Law Commons^™

Democratizing Startups, Seth C. Oranburg

Seth C Oranburg

The Jumpstart Our Business Startups Act of 2012 intends to “help entrepreneurs raise the capital they need to put Americans back to work and create an economy that’s built to last.” The goal is to “democratize startups” by making capital available to diverse entrepreneurs in new geographies. Yet the net effect of securities regulations and market conditions is the opposite. Startup companies are encouraged to stay private so capital is consolidating in large, mature firms instead of recycling into new startups. Evidence of consolidation is that once-rare “Unicorns” (billion-dollar startups) now number over 111. More money is going into huge …

The Customary Practice Of Gerawee In Afghanistan: A Case For Transitioning To Real Equity-Based Finance, Haroun Rahimi

Haroun Rahimi

The customary practice of Gerawee, in principle, refers to a specific form of synthetic loan. It is a pledge-lease transaction that enables owners of immovable properties to obtain financing based on the market value of those properties in exchange for either paying regular payments in form of rent or transferring the right to lease those properties to a financer. The practice has been developed to help debtors and creditors avoid the prohibition of interest bearing loans under Shari’ah. Despite the efforts of some Muslim jurists to justify the practice under Shari’ah, it is widely criticized. In particular, Afghan muftis …

An Approach To The Regulation Of Spanish Banking Foundations, Miguel Martínez

Miguel Martínez

The purpose of this paper is to analyze the legal framework governing banking foundations as they have been regulated by Spanish Act 26/2013, of December 27th, on savings banks and banking foundations. Title 2 of this regulation addresses a construct that is groundbreaking for the Spanish legal system, still of paramount importance for the entire financial system insofar as these foundations become the leading players behind certain banking institutions given the high interest that foundations hold in the share capital of such institutions.

Avenues To Foreign Investment In China’S Shipping Industry—Have Lease Financing Arrangements And The Free Trade Zones Opened Markets For Foreign Non-Bank Investment?, Rick Beaumont

Rick Beaumont

No abstract provided.

Making Sense Of Successor Liability, Marie T. Reilly

Marie T. Reilly

A firm that buys assets from another firm ordinarily does not acquire liability to the seller's creditors simply by buying its assets. This ordinary rule is subject to important exceptions. The buyer's consent triggers an exception. If a buyer agrees to assume the seller's liability to third parties, it is for that reason liable. This article considers a more controversial exception - successor liability. When a court decides that an asset acquirer should be treated as a "successor" to the transferor, it is liable for the transferor's debts as though it were the transferor.

The Latent Efficiency Of Fraudulent Transfer Law, Marie T. Reilly

Marie T. Reilly

No abstract provided.

Deliberative Engagement Within The World Trade Organization: A Functional Substitute For Authoritative Interpretations, Cosette D. Creamer, Zuzann Godzimirska

Cosette D Creamer

The transition from the General Agreement on Tariffs and Trade dispute settlement proceedings to the Dispute Settlement Mechanism (DSM) of the World Trade Organization represented a notable instance of judicialization within international economic governance, in that it significantly increased the independence of the DSM from direct government control. Since they began ruling on trade conflicts in 1995, the WTO’s adjudicative bodies have enjoyed a greater degree of interpretive autonomy than initially intended by states parties. This development largely stems from deadlock within the political organs of the Organization resulting in non-use of one of the primary means of legislative response—authoritative …

Contract Theory And The Failures Of Public-Private Contracting, Wendy Netter Epstein

Wendy Netter Epstein

The market for public-private contracting is huge and flawed. Public-private contracts for services such as prisons and welfare administration tend to result in cost savings at the sacrifice of quality service. For instance, to cut costs, private prisons skimp on security. Public law scholars have studied these problems for decades and have proposed various public law solutions. But the literature is incomplete because it does not approach the problem through a commercial lens. This Article fills that gap. It considers how economic analysis of contract law, in particular efficiency theory and agency theory, bear upon the unique problems of public-private …

Avenues To Foreign Investment In China’S Shipping Industry—Have Lease Financing Arrangements And The Free Trade Zones Opened Markets For Foreign Non-Bank Investment?, Rick Beaumont

Rick Beaumont

No abstract provided.

Resituating The Automatic Stay Within The Federal Common Law Of Bankruptcy, Daniel J. Sheffner

Daniel Sheffner

Many bankruptcy judges and practitioners make broad references to the equitable powers of bankruptcy courts. Bankruptcy courts, they exclaim, are “courts of equity” and so may do as “equity” requires. One often-cited source of bankruptcy courts’ apparently vast equitable and supplemental powers is § 105(a) of the Bankruptcy Code. Section 105(a) empowers bankruptcy courts to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of” the Code. Section 105(a) has been cited as the basis for re-imposing the Bankruptcy Code’s automatic stay once the stay has been terminated or otherwise modified. The automatic …

Through The Looking Glass: Series Llcs In 2015, Allen Sparkman

Allen Sparkman

This Article examines the development of Series LLCs, reviews the existing series LLC legislation, discusses possible uses of Series LLCS, analyzes areas of uncertainty with respect to Series LLCs, and makes recommendation for the future development of the Series LLC concept.

Discriminatory Internal Taxation In The European Union: The Power Of The European Court Of Justice To Limit The Tax Sovereignty Of Member-States Under Article 110 Of The Tfeu, Jarrod Tudor

Jarrod Tudor

Protectionism can come in a variety of methods including the use of internal taxation policies that discriminate against imports making those imports more expensive on the domestic market and thus favoring domestically-produced goods. Discriminatory taxation policies have been developed by member-states to mask protectionism by distinguishing products based on import status, product similarity, product life cycle, consumption, tax collection practices, transportation charges, and state aid. The Framers of the Treaty on the Functioning of the European Union (TFEU) wrote Article 110 with the objective in mind to prohibit internal taxation policies from discriminating against goods in made in other member-states. …

Hardship: A Remedy For Changed Circumstances In International Commercial Contracts, Raul Henrique Pereira De Souza Fleury

Raul Henrique Pereira de Souza Fleury

Long-term commercial transactions can transform into an agreement far different than the anticipated by the parties due to unforeseeable circumstances. In the international field such possibility is greater. This places a hard burden to business persons around the globe, since their mutual purpose is to see their business transaction achieve its goal. In trying to assess and manage the potential negative effects of changed circumstances, international business practice had developed the hardship clause. This article focus on the historical origin and development of the hardship clause, its requirements, the adoption of similar remedies by domestic legislation, and how it has …

Some Basic Marxist Concepts To Understand Income Tax, John Passant

John Passant

The paper introduces readers to some basic Marxist concepts to give the building blocks for an alternative understanding of tax and perhaps even to inspire some to use these concepts and ideas in their future research. It argues that the tax system reflects the phenomena of wealth and income and that there is a deeper reality obscured and ignored by the income tax system as an outcrop of a capitalist system which does the same. This deeper reality is that capital exploits workers and that profit, rent, interest and the like are the money form of the unpaid labour of …

Broad Shareholder Value And The Inevitable Role Of Conscience, Paul D. Weitzel, Zachariah J. Rodgers

Paul D. Weitzel

This article proposes an integrative solution to the modern debate on corporate purpose, the question of whether directors and officers must solely maximize profits or whether they may consider the effects on employees, the environment or the community. Many find pure profit maximization unseemly and suggest alternative theories, typically arguing that corporations owe a duty to a broader range of stakeholders. This position is inconsistent with the case law and unnecessary to allow conscience in the board room. We resolve the issue more simply by acknowledging that the purpose of a corporation is to promote the shareholders’ interests, which includes …

An Overview Of The Principles Of Corporate Governance, Melvin Aron Eisenberg

Melvin A. Eisenberg

Presents an overview of the book 'Principles of Corporate Governance' in the United States. Background architecture of the Principles of Corporate Governance of the American Law Institute; Explanations of the policy reasons of the provisions covered by the Principles; Restatement rules of the relevant law.

Recovery Of Damages For Lost Profits: The Historical Development, Robert M. Lloyd, Nicholas J. Chase

Robert M Lloyd

ABSTRACT Recovery of Damages for Lost Profits: The Historical Development The rule of Hadley v. Baxendale is widely considered the most important rule of contract damages. In fact, however, the rule that damages must be proven with reasonable certainty is far more important in the modern practice of law. The reasonable certainty rule originated in Roman law and came to the common law through the civil law of Western Europe, developing first in the United States and spreading from the United States to England. The rule of Hadley v. Baxendale developed much in the same way, and, contrary to popular …

Broker-Dealer: A Fiduciary By Any Other Name?, William Alan Nelson Ii

William Alan Nelson II

Broker-dealers, unlike investment advisers, are not regulated as fiduciaries when providing investment advice, even though broker-dealers are holding themselves out as financial advisors and offering virtually identical services to investors. The lack of consistent regulation of financial service providers arises from the structure in which advice historically has been delivered. Financial services regulation since the Great Depression has developed along roughly dual tracks: laws governing the sale of financial products, which may or may not require that the products be suitable for the customer, and laws governing investment advice, which impose a fiduciary requirement on the adviser to act solely …

Insuring Floods: The Most Common And Devastating Natural Catastrophies In America, Christopher French

Christopher C. French

Identifying The Honest Debtor: Section 727(A)(4)(A) Of The Bankruptcy Code And The Need For Consistency In Denial Of Discharge Proceedings, Andrew F. Emerson

Andrew Emerson

No abstract provided.

Identifying The Honest Debtor: Section 727(A)(4)(A) Of The Bankruptcy Code And The Need For Consistency In Denial Of Discharge Proceedings, Andrew F. Emerson

Andrew Emerson

No abstract provided.

Bridgefunding Is Crowdfunding For Startups Across The Private Equity Gap, Seth C. Oranburg

Seth C Oranburg

Title III of the JOBS Act of 2012, which attempts to encourage entrepreneurship by allowing startups and small business to sell stock to the general public over the Internet through “crowdfunding,” is completely backwards. Its ceiling should be a floor—the $1 million limit should be inverted. By capping startups at raising $1 million from crowdfunding, the JOBS Act does not address the private equity gap, a fundamental problem in startup markets, and exposes unsophisticated investors to risk and fraud. This Article presents a regulatory framework premised on “bridgefunding,” an approach that this article develops to protect new investors by encouraging …

Examining Success, Jonathan C. Lipson

Jonathan C. Lipson

Chapter 11 of the Bankruptcy Code presumes that managers will remain in possession and control of a corporate debtor. This presents an obvious agency problem: these same managers may have gotten the company into trouble in the first place. The Bankruptcy Code thus includes checks and balances in the reorganization process, one of which is supposed to be an “examiner,” a private individual appointed to investigate and report on the debtor’s collapse.

We study their use in practice. Extending prior research, we find that examiners are exceedingly rare, despite the fact that they should be “mandatory” in large cases ($5 …

Flexible Finality In Bankruptcy: The Right To Appeal A Denial Of Plan Confirmation, Joseph L. Nepowada

Joseph L Nepowada

This Article examines the current state of the law interpreting what “finality” means in context of a bankruptcy proceeding and what effect that interpretation has on the appealability of certain orders, such as the denial of plan confirmation under a Chapter 13 bankruptcy proceeding. The article highlights nine courts of appeals and their decisions concerning the appealability of a denial of a plan confirmation and it is apparent that the courts are split with three courts of appeal allowing a debtor to appeal a denial of plan confirmation as a matter of right, while six courts of appeal will deny …

Worlds Colliding: Competition Policy And Bankruptcy Fire Sales, Max Huffman

Max Huffman

Modern business bankruptcies commonly involve mergers and acquisitions pursued as “fire sales.” The bankruptcy forum and the unique incentives bankruptcy creates allow those acquisitions to take place with reduced constituent involvement and regulatory oversight. Those fire sale transactions may present antitrust concerns where they lead to undue concentration in the relevant marketplace. This paper studies the poorly explored tension between bankruptcy law, which favors mergers and acquisitions as value-maximizing propositions and creates opportunity for fire sales, and antitrust law, which disfavors combinations leading to undue concentrations of economic power. The substantial tension manifests both as a matter of substantive law …

Enduring Design For Business Entities, William E. Foster

William E Foster

The success or failure of an institution may hinge on some of the earliest decisions of its founders. In constitutional design literature, endurance is a widely accepted drafting objective. Indeed, constitutional endurance is positively associated with prosperous and stable societies. Like drafters of constitutions, business organizers have almost innumerable objectives for their enterprises, and attorneys drafting organizational documents must take into account these myriad goals. Oftentimes the drafting process fails to fully address some of the most important of these aims and results in suboptimal structures that lack predictability and reliability. This article looks specifically at small business organizations and …

Optimized Theft: Why Some Controlling Shareholders “Generously” Expropriate From Minority Shareholders, Sang Yop Kang

Sang Yop Kang

Although controlling shareholder agency problems have been well studied so far, many questions still remain unanswered. In particular, an important puzzle in a bad-law jurisdiction is: why some controlling shareholders (“roving controllers”) loot the entire corporate assets at once, and why others (“stationary controllers”) siphon a part of corporate assets on a continuous basis. To solve this conundrum, this Article provides analytical frameworks exploring the behaviors and motivations of controlling shareholders. To begin with, I reinterpret Olson’s political theory of “banditry” in the context of corporate governance in developing countries. Based on a new taxonomy of controlling shareholders (“roving controllers” …

The Harmonization Of Browsewrap Agreements Abroad And The Protection Of American Consumers, Tinsley A. Ashley

Tinsley A Ashley

No abstract provided.

Re-Envisioning Investors’ Anti-Director Rights Index: Theory, Criticism, And Implications, Sang Yop Kang

Sang Yop Kang

‘Law and Finance’ theory – which offers analytical frameworks to measure the protection of public investors and the quality of corporate governance – has dominated the comparative corporate governance scholarship in the last decade. So far, many proponents and critics have had debates on the relevance of the theory and the implications of the theory’s empirical studies. Several important points in relation to shareholder protection, however, have been highly neglected in these debates. In particular, the significance of one-share-one-vote (OSOV) rule has been inappropriately underestimated. In response, this Article explores (1) why OSOV is an utmost critical component in corporate …

Studying Is Dangerous? Possible Federal Remedies For Study Abroad Liability, Robert J. Aalberts, Chad G. Marzen, Darren A. Prum

Chad G. Marzen

Every year, thousands of U.S. students study abroad for academic credit. Study abroad programs have traditionally garnered strong congressional support, and proponents of the programs emphasize the educational, cultural, and diplomatic benefits from study abroad experiences.

Despite the many benefits of study abroad programs, risks are incurred overseas. In the past several years, a number of incidents have resulted in which students studying abroad have not only incurred physical harm, but in some instances have died while enrolled in a study abroad program. The current liability standards governing study abroad programs are murky. This article not only discusses the various …