Law Commons^™

End Delaware’S Corporate Dominance, Kent Greenfield

Kent Greenfield

Corporate Law In The Shanghai People's Courts, 1992-2008: Judicial Autonomy In A Contemporary Authoritarian State, Nicholas Howson

Nicholas Howson

In late 2005 China adopted a largely rewritten Company Law that radically increased the role of courts. This study, based on a review of more than 1000 Company Law-related disputes reported between 1992 and 2008 and extensive interactions with PRC officials and sitting judges, evaluates how the Shanghai People’s Court system has fared over 15 years in corporate law adjudication. Although the Shanghai People’s Courts show generally increasing technical competence and even intimations of political independence, their path toward institutional autonomy is inconsistent. Through 2006, the Shanghai Court system demonstrated significantly increased autonomy. After 2006 and enactment of the new …

When 'Good' Corporate Governance Makes 'Bad' (Financial) Firms: The Global Crisis And The Limits Of Private Law, Nicholas Howson

Nicholas Howson

In the aftermath of the global financial crisis of 2008–2009, investors, analysts, legislators, and pundits have spotlighted “good” or “improved” corporate governance as a remedy for all that presently ails us. It is one remedy in a long wish list that includes tougher requirements for risk capital, liquidity, and leverage; compensation and bonus reform; reimposition ofthe Glass-Steagall-like separation of bank “utility” and “casino” functions; the downsizing or breakup of institutions deemed “too big to fail;” enhanced consumer protection; securities law liability for secondary violators (like credit rating agencies); direct taxation of proprietary trading; “macroprudential” regulation; and new transparency requirements for …

The Meaning Of Hobby Lobby: Bedrooms, Boardrooms & Burdens, Anne Tucker

Anne Tucker

No abstract provided.

Contributor, Anne Tucker

Anne Tucker

No abstract provided.

The Non-Merger Virtual Merger: Is Corporate Law Ready For Virtual Reality?, Stuart Cohn

Stuart R. Cohn

The term virtual mergers describes the relatively recent phenomenon of companies entering into contractual arrangements that are functionally, but not legally, equivalent to mergers prescribed by corporate statutes. Virtual mergers usually involve the shared use of assets contributed by each of the companies. A central element of the transaction is that the two companies remain legally independent, each with its own directors, officers, and shareholders. The arrangements can usually be terminated by either party, allowing each company to return to the status quo ante or exercise buyout rights if contractually provided. Although virtual mergers have occurred among public companies in …

Bankruptcy Law As A Liquidity Provider, Kenneth Ayotte, David Skeel

Kenneth Ayotte

Since the outset of the recent financial crisis, liquidity problems have been cited as the cause behind the bankruptcies and near bankruptcies of numerous firms, ranging from Bear Stearns and Lehman Brothers in 2008 to Kodak more recently. This paper expands the prevailing normative theory of corporate bankruptcy — the Creditors’ Bargain theory — to include a role for bankruptcy as a provider of liquidity. The Creditors’ Bargain theory argues that bankruptcy law should be limited to solving problems caused by multiple, uncoordinated creditors, but focuses almost exclusively on the problem of creditor runs. We argue that two well-known problems …

Bankruptcy Or Bailouts?, Kenneth Ayotte, David Skeel

Kenneth Ayotte

The usual reaction if one mentions bankruptcy as a mechanism for addressing a financial institution’s default is incredulity. Those who favor the rescue of troubled financial institutions, and even those who prefer that their assets be promptly sold to a healthier institution, treat bankruptcy as anathema. Everyone seems to agree that nothing good can come from bankruptcy. Indeed, the Chapter 11 filing by Lehman Brothers has been singled out by many the primary cause of the severe economic and financial contraction that followed, and proof that bankruptcy is disorderly and ineffective. As a result, ad-hoc rescue lending to avoid bankruptcy …

Institutional Investors' Appetite For Alternatives, Christopher Geczy, Jessica Jeffers, David Musto, Anne Tucker

Anne Tucker

No abstract provided.

Institutional Investing When Shareholders Are Not Supreme, Christopher Geczy, Jessica Jeffers, David Musto, Anne Tucker

Anne Tucker

Institutional investors, with trillions in assets under management, hold increasingly important stakes in public companies and fund individual retirement for many Americans, making institutional investors’ behaviors and preferences paramount determinants of capital allocations and the economy. In this paper, we examine high fiduciary duty institutions' (HFDIs') response to decreased profit maximization pressure as measured by the effect of constituency statutes on HFDI investment. We ask this question, in part, to anticipate HFDIs’ response to alternative purpose firms, like benefit corporations. Only with access to institutional investors’ capital can alternative purpose firms gain economic significance to rival the purely for-profit corporation. …

Exalting The Corporate Form Over Environmental Protection The Corporate Shell Game And The Enforcement Of Water Management Law In Florida, Mary Jane Angelo, Charles Lobdell, Tara Boonstra

Mary Jane Angelo

Current laws in Florida afford substantial protection to the “people behind the corporations” (corporate principals) and generally do not allow environmental permitting agencies such as the water management districts to consider such people in their permitting or enforcement efforts. This article poses the question “Do existing corporate law principles of limited liability defeat the important public policy of water resource protection in Florida?” First, in Parts II and III, this article introduces the problem and provides an overview of Florida water management district permitting and enforcement authorities and processes. Next, in Part IV, this article explores the existing legal authorities …

Democracy In The Private Sector: The Rights Of Shareholders And Union Members, Michael Goldberg

Michael J Goldberg

In the years since Enron, there has been a lively debate over the value of shareholder democracy as a means to improve corporate performance and reduce the likelihood of future Enrons or Lehman Brothers. That debate has been enriched by comparative scholarship looking at corporate governance abroad, and comparing corporate governance with public government. This Article explores a different comparison, between corporations and their sometime adversaries across bargaining tables and picket lines – labor unions. More specifically, this article compares the regulation of corporate governance and the regulation of the internal affairs of unions, and the rights of shareholders and …

The Shareholder Value Myth, Lynn Stout

Lynn A. Stout

No abstract provided.

On The Rise Of Shareholder Primacy, Signs Of Its Fall, And The Return Of Managerialism (In The Closet), Lynn Stout

Lynn A. Stout

In their 1932 opus "The Modern Corporation and Public Property," Adolf Berle and Gardiner Means famously documented the evolution of a new economic entity—the public corporation. What made the public corporation “public,” of course, was that it had thousands or even hundreds of thousands of shareholders, none of whom owned more than a small fraction of outstanding shares. As a result, the public firm’s shareholders had little individual incentive to pay close attention to what was going on inside the firm, or even to vote. Dispersed shareholders were rationally apathetic. If they voted at all, they usually voted to approve …

Are Stock Markets Costly Casinos? Disagreement, Market Failure, And Securities Regulation, Lynn Stout

Lynn A. Stout

No abstract provided.

Fiduciary Duties For Activist Shareholders, Iman Anabtawi, Lynn Stout

Lynn A. Stout

Corporate law and scholarship generally assume that professional managers control public corporations, while shareholders play only a weak and passive role. As a result, corporate officers and directors are understood to be subject to extensive fiduciary duties, while shareholders traditionally have been thought to have far more limited obligations. Outside the contexts of controlling shareholders and closely held firms, many experts argue shareholders have no duties at all. The most important trend in corporate governance today, however, is the move toward "shareholder democracy." Changes in financial markets, in business practice, and in corporate law have given minority shareholders in public …

Are Takeover Premiums Really Premiums? Market Price, Fair Value, And Corporate Law, Lynn Stout

Lynn A. Stout

No abstract provided.

In Praise Of Procedure: An Economic And Behavioral Defense Of Smith V. Van Gorkom And The Business Judgment Rule, Lynn Stout

Lynn A. Stout

No abstract provided.

If Corporations Are People, They Should Act Like It, Kent Greenfield

Kent Greenfield

No abstract provided.

Corporate Law's Original Sin, Kent Greenfield

Kent Greenfield

No abstract provided.

Shareholder Primacy, The Main Barrier To Sustainable Companies: A Comparative Analysis Of Company Law, David Millon, A. Johnston, B. Sjåfjell, L. Anker-Sorensen

David K. Millon

No abstract provided.

The Worst Of Both Worlds: The Wild West Of The “Legal” Marijuana Industry, Luke Scheuer

Luke M Scheuer

As states have legalized marijuana, they have created a booming industry that operates in violation of the federal Controlled Substances Abuse Act. Like the tobacco and alcohol industries, this new legal marijuana industry has the potential to do great harm to American consumers and communities if it is not disciplined and restrained in how it sells and develops its products. Unfortunately the federal government has not yet stepped in to regulate the industry and state governments have imposed only limited controls. In addition, because of the increased threat of criminal and civil liability hanging over the industry, it has been …

Corporate Social Responsibility And Sustainability, David Millon

David K. Millon

No abstract provided.

The “Legal” Marijuana Industry's Challenge For Business Entity Law, Luke M. Scheuer

Luke M Scheuer

In recent years many states have legalized the use and sale of marijuana for medical or even recreational purposes. This has led to the booming growth of a “legal” marijuana industry. Businesses openly growing and selling marijuana products to the consuming public are faced with some unusual legal hurdles. Significantly, although the sale of marijuana may be legal at the state level, it is still illegal under federal law. This article explores the conflict between state and federal marijuana laws from a business entity law perspective. For example, managers owe a fiduciary duty of good faith to their businesses and …

Religious Rights Of Corporations, Part 2, Kent Greenfield

Kent Greenfield

A Delaware Response To Delaware's Choice, Lawrence Hamermesh, Norman Monhait

Lawrence A. Hamermesh

This article is an invited response to Professor Subramanian’s article “Delaware’s Choice.” The article expresses skepticism, for two primary reasons, about the need for the change to Delaware’s takeover statute that Professor Subramanian proposes. First, there is uncertainty that the constitutionality of that statute would be evaluated today under a test as demanding as the one that was applied when the statute was upheld in the late 1980s. Second, citing an earlier article by A. Gilchrist Sparks and Helen Bowers, we question whether a constitutional evaluation of the takeover statute should be limited to data on tender offers that are …

The End Of Contractarianism? Behavioral Economics And The Law Of Corporations, Kent Greenfield

Kent Greenfield

Reviews the current state of the scholarship in the field of behavioral economics as it relates to corporate and securities law.

M&A Under Delaware's Public Benefit Corporation Statute: A Hypothetical Tour, Frederick Alexander, Lawrence Hamermesh, Frank Martin, Norman Monhait

Lawrence A. Hamermesh

Noting the enthusiastic initial response to Delaware’s 2013 public benefit corporation statute, this Article presents a series of hypotheticals as vehicles for comment on issues that are likely to arise in the context of mergers and acquisitions of public benefit corporations. The Article first examines appraisal rights, concluding that such rights will be generally available to stockholders in public benefit corporations, and noting the potential for ambiguity in defining “fair value” where the corporation’s purposes extend to public purposes as well as private profit. Next, the Article examines whether and to what extent “Revlon” duties and limitations on deal protection …

Consent In Corporate Law, Lawrence Hamermesh

Lawrence A. Hamermesh

Recent Delaware case law explores and extends what the author describes as the “doctrine of corporate consent,” under which a stockholder is deemed to consent to changes in the corporate relationship that are adopted pursuant to statutory authority (such as by directors adopting bylaws). This essay examines whether and to what extent there may be limits on the application of the doctrine of corporate consent, and whether fee-shifting bylaws exceed those limits.

Director Nominations, Lawrence Hamermesh

Lawrence A. Hamermesh

“I don't care who does the electing, so long as I get to do the nominating.” William M. (“Boss”) Tweed. Shareholder election of directors is widely accepted as an important tool in corporate governance. As Boss Tweed’s aphorism demonstrates, the shareholder’s ability to nominate director candidates should therefore also be deemed important. With ever-increasing shareholder activism and increased sensitivity on the part of management to the prospect of director election contests, the scope of the right to nominate and the scope of permissible limitations of that right are likely to come under increasing scrutiny. Yet corporate statutes are largely silent …