Assertion Supported AI assessment confidence: 95% certainty 5/5 debate potential 2/5

Locker: VC directors' fiduciary duty to common shareholders takes absolute priority

Nikki Locker · a16z Podcast | 'The Most Boring Yet Valuable' 20 Minutes, All About Board Minutes · Jan 2, 2019 · at 5:47

Nikki Locker, a securities litigation partner at Wilson Sonsini, discusses potential board conflicts of interest in venture-backed companies.

0:00 / 0:19exact quote · 19.1s

▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark

“Yes, they owe fiduciary duties to the common shareholders, and that takes priority and precedence over everything as a director, and therefore they must have a record that they Acted in conformity with their fiduciary duty to the common shareholders, and it's even, I mean, it's just critically important.”

quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →

The claim, plainly

Venture capital directors representing preferred shareholders owe a fiduciary duty to common shareholders that takes priority over all other considerations as a director.

a quote alone can be ambiguous, so this restates it with the references and context of the conversation around it resolved. AI-written; the tape below the player is the source.

Assessment

Nikki Locker's statement accurately reflects established Delaware corporate law precedent. Under Delaware General Corporation Law, corporate directors owe fiduciary duties of loyalty and care to the corporation and its ultimate residual claimants—the common stockholders. As established in In re Trados Inc. Shareholder Litigation (Del. Ch. 2009/2013) and reiterated in cases such as In re Nine Systems Corp. Shareholders Litigation (2014) and Frederick Hsu Living Trust v. ODN Holding Corp. (2017), when the economic or non-contractual interests of preferred stockholders conflict with those of common stockholders, directors (including preferred-designated or venture capital directors) must prioritize maximizing enterprise value for the residual common equity.

In re Trados Inc. Shareholder Litigation (Del. Ch. 2009, 2013) established that in conflict scenarios between preferred and common shareholders, directors' fiduciary obligations require them to act in the best interests of the common stockholders as the residual claimants.
In re Nine Systems Corp. Shareholders Litigation (Del. Ch. 2014) and Frederick Hsu Living Trust v. ODN Holding Corp. (Del. Ch. 2017) reaffirmed that preferred-appointed directors breach their fiduciary duty of loyalty if they orchestrate transactions or recapitalizations to favor preferred interests over common equity value.

Checked against

[1] wsgr.com [2] thomsonreuters.com [3] wyoleg.gov [4] justia.com [5] hunton.com [6] cooleyma.com [7] fenwick.com [8] potteranderson.com

Delaware fiduciary duty directors common shareholders preferred shareholders priority In re Trados Inc Litigation fiduciary duty common preferred Delaware corporate law

assessed as of 2026-08-27

This assessment is an AI reading of a public statement, made against the cited references with the confidence shown. It can be wrong. The quote, the tape and the references are all on this page; if something is off, use report an error below. full disclaimer →

Mentioned

common shareholders preferred shareholders

⚑ Spot an error? Report it

More from Nikki Locker

Assertion Supported

Locker: Private startups need board minutes just as much as public companies

“This applies the need for properly prepared minutes applies equally to privately held corporations and public companies, and that's not necessarily intuitive, and most people would actually ask and think, That properly prepared minutes are only needed at a pub…”

Nikki Locker Jan 2, 2019 ▶ 4:18 a16z Podcast | 'The Most Boring Yet Valuable' 20 Minutes, All About Board Minutes

Insight

Locker: Board minutes must explicitly document potential conflicts and legal counsel

“The board minutes ideally should recognize that the board recognized the potential conflict. Even better if a lawyer provided a discussion of their fiduciary duties in connection with a potential conflict.”

Nikki Locker Jan 2, 2019 ▶ 19:29 a16z Podcast | 'The Most Boring Yet Valuable' 20 Minutes, All About Board Minutes

Locker: VC directors' fiduciary duty to common shareholders takes absolute priority

More from Nikki Locker

Turn any episode into a week of clips.