Boards Cannot Delegate Accountability: Fiduciary Duties, Caremark Oversight, and the Age of AI-Mediated Authority
Abstract
This paper argues that directors may lawfully delegate operational functions, but cannot relinquish fiduciary accountability for the criteria by which corporate action is framed, prioritised, and supervised. As organisations embed discretion in persistent, decision-structuring infrastructure, including AI-enabled systems, the locus of fiduciary attention shifts upstream. Once such systems become operationally central and materially shape what decisions are realistically reachable, they cross a Delegation Threshold at which the architecture itself becomes legally consequential. Drawing primarily on Delaware corporate law and the Caremark oversight framework, while engaging English company law comparatively, the paper identifies five governance requirements for fiduciary compliance in this context: attributable authority, bounded scope, structured escalation and override capacity, operational reversibility, and sustained oversight against drift. The argument does not propose new liability standards. It clarifies where established duties attach when discretion is channelled through embedded systems and argues that Caremark litigation may become the principal pathway through which AI governance enters corporate fiduciary law.
Keywords
- AI governance
- corporate governance
- fiduciary duties
- board accountability
- Caremark doctrine
- oversight liability
- evaluative control
- delegation and abdication
- algorithmic decision-making
- risk management
- institutional responsibility
- governance architecture