Law Commons^™

Chipping Away At Compliance: How Compliance Programs Lose Legitimacy And Its Impact On Unethical Behavior, David Hess

Brooklyn Journal of Corporate, Financial & Commercial Law

Employee perceptions of an organization’s compliance program are critical. A program that has lost legitimacy with its employees is not just ineffective, but it creates more harm than good by leading to more unethical behavior. This Article identifies ways in which compliance programs can start to lose legitimacy, explains how that lost legitimacy leads to increased wrongdoing, and then concludes by setting out some basic reforms focused on helping stop this downward spiral and protecting the legitimacy of the compliance function.

Third-Party Funding: The Road To Compatibility In International Arbitration, Vienna Messina

Brooklyn Journal of International Law

Third-party funding in global commerce and dispute resolution has gained considerable traction in the last few decades. The rise in complex international arbitration cases has encouraged a demand for third-party funding arrangements since the disputes involve large amounts of money in addition to high legal costs. This Note explores the implications of third-party funding on the practice of international arbitration, particularly with the expansion of arbitral institutions’ doctrinal rules to address the use of third-party funding. Much of the pre-existing research and literature highlights the issues that third-party funding poses in international arbitration proceedings, but fails to consider a broader, …

Social Responsibility Regulation And Its Challenges To Corporate Compliance, Stephen Kim Park

Brooklyn Journal of Corporate, Financial & Commercial Law

This Article addresses the intersection of corporate social responsibility and corporate compliance. In this context, the focus of this Article is on regulation that seeks to enhance socially responsible corporate conduct and its implications for the compliance function. Social responsibility regulation raises operational concerns for companies, including problems associated with assessing social performance, the proliferation and fragmentation of legal obligations, and the contested nature of the social issues that it addresses. As laws mandating socially responsible corporate conduct continue to grow in number and expand in scope, corporations will increasingly need to acknowledge and respond to these challenges.

“Fair Enough”? Revising The Yellowstone Injunction To Fit New York’S Commercial Leasing Landscape And Promote Judicial Economy, Gabriel W. Block

Brooklyn Journal of Corporate, Financial & Commercial Law

The Yellowstone injunction is an equitable remedy that tolls any applicable cure period and gives tenants a better opportunity to maintain their leasehold when they have defaulted under their lease. The remedy is available to commercial tenants in New York City and to commercial and residential tenants throughout the State. This Note examines the Yellowstone injunction in the context of New York City’s commercial tenants, who employ it most frequently and benefit most from its protections. This Note examines the development and application of the Yellowstone injunction and proposes changing the doctrine to exclude cases of monetary defaults and expired …

Artificial Intelligence & Artificial Prices: Safeguarding Securities Markets From Manipulation By Non-Human Actors, Daniel W. Slemmer

Brooklyn Journal of Corporate, Financial & Commercial Law

Securities traders are currently competing to use Artificial Intelligence (A.I.) in order to make more profitable decisions in the marketplace. While A.I. provides superior abilities in recognizing market patterns, its complexity can obscure its decision-making process beyond human comprehension. Problematically, the current securities laws prohibiting manipulation of securities prices rest liability for violations on a trader’s intent. In order to prepare for A.I. market participants, both courts and regulators need to accept that human concepts of decision-making will be inadequate in regulating A.I. behavior. However, the wealth of case law in the market manipulation doctrine need not be cast aside. …

Involuntary Dissolution: Theory And Operation In Publicly Traded Corporations, Dr. Murat Can Pehlivanoglu

Annual Survey of International & Comparative Law

Involuntary dissolution is recognized as the primary mechanism to monitor opportunism and remedy the aggrieved minority shareholders of corporations. Contrary to general understanding, involuntary dissolution is not idiosyncratic to close corporations. However, its application to publicly traded corporations requires an approach different than the one for close corporations. This note discusses and recommends the approach necessary to justify and effectively enforce involuntary dissolution statutes’ application in the context of publicly traded corporations. It expresses the opinion that the contractual view of corporate law would provide the theoretical basis necessary to construe the statute for publicly traded corporations and exemplifies its …

Variations On A Theme: Corporate Law In Latin America, Continental Europe, And The United States, Ángel R. Oquendo

University of Miami Inter-American Law Review

The regulation of incorporated companies in Latin America and Continental Europe appears to distance itself from that in the United States. It differs in how it structures itself and handles incorporation, incorporators, piercing, governance, discipline, and shareholders. In their regulatory exertions, both regimes rely, certainly, on legislation and adjudication yet do so differently, qualitatively in addition to quantitatively.

Apparently, civil and common law continue to specialize respectively though not exclusively in statutes and binding precedents. Still, they ever more frequently intrude into each other’s apparent specialty, while leaving their own imprint on it. The tendency to converge coexists with that …

Corporate Social Responsibility Versus Shareholder Value Maximization: Through The Lens Of Hard And Soft Law, Min Yan

Northwestern Journal of International Law & Business

Even with a significant increase in the number of firms around the world engaging in corporate social responsibility (“CSR”), many people still perceive CSR as a voluntary commitment and shareholder value maximization (“SVM”) as a mandatory requirement. This paper borrows the concept of hard law and soft law in terms of coerciveness and overturns the stereotype that SVM is a hard-law constraint and CSR a soft-law constraint. The paper first demonstrates that directors of the board are not obliged to maximize shareholder value even in the Anglo-American jurisdictions where shareholder primacy culture is more dominant. Next, the paper critically discusses …

A Practice Worth Ending: Eps Guidance Harming Long-Term Growth, Rachel G. Miller

Notre Dame Law Review

This Note focuses on one factor—earnings per share (EPS) guidance—that contributes to myopic behavior and short-termism within public companies. Part I discusses the history of the shareholder primacy norm and the need for management to act in the best interest of its shareholders. Additionally, this Part provides background on EPS guidance and the notion of short-termism. Part II lays out a framework for quarterly reporting and argues that the current disclosure requirements should remain intact. This Part addresses the importance of frequency in quarterly reporting and provides two examples—the United Kingdom and Regulation A—of practices with longer reporting frequencies that …

“At Home” In Georgia: The Hidden Danger Of Registering To Do Business In Georgia, Brian P. Watt, W. Alex Smith

Georgia State University Law Review

Georgia law prohibits any foreign corporation—a corporation with an originating registration initiated in a state other than Georgia—from transacting business in the state until it obtains a certificate of authority from the Georgia Secretary of State. Attorneys advise foreign corporations to register as a matter of course, and business owners readily comply. Georgia is not unique in its registration requirement. Every state in the union has enacted such a statute. But very few states require a foreign corporation to forfeit the guarantees of due process as a condition for transacting business in the state. Georgia is one of them. In …

Reassessing Self-Dealing: Between No Conflict And Fairness, Andrew F. Tuch

Fordham Law Review

Scholars have long disagreed on which of two rules is more effective when a fiduciary engages in self-dealing. Some defend the “strict” no-conflict rule, which categorically bans self-dealing. Others prefer the “flexible” and “pragmatic” fairness rule, which allows self-dealing if it is fair to beneficiaries. The centrality of this debate cannot be overstated: corporate law as a field is fundamentally concerned with self-dealing by fiduciaries. Yet a lack of firm data means that this debate has dragged on for decades, with no end in sight. This Article makes a simple but powerful point: the entire debate is somewhat misguided because, …

Western Corporate Fiscal Citizenship In The 21st Century, Alex Freund

Northwestern Journal of International Law & Business

For the Western world, the challenges of the 21st Century are numerous, from climate change’s effects on food production and coastal cities to underfunded social safety nets to automation’s impact on the middle class. To handle such costly problems, government intervention will be required. Government intervention, however, always comes at a cost to either individuals or corporations. To determine who should bear these costs, scholars and experts should turn to notions of fiscal citizenship – the social contract between the state and private parties through taxation and the provision of goods and services. By applying principles of individual fiscal citizenship …

Index Funds And The Future Of Corporate Governance: Theory, Evidence, And Policy, Scott Hirst, Lucian Bebchuk

Faculty Scholarship

Index funds own an increasingly large proportion of American public companies. The stewardship decisions of index fund managers—how they monitor, vote, and engage with their portfolio companies—can be expected to have a profound impact on the governance and performance of public companies and the economy. Understanding index fund stewardship, and how policymaking can improve it, is thus critical for corporate law scholarship. In this Article we contribute to such understanding by providing a comprehensive theoretical, empirical, and policy analysis of index fund stewardship.

We begin by putting forward an agency-costs theory of index fund incentives. Stewardship decisions by index funds …

Common Ownership And Executive Incentives: The Implausibility Of Compensation As An Anticompetitive Mechanism, David I. Walker

Faculty Scholarship

Mutual funds, pension funds and other institutional investors are a growing presence in U.S. equity markets, and these investors frequently hold large stakes in shares of competing companies. Because these common owners might prefer to maximize the values of their portfolios of companies, rather than the value of individual companies in isolation, this new reality has lead to a concern that companies in concentrated industries with high degrees of common ownership might compete less vigorously with each other than they otherwise would. But what mechanism would link common ownership with reduced competition? Some commentators argue that one of the most …

Washington’S 'Cutting-Edge' Technology Solution To Combating Sales Tax Fraud: Real-Time Data (Now), Real-Time Remittance In The Future, Richard Thompson Ainsworth, Robert Chicoine, Andrew Leahey, Sunder Gee

Faculty Scholarship

Globally, consumption tax compliance (value added tax and retail sales tax) has gone digital – digital invoices are becoming mandatory, centralized monitoring of transactions and tax payments are increasingly common, and artificial intelligence is assessing fraud risks in real-time. When tax is collected, it is increasingly being remitted in near-real-time. This is the trajectory for the modern retail sales tax (RST) imposed by most states in the US. While this may appear to be revolutionary to the average American, it is a well-worn path among global nations using the value added tax (VAT). The RST will eventually be following suit. …

Introduction, Kim Brooks, Kim Brooks

Dalhousie Law Journal

At Schulich, we see business law in a broad frame and understand that business law and policy includes the role of businesses in environmental protection, sustainable investing, inter-nation equity, and access to justice. We understand that businesses operate in broad social, economic, and political contexts, and as a community of scholars we care about the interactions of business law and policy with technology, governance and stakeholder rights, and economic, social and environmental justice. We hope that this collection advances vital scholarly and policy conversations.

A Survey And Critique Of The “Seller In Possession” Statutory Regimes Of Common Law Canada: An Abc Prequel, Clayton Bangsund

Dalhousie Law Journal

The article examines the various provincial and territorial statutory regimes that apply to resolve title disputes emanating from a “seller in possession” scenario in which an initial buyer leaves bought goods in the possession of a seller who then transfers them to a subsequent bona de purchaser. Presently there are four distinct statutory models in force across common law Canada. Some provinces and territories incorporate modernized electronic personal property registry infrastructure into their statutory priority regimes, while others do not. The author undertakes a comparative assessment of the four models, highlights their strengths and weaknesses, and asserts that Model 2—representative …

Disrupting Business As Usual: Considering Teaching Methods In Business Law Classrooms, Jeffery Hewitt, Shanthi E. Senthe

Dalhousie Law Journal

The Truth and Reconciliation Commission of Canada (TRC)’s Calls to Action propose signimcant changes to legal education. No law school classroom is exempt, including business law courses. We are two of a growing number ofscholars in the legal academy actively incorporating Indigenous laws, critical race theory and socio-economic perspectives into business law courses as part of our responses to the TRC. This paper explores a field school we developed at Windsor Law as a response to the Calls to Action. In a temporary fusion of two courses, Secured Transactions along with Indigenous Peoples, Art & Human Rights, a synergy emerges …

Manufacturing Consent To Climate Inaction: A Case Study Of The Globe And Mail ’S Pipeline Coverage, Jason Maclean

Dalhousie Law Journal

Canada has long been a climate change policy laggard. Canada is among the world’s poorest-performing countries in terms of climate action—not only is Canada’s greenhouse gas emissions-reduction target under the Paris Agreement insufficiently ambitious, Canada is not even remotely on track to meet it. Canada’s enduring inaction on climate change is legitimized and sustained by its mainstream corporate news media, which contribute to the oil and gas industry’s capture of Canadian climate and energy policy. In this article, I examine how Canada’s leading national newspaper, The Globe and Mail, editorially framed the completion of the controversial expansion of the Trans …

Third-Party Liability Of Directors And Officers: Reconciling Corporate Personality And Personal Responsibility In Tort, Michael Marin

Dalhousie Law Journal

When is a director or of�� cer personally liable in tort to a party who is not the corporation he or she serves? In Canada, there is no clear answer. The law is marked by division both within and between appellate courts, resulting in judgments that are hard to reconcile and verge on arbitrary. This is likely attributable to the mistaken belief that there is a tension between personal liability and corporate personality, as well as the disputed relationship between common law and statutory obligations. To address these challenges, most Canadian courts have followed a threshold corporate law analysis, which …

Reorganizations, Sales, And The Changing Face Of Restructuring In Canada: Quantitative Outcomes Of 2012 And 2013 Ccaa Proceedings, Alfonso Nocilla

Dalhousie Law Journal

This article examines quantitative data on the outcomes of proceedings under the Companies’ Creditors Arrangement Act (CCAA), Canada’s principal statute for resolving large, complex corporate insolvencies. In particular, this article compares the durations, direct costs, and returns to different classes of creditors generated by traditional reorganizations under the CCAA and by “liquidating CCAAs”—that is, proceedings in which the insolvent debtor sells substantially all of its assets rather than reorganizing itself. The article makes a number of contributions to the existing scholarship. Firstly, quantitative data on CCAA proceedings are rare. The data examined here, collected by the author from proceedings initiated …

Corporate Risk And Climate Impacts To Critical Energy Infrastructure In Canada, Rudiger Tscherning

Dalhousie Law Journal

Recent climate events such as Hurrican Harvey in Texas foreshadow the dangers that could result from critical energy infrastructure failure in Canada due to physical impacts caused by climate change. This article examines the types of climate impacts that could affect critical energy infrastructure in Canada. The article argues that these impacts translate into three types of corporate risk to the owners and operators of the critical asset: economic risks to the infrastructure asset; management and operational risks to the corporation; and risks arising from corporate disclosure obligations. Applying the theoretical approach of "risk management," the article concludes that, on …

Evaluating Canadian Tax Remission Orders: A Debt Relief Vehicle For Taxpayers, Samuel Singer

Dalhousie Law Journal

Tax remission orders, although rare, serve important functions in the Canadian tax system. This paper draws from a comprehensive study of federal tax remission orders issued between 1998 and 2017. It presents general findings about remission orders in that time period, including remission order applications, their reported costs, and the number of remission orders issued. The paper identifies the five most common categories of reasons cited for granting remission orders. It then applies tax policy analysis to assess the two most frequent reasons for grating remission orders: to provide debt relief for financial hardship and/or extenuating circumstances, and to provide …

Corporate Governance And Institutional Investors: Proxy Voting Behavior After The Stewardship Code (コーポレートガバナンスと機関投資家―スチュワードシップコード改訂後の議決権行使の状況について), Mari Yamauchi, Toru Yoshikawa

Research Collection Lee Kong Chian School Of Business

本稿では，日本版スチュワードシップコードの改訂により始まった機関投資家 による議決権行使の結果について，投資家のタイプごとに分析し，どのような投 資家がどのような会社提案議案についてより多くの反対票を投じているかについ て検討した。先行研究に従えば，資産運用会社のように投資先企業とアームズレ ングスの関係を持つ投資家は，保険会社のように投資先企業とビジネス上の関係 を持つ投資家と比較すると，会社側提案に対して異議を唱える可能性が高いとさ れる。また，株式持ち合いなど日本的背景を考慮すると，日本においては，外資 系投資家の方が国内の投資家に比べて，会社提案に対して反対票を投じる可能性 が高いことも予想される。2018年度の議決権行使の結果を分析したところ，ほぼ 先行研究と同じ結果が得られ，業種で分類した場合，資産運用会社の方が生損保 のような保険会社より反対票の比率が高いこと，資本国籍で分類すると，外資投 資家の方が買収防衛策の導入や退任役員への退職慰労金の支給など特定の項目に ついて，日系の投資家に比べて反対率が高いことが確認された。

Grab The Fire Extinguisher Comparing Uk Schemes Of Arrangement To U.S. Corporate Bankruptcy After Jevic, David S. Stevenson

Cleveland State Law Review

Corporations overwhelmed with debt frequently turn to the courts for help to restructure their credit obligations, but some courts are more helpful than others. This is especially true when creditors cannot agree on a particular resolution, let alone when some creditors will not be paid at all. International corporations often have a choice of forum—and substantive insolvency law—based on their legal and physical presence in dozens or even hundreds of countries. The UK and U.S. offer different avenues for using insolvency law to restructure debts without total liquidation, and the American avenue has become more difficult to navigate thanks to …

Watching Insider Trading Law Wobble: Obus, Newman, Salman, Two Martomas, And A Blaszczak, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

“The crime of insider trading,” Judge Jed Rakoff has said, “is a straightforward concept that some courts have managed to complicate.” In the last eight years or so, insider trading law has wobbled visibly (in the Second Circuit in particular) in applying the standard for tipper-tippee liability originally set in the Supreme Court’s Dirks decision in 1983: from Obus (2012) to Newman (2014), with a detour to the Supreme Court in Salman (2016), and then two Martoma opinions (2017 and 2018). Most recently, the court of appeals offered what to many was a major surprise in its Blaszczak …

The Dodge Brothers’ Monster: A Legal Analysis Of The Effect Of Fiduciary Duty On Dual Voting Structures, Jer'ron J.L. Dinwiddie Ii

Student Publications

The purpose of this research paper is to determine the legal obligations that a shareholder with majority voting rights would have in a dual-voting structure. The focus on the paper is on breaking down the fiduciary duty analysis for its application to dual-voting structures, which currently stands as the shareholder with majority voting rights have no duty to other shareholders.

The paper details the evolution of the common law and the social responses to the use of these structures. Then, the paper measure the application fiduciary duty would have on a dual-voting structure using WeWork as a case study. On …

European Banking Union A: The Single Supervisory Mechanism, Rosalind Z. Wiggins, Michael Wedow, Andrew Metrick

Journal of Financial Crises

At the peak of the Global Financial Crisis in fall 2008, each of the 27 member states in the European Union (EU) set many of its own banking rules and had its own bank regulators and supervisors. The crisis made the shortcomings of this decentralized approach obvious, and since its formation in January 2011, the European Banking Authority (EBA) has been developing a “Single Rulebook” that will harmonize banking rules across the EU countries. In June 2012, European leaders went even further, committing to a banking union that would better coordinate supervision of banks in the then 18-country Eurozone. A …

Civil Rights And Shareholder Activism: Sec V. Medical Committee For Human Rights, Sarah C. Haan

Sarah Haan

This article builds upon the author's remarks at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

What does “corporate democracy” mean? How far does federal law go to guarantee public company investors a say in a firm’s policies on important social, environmental, or political issues? In 1972, the U.S. Supreme Court appeared ready to start sketching the contours of corporate democracy—and then, at the last minute, it pulled back. This Article tells the story of Securities and Exchange Commission v. Medical Committee for Human Rights …

Social Activism Through Shareholder Activism, Lisa M. Fairfax

Washington and Lee Law Review

This article is based on the author's keynote address at the 2018-2019 Lara D. Gass Annual Symposium: Civil Rights and Shareholder Activism at Washington and Lee University School of Law, February 15, 2019.

In 1952, the SEC altered the shareholder proposal rule to exclude proposals made “primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes.” The SEC did not reference civil rights activist James Peck or otherwise acknowledge that its actions were prompted by Peck’s 1951 shareholder proposal to Greyhound for desegregating seating. Instead, the SEC indicated that its change simply reflected a codification …