---
title: "\"Mission Critical\" Issues and… | Insights — Lyoen & Partners"
url: https://lyoenandpartners.com/insights/mission-critical-issues-and-red-flags-what-it-means-for-a-board-to-exercise-oversight
description: "Published 22 September 2022, setting out the two-prong Caremark test verbatim and recording that Delaware courts have allowed an increasing number of such…"
lang: en-US
---

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Thursday, September 22, 2022risk

# "Mission Critical" Issues and "Red Flags": What It Means for a Board To Exercise Oversight

Published 22 September 2022, setting out the two-prong Caremark test verbatim and recording that Delaware courts have allowed an increasing number of such claims to survive dismissal, quoting a decision that they "once rarities have in recent years bloomed like dandelions after a warm spring rain". The Boeing 737 MAX claim survived where the board did not monitor or discuss airplane safety regularly, had no protocol for receiving safety updates and treated the first crash as an anomaly and a public relations problem; claims were dismissed in June 2022 where a board had a standing safety committee meeting five times a year receiving extensive management reports. The stated legal test is process rather than outcome, "whether the board made a good faith effort to put in place a reasonable board-level system", with an instruction to document that effort in sufficient detail given the frequency of books and records demands.

Sources

Skadden, Arps, Slate, Meagher and Flom LLP (https://www.skadden.com/insights/publications/2022/09/the-informed-board/mission-critical-issues-and-red-flags)

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