Law Commons^™

Damning Dictum: The Default Duty Debate In Delaware, Mohsen Manesh

Mohsen Manesh

Bizarrely, today even the most sophisticated business lawyer cannot answer a seemingly simple question: whether, in the absence of an express agreement to the contrary, the manager of a Delaware limited liability company (LLC) owes traditional fiduciary duties to its members as a default matter? This was not always the case. Until recently, this question was settled—settled at least in the Delaware Court of Chancery. But in November 2012, the Delaware Supreme Court cast doubt on a long line of chancery court precedent in Gatz Properties v. Auriga Capital. Given the broad freedom of contract available under LLC law, it …

How To Sufficiently Consider Efficiency, Competition, And Capital Formation In The Wake Of Business Roundtable, Ian D. Ghrist

Ian D. Ghrist

This article applies ideas from the Law and Economics movement to the D.C. Circuit's 2011 decision in Business Roundtable v. Securities and Exchange Commission. The article lays out a framework for cost-benefit analysis that, if followed, should increase new rules' chances of surviving the heightened arbitrary and capricious review standard imposed by the National Securities Markets Improvement Act of 1996.

The Dodd-Frank Act comprises the broadest financial reforms since the 1930s. The Act, however, makes surprisingly few important decisions and instead, almost exclusively defers to agency rulemaking or the creation of a new organization. The Act mandates the promulgation of …

Defending Against Shareholder Proxy Access: Delaware's Future Reviewing Company Defenses In The Era Of Dodd-Frank, J.W. Verret

John W Verret

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has ensured that a shareholder’s ability to place nominees to the board onto the corporate ballot, an objective long advocated by the institutional investor community, will soon be implemented by the Securities and Exchange Commission. Advocates of proxy access urge that it will help hold boards of directors accountable to their owners. Critics argue that it will give conflicted shareholders, like unions and state pensions, power they will use to facilitate their political objectives at the expense of ordinary shareholders. The shareholder primacy and director primacy theories of corporate …

Hedge Funds’ Empty Voting In Mergers And Acquisitions: A Fiduciary Duties Perspective, Andrea Zanoni

Andrea Zanoni

Hedge funds have become lately active also in the market for corporate control. Their active involvement has been propelled by a tactic allowing them to decouple voting rights from economic ownership and labelled in the literature as “encumbered shares” or “empty voting”.

The aim of this Article is twofold. On the one hand, I address the impact of hedge funds’ activism on the financial markets and on the portfolio companies. In general terms, hedge funds’ activism should be seen as a neutral element. After a cost-benefit analysis, I show that the costs implied by hedge funds’ activism are at least …

The Love Song Of The Delaware Court Of Chancery, David K. Kessler

David K Kessler

Though corporate law can often seem dry and uninteresting, it is full of wonderful stories, complex characters, and powerful language. As such, the field of corporate law lends itself to the medium that has long best captured those elements: poetry. The attached document is an adaptation of T.S. Eliot’s The Love Song of J. Alfred Prufrock to the theme of corporate law. It has been enthusiastically received on the Harvard campus by former Law School Dean (and Corporations guru) Robert Clark and the Vice-Chancellor of the Delaware Court of Chancery, Leo Strine. I understand that this submission is far more …

The Sec And The Failure Of Federal Takeover Law, Steven Davidoff

Steven Davidoff Solomon

In this Article, I argue that the current federal takeover law is a failure. I do this by first exploding the commonly accepted academic myth of the federal government as an active regulator of takeovers. Rather, since the twilight of the 1980s, the SEC has abandoned its earlier presence as the nation's primary takeover regulator. The consequence of this abstention is that the federal takeover code has become obsolete. It oftentimes regulates incongruously, does not regulate important areas, or regulates in a manner inconsistent with the welfare of its relevant parties. Moreover, in the SEC absence the Delaware courts have …