Corporation Law: The Business Judgment Rule in Derivative Suits against Directors

Galef v. Alexander, 615 F.2d 51 (2d Cir. 1980). The shareholders derivative suit is the principal means available to minority shareholders to correct abuses committed by corporate management. Recent federal court decisions have limited the availability of this action through application of the “business judgment” rule. This rule provides corporate management with a shield to protect their actions concerning the business affairs of the corporation from judicial scrutiny. Applied to a derivative action, the rule operates as a bar to the shareholder’s suit, provided the directors seeking its application do not “stand in a dual relation that prevents an unprejudiced exercise of judgment.” Application of the business judgment rule was the crucial issue confronting the court in Galef v. Alexander. Resolution of this issue was further complicated when Galef alleged violations of both state law and the federal proxy requirements of the Securities Exchange Act of 1934. This note evaluates the Galef court’s application of the business judgment rule and the impact of the court’s decision on the policies underlying the business judgment rule, and section 14(a) of the Securities Exchange Act of 1934

Evolution of a designed retro-aldolase leads to complete active site remodeling

Evolutionary advances are often fueled by unanticipated innovation. Directed evolution of a computationally designed enzyme suggests that dramatic molecular changes can also drive the optimization of primitive protein active sites. The specific activity of an artificial retro-aldolase was boosted >4,400 fold by random mutagenesis and screening, affording catalytic efficiencies approaching those of natural enzymes. However, structural and mechanistic studies reveal that the engineered catalytic apparatus, consisting of a reactive lysine and an ordered water molecule, was unexpectedly abandoned in favor of a new lysine residue in a substrate binding pocket created during the optimization process. Structures of the initial in silico design, a mechanistically promiscuous intermediate, and one of the most evolved variants highlight the importance of loop mobility and supporting functional groups in the emergence of the new catalytic center. Such internal competition between alternative reactive sites may have characterized the early evolution of many natural enzymes