Section 102(b)(7) of the Delaware General Corporation Law allows a corporation to eliminate or limit directors’ personal liability for certain monetary damages.
The provision works through the corporation’s certificate of incorporation: it permits an exculpation clause protecting directors from monetary liability for some breaches of fiduciary duty. Delaware adopted the provision in 1986, following the intense reaction to Smith v. Van Gorkom, a 1985 decision that found directors liable for inadequate care in approving a merger.
The protection is not unlimited. Section 102(b)(7) does not permit exculpation for breaches of the duty of loyalty, bad-faith conduct, intentional misconduct, knowing violations of law, improper personal benefits, or certain liabilities under Section 174. Modern amendments also address specified officer protections separately, so the phrase is most traditionally associated with directors.
Section 102(b)(7) is therefore not a blanket immunity statute. It primarily protects against monetary damages for duty-of-care claims when the corporation has adopted the required charter language. It does not prevent injunctions or eliminate fiduciary duties themselves.