16 Reports (Forms 3, 4 and 5): directors, officers and holders of more than 10% must file forms reporting transactions in the issuer’s securities. These filers are also subject to short-swing profit rules, generally requiring disgorgement of profits derived from matchable purchases and sales within a six-month period.
• Federal proxy rules apply to solicitations of public company shareholders (whether by management or by shareholders), including disclosure of participants and their interests in the matter.
• Form 13F and Form N-PX: institutional investment managers exercising investment discretion over USD100 million or more of Section 13(f) securities (generally, listed securities and ETFs) must disclose holdings (and their values) quarterly, and “say on pay” proxy voting records annually.

In addition, shareholders may have disclosure obligations to regulators, depending on the nature, size and industry of the investment and the issuer. For example, shareholders may need to report certain acquisitions of voting securities to antitrust authorities prior to consummation if the transaction value and size of the investor and issuer exceed certain thresholds. Foreign shareholders may also need to seek approval from the Committee on Foreign Investments in the United States (CFIUS) for certain acquisitions.

Schedules 13D and 13G require disclosure of beneficial ownership above 5%, and the federal proxy rules require disclosure of beneficial ownership if a public company shareholder is engaging in a proxy solicitation. A beneficial owner of a security is any person who has direct or indirect voting or investment power over the security.

Public companies are subject to certain ongoing reporting requirements under federal securities laws, which require them to file annual reports (including audited financial statements for fiscal year periods) and quarterly reports (including unaudited financial statements for interim periods), as well as current reports related to certain events deemed material to investors. As noted in 4.3 Shareholder Meetings, public companies are also subject to federal securities laws related to the solicitation of proxies for shareholder votes, which require them to file proxy statements related to their annual shareholder meetings. These filings are available on the SEC’s website and must also be made available on the public company’s website.

Furthermore, on 5 May 2026, the SEC published proposed rules that would give public companies the option to elect annually whether to file a semi-annual report covering its half-year interim results in lieu of quarterly reports. The proposed rules will be subject to a public comment period and potential amendment prior to any final approval.

Public companies are required to disclose detailed information related to corporate governance in the proxy statements related to their annual shareholder meetings. Among other information, proxy statements must include:

• the names of the directors and their qualifications, experience and skills;
• the names of the directors who qualify as independent under applicable stock exchange and SEC rules;
• information regarding and certain reports from the audit, compensation and nominating committees of the board of directors, including their responsibilities and members;
• descriptions of the leadership structure of the board and its role in risk oversight;
• detailed information regarding the compensation of certain executive officers and the directors;
• the stock ownership of certain executive officers and the directors;
• descriptions of certain related party transactions; and
• information related to the company’s code of ethics, hedging policies, insider trading policies, compensation clawback policies and related party transaction policies.

Public companies are also required to disclose in a current report certain changes and other events related to corporate governance, including:

• changes in control of the company;
• changes in directors, certain officers and certain compensatory arrangements;
• amendments to the company’s organisational documents;
• amendments to and waivers of the company’s code of ethics; and
• voting results of shareholder meetings.

Applicable stock exchange rules require public companies to provide certain governance documents on their websites, including the charters of their audit, compensation and nominating committees, and, in the case of NYSE listed companies, their corporate governance guidelines and codes of the ethics. Public companies are also required to file their insider trading polices and compensation clawback policies, as exhibits to their annual reports.

As discussed in 1.1 Corporate Forms and Governance Requirements, companies are typically incorporated or organised at the state level. Companies are required to file their certificates of incorporation or equivalent organisational documents with the relevant Secretary of State (including any amendments to those documents), and most states require companies to make annual or biennial compliance filings providing certain fundamental company details (such as company name, business address, registered agent, and names of directors) to ensure the relevant government agencies have up-to-date information regarding the company. These documents and filings are typically available to the public.

The US Bank Secrecy Act (BSA) and its implementing regulations as promulgated by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) prescribe the US AML regulatory framework, including requirements for:

• AML programme implementation and maintenance;
• customer identification and due diligence; and
• recordkeeping and reporting.

However, these generally apply only to covered financial institutions (eg, banks, broker-dealers, money services businesses) and certain other entity types (eg, precious metals dealers, casinos, operators of credit card systems). As a general matter, US companies, other than the certain covered entities, are not subject to AML regulatory requirements.

Under federal banking regulators’ requirements, a bank’s board of directors must approve the bank’s AML programme (or provide authority to a designee for such approval). As a general matter, non-regulated company boards are required to provide the same oversight and guidance to AML risk issues as they are for other compliance risk areas. US law applicable to non-regulated entities is not prescriptive as to AML risk in this regard.

Liability for Non-Compliance

Directors can be exposed to personal liability if they fail to exercise good-faith oversight of a financial institution’s AML programme and compliance with the BSA and FinCEN regulations, or if they ignore red flags as to AML-related risks that could expose the company to liability under the BSA or FinCEN regulations, where AML compliance is a key risk area for the company (eg, in the case of banks, broker-dealers and other regulated entities).

Public companies are required by federal securities laws to have an independent auditor audit the financial statements included in their annual reports and provide an opinion as to whether such financial statements are fairly stated and comply in all material respects with US generally accepted accounting principles. In addition, the independent auditor must perform limited reviews of the interim financial statements included in a public company’s quarterly reports. For most public companies, the independent auditor is also required to review annually and report on the effectiveness of the company’s internal control over financial reporting (although certain newly public and smaller public companies are exempt from this last requirement).

In order to qualify as independent, an auditor must be capable of exercising objective and impartial judgement on all issues encompassed in the engagement with the public company, considering all relevant circumstances. Furthermore, applicable SEC rules set forth restrictions on specified financial, employment and business relationships between the auditor and the public company, and restrictions on the auditor providing certain non-audit services to the public company.

Under applicable stock exchange and SEC rules, the audit committee is responsible for the appointment, compensation and retention of the public company’s auditor, oversight of the auditor’s independence, and approval of all audit and permitted non-audit services. See 1.3 Companies With Publicly Traded Shares for further discussion of stock exchange audit committee requirements.

Geopolitical Risk Management and Internal Controls

In the US, there is no dedicated federal regulator for geopolitical risk, although certain federal agencies regulate foreign investment (Committee of Foreign Investment in the United States), manage sanctions (Office of Foreign Assets Control) and control exports (Bureau of Industry and Security).

Public companies are required to disclose in their annual reports the material risks impacting their business (which often include discussion of geopolitical risk exposure such as trade wars, sanctions, supply chain disruption and armed conflicts), and to disclose in the proxy statements for their annual meetings the board of directors’ role in the risk oversight of the company, how the board administers its oversight function, and the effect that this has on the board’s leadership structure. Public companies are also required to disclose in their annual reports the board’s oversight of risk from cybersecurity threats, any board committee responsible for oversight of these risks, and the processes by which the board or such committee is informed about these risks. Furthermore, the audit committees of NYSE listed companies are required to review the company’s policies with respect to risk assessment and risk management. Public companies’ approach to these requirements varies significantly based on various considerations, such as the business and size of the company, the materiality of such risks, and the relative investor and other stakeholder interest in such matters.

Public companies are also required to:

• maintain disclosure controls and procedures to ensure timely reporting of required information in accordance with federal securities laws; and
• maintain internal control over financial reporting to provide reasonable assurance regarding the reliability of the company’s financial reporting and the preparation of its financial statements in accordance with US generally accepted accounting principles. 

A public company’s principal executive and financial officers are responsible for designing and implementing these controls and, subject to certain exceptions for newly public companies, must certify annually as to the effectiveness thereof.

There are no specific ESG reporting requirements at the US federal level save for the continuing disclosure obligations mandated by the SEC conflict mineral disclosure rule promulgated in 2012. The Trump Administration has abandoned the SEC climate disclosure rule and recently proposed to formally rescind the rule, which will ultimately be the subject of litigation. As a result, public companies are currently obligated to disclose ESG risks, opportunities or performance information only if they fall within the scope of the SEC’s overall materiality disclosure requirement.

California has adopted two climate disclosure rules, and multiple states are considering similar rules. The Climate Corporate Data Accountability Act (SB 253) requires any public or private company that does business in California and has more than USD1 billion in global revenue to disclose annually its Scope 1 and 2 climate emissions to the State beginning on 10 August 2026 for calendar year 2025, and Scope 3 emissions beginning in 2027. An independent third party limited assurance review of the data is required and must be disclosed.

Greenhouse Gases

Climate-related financial risk (SB 261) requires any public or private company that does business in California with more than USD500 million in global revenue to prepare a climate financial risk report biannually, beginning on 1 January 2026, which is consistent with IFRS climate disclosure standards (TCFD) or the equivalent and is posted on the company’s website. On 18 November 2025, the US Ninth Circuit Court of Appeals stayed the rule pending its ruling on litigation challenging the legality of the rule. A decision is expected in the near term and also may have an effect on the scheduled implementation of SB 253.

The US ESG landscape reflects conflicting, uncertain and evolving developments on the federal, state and local levels. Most recent laws and regulations are embroiled in litigation with unclear outcomes and impacts. As a result of this uncertainty, state attorneys general and private litigants across the spectrum of ESG views have pursued lawsuits against voluntary standard setters, financial entities, rating agencies and companies relating to their ESG activities and statements. As a consequence, companies and organisations are increasingly reviewing their ESG strategies, reports, disclosures and statements carefully, to maximise business opportunities while minimising legal risks.

Federal

The federal government has largely withdrawn from the ESG regulatory space except for new prohibitions, restrictions and legal actions related to diversity and inclusion and guidance intended to discourage asset managers’ consideration of ESG in investment decisions. In addition to abandoning the SEC climate disclosure rule, the Trump Administration has reversed most of the Biden Administration funding for climate and related decarbonisation and electrification infrastructure, and has withdrawn climate mandates in federal procurement and policies.

USEPA has proposed reversing its previous endangerment finding that climate emissions endanger public health and the environment, requiring them to be regulated. This important determination will end up in the US Supreme Court, and in the interim will cause confusion and likely additional litigation regarding whether and who has the authority to regulate climate emissions. The Trump Administration has used various orders and other activities to enhance fossil fuel and coal production while opposing or denying permits for renewable projects, chilling the investment market for renewables. Finally, the Trump Administration has increasingly sought to sidestep mandatory environmental and sustainability review requirements before proceeding with major projects, which has created major controversies, litigation and uncertainty.

State

The states are deeply divided, with wildly divergent ESG approaches barring specific activities and legally challenging ESG in multiple jurisdictions while other states have imposed affirmative obligations. Further complicating matters, key state laws across the spectrum are mired in litigation. 24 states had adopted climate targets, led by California, which has created a USD54 billion California Climate Commitment, a cap and trade programme and climate disclosure rules. In contrast, many states adverse to ESG have advanced a patchwork of rules opposing climate measures, led by Texas, which adopted a law precluding any financial firm from doing business with Texas state entities if they boycott fossil fuels in their activities. A Texas federal court ruled earlier this year that the Texas law was unconstitutional.

Due in part to the unclear future of various pro and anti-state ESG laws, state attorneys general from both sides are increasingly pursuing legal action against companies and organisations, using antitrust, fraud and consumer protection theories. Similarly, states, municipalities and private litigants are bringing wide-ranging actions against companies, asserting damage due to unlawful contributions to climate problems, and are challenging company ESG reports and statements as false or misleading. The growing success in the range of ESG-related cases will likely spur further growth in such actions.

Local

In the absence of federal activity and agreement among states, municipalities have assumed an outsized role, advancing affirmative climate action. 300 mayors across the country have adopted the Paris Agreement goals. While there are significant differences in the focus of these efforts, they tend to involve one or more of the following:

• energy efficiency and building code requirements;
• renewable energy goals;
• transportation electrification and infrastructure;
• resilience and adaptation measures; and
• policy and financing tools.

Delaware law requires oversight of corporate risk, including risk from emerging technologies such as AI. Under general corporate and securities laws, publicly traded companies have to inform investors how they are affected by business opportunities and risks through technological advances, including related to AI. For example, cybersecurity risks increase significantly because threat actors leverage AI systems for ransomware and espionage attacks, and companies can also use AI systems to identify and cure vulnerabilities and protect themselves. Enterprises can leverage AI tools to generate custom software for their own use, which may reduce demand for standards software and affect vendors of SaaS and on-prem software, but software vendors can also leverage AI tools to reduce costs and customise software more effectively for customers.

Private sector companies remain largely free under US law to address AI use-related risks with governance frameworks they consider appropriate from a business perspective. Many companies have established multi-stakeholder governance committees and review processes spearheaded by legal and compliance departments. Some have designated Chief AI Officers.

Congress and several US states, including California, Colorado, New York, Texas and Utah, have enacted AI laws and regulations since 2024, with effective dates in 2026. The current US president has issued policy statements and executive orders opposing regulation.

Under California’s Transparency in Frontier Artificial Intelligence Act (TFAIA), a narrowly defined group of “large frontier developers” must adopt and publish a frontier AI framework, updated annually, that describes how the large frontier developer approaches:

• incorporating national standards, international standards and industry-consensus best practices into its frontier AI framework;
• defining and assessing thresholds used by the large frontier developer to identify and assess whether a frontier model has capabilities that could pose a catastrophic risk, which may include multiple-tiered thresholds;
• applying mitigations to address the potential for catastrophic risks based on the results of assessments;
• reviewing assessments and the adequacy of mitigations as part of the decision to deploy a frontier model or use it extensively internally;
• using third parties to assess the potential for catastrophic risks and the effectiveness of mitigations of catastrophic risks;
• revisiting and updating the frontier AI framework;
• cybersecurity practices, to secure unreleased model weights from unauthorised modification or transfer by internal or external parties;
• identifying and responding to critical safety incidents;
• instituting internal governance practices to ensure the implementation of these processes; and
• assessing and managing catastrophic risk resulting from the internal use of its frontier models, including risks resulting from a frontier model circumventing oversight mechanisms.

Frontier developers must report critical safety incidents to the California Office of Emergency Services and, in case of imminent risk of death or serious physical injury, also within 24 hours to appropriate authorities, including law enforcement or public safety agencies with jurisdiction, depending on the nature of that incident. Frontier developers must also publish transparency reports, disclosing the steps taken to fulfil the requirements of the frontier AI framework, intended uses, restrictions or conditions on uses, results of assessments of catastrophic risks, and other prescribed information. Large frontier developers must additionally submit risk assessments to the California Office of Emergency Services every three months.

Whistle-blowers are specifically protected by Cal. Labor Code §1107.1, which the California Legislature added via TFAIA. Frontier developers must not prevent employees from disclosing violations of TFAIA or certain risks and dangers to federal or state authorities, and must notify employees of their whistle-blowing rights. Large frontier developers must implement specific whistle-blower processes, and share disclosures and responses with officers and directors on a quarterly basis (excluding officers and directors who are specifically the subject of whistle-blower reports).

AI developers have been subject to class action lawsuits and government actions for allegedly:

• violating copyrights, privacy laws and computer interference laws for scraping and copying data for development purposes without required permissions;
• misleading customers and investors about AI capabilities and risks;
• discriminating against job applicants with biased systems; and
• launching defective products that induced violence, suicides and addiction.

Officers and directors are not normally personally liable for violations by their companies, unless they are directly involved in wrongdoing or completely neglect their supervisory duties.

Large AI developers must publish transparency reports and disclose critical safety incident reports under California’s Transparency in Frontier Artificial Intelligence Act and other state laws. Companies must also disclose certain details about AI-powered chatbots to consumers under state laws. Job applicants and employees must be informed about automated decision-making tools under a New York City ordinance and other state laws.