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Full-Text Articles in Law

The Corporation As Sovereign, Allison D. Garrett Oct 2017

The Corporation As Sovereign, Allison D. Garrett

Maine Law Review

In the past two hundred years, sovereignty devolved from the monarch to the people in many countries; in our lifetimes, it has devolved in several significant ways from the people to the corporation. We are witnesses to the erosion of traditional Westphalian concepts of sovereignty, where the chess game of international politics is played out by nation-states, each governing a certain geographic area and group of people. Eulogies for the nation-state often cite globalization as the cause of death. The causa mortis is characterized by the increase in the power and normative influence of supranational organizations, such as the United ...


The "New" Fiduciary Standards Under The Revised Uniform Limited Liability Company Act: More Bottom Bumping From Nccusl, Rutheford B. Campbell Jr. Oct 2017

The "New" Fiduciary Standards Under The Revised Uniform Limited Liability Company Act: More Bottom Bumping From Nccusl, Rutheford B. Campbell Jr.

Maine Law Review

Between 1995 and 2001, the influential National Conference of Commissioners on Uniform State Laws (NCCUSL) promulgated iterations of uniform laws pertaining to partnerships, limited partnerships and limited liability companies. One or more of those acts have been widely adopted by state legislatures. Each of the three acts—the Uniform Partnership Act (1997) (hereinafter RUPA), the Uniform Limited Partnership Act (2001) (hereinafter ULPA (2001)), and the Uniform Limited Liability Company Act (1996) (hereinafter ULLCA) —contains identical fiduciary duty provisions. The acts all adopt the same standards for the duty of care and the duty of loyalty, and offer parties the same ...


Humanizing The Corporation While Dehumanizing The Individual: The Misuse Of Deferred-Prosecution Agreements In The United States, Andrea Amulic Oct 2017

Humanizing The Corporation While Dehumanizing The Individual: The Misuse Of Deferred-Prosecution Agreements In The United States, Andrea Amulic

Michigan Law Review

American prosecutors routinely offer deferred-prosecution and nonprosecution agreements to corporate defendants, but not to noncorporate defendants. The drafters of the Speedy Trial Act expressly contemplated such agreements, as originally developed for use in cases involving low-level, nonviolent, noncorporate defendants. This Note posits that the almost exclusive use of deferrals in corporate cases is inconsistent with the goal that these agreements initially sought to serve. The Note further argues that this exclusivity can be attributed to prosecutors’ tendency to only consider collateral consequences in corporate cases and not in noncorporate cases. Ultimately, this Note recommends that prosecutors evaluate collateral fallout when ...


Before International Tax Reform, We Need To Understand Why Firms Invert, Michael S. Knoll Sep 2017

Before International Tax Reform, We Need To Understand Why Firms Invert, Michael S. Knoll

Faculty Scholarship

A wave of corporate inversions by U.S. firms over the past two decades has generated substantial debate in academic, business, and policy circles.

The core of the debate hinges on a couple of key economic questions: Do U.S. tax laws disadvantage U.S.-domiciled companies relative to their foreign competitors? And, if so, do inversions improve the competitiveness of U.S. multinational firms both abroad and at home?

There is unfortunately little, if any, empirical work directly determining whether U.S.-based MNCs are currently tax-disadvantaged compared to their foreign rivals, or measuring the amount by which (if ...


Evaluating Beps, Reuven Avi-Yonah, Haiyan Xu Aug 2017

Evaluating Beps, Reuven Avi-Yonah, Haiyan Xu

Articles

This article evaluates the recently completed Base Erosion and Profit Shifting (BEPS) project of the G20 and OECD and offers some alternatives for reform.


Amending Corporate Charters And Bylaws, Albert H. Choi, Geeyoung Min Aug 2017

Amending Corporate Charters And Bylaws, Albert H. Choi, Geeyoung Min

Faculty Scholarship

Recently, courts have embraced the contractarian theory that corporate charters and bylaws constitute a “contract” between the shareholders and the corporation and have been more willing to uphold bylaws unilaterally adopted by the directors. This paper examines the contractarian theory by drawing a parallel between amending charters and bylaws, on the one hand, and amending contracts, on the other. In particular, the paper compares the right to unilaterally amend corporate bylaws with the right to unilaterally modify contract terms, and highlights how contract law imposes various limitations on the modifying party’s discretion. More generally, when the relationship of contracting ...


Trends In The Social [Ir]Responsibility Of American Multinational Corporations: Increased Power, Diminished Accountability, Cynthia A. Williams, John Martin Conley Jul 2017

Trends In The Social [Ir]Responsibility Of American Multinational Corporations: Increased Power, Diminished Accountability, Cynthia A. Williams, John Martin Conley

Cynthia A. Williams

No abstract provided.


First Amendment Decisions From The October 2006 Term, Erwin Chemerinsky, Marci A. Hamilton Jun 2017

First Amendment Decisions From The October 2006 Term, Erwin Chemerinsky, Marci A. Hamilton

Erwin Chemerinsky

No abstract provided.


Human Rights And Cybersecurity Due Diligence: A Comparative Study, Scott J. Shackelford Jun 2017

Human Rights And Cybersecurity Due Diligence: A Comparative Study, Scott J. Shackelford

University of Michigan Journal of Law Reform

No company, just like no nation, is an island in cyberspace; the actions of actors from hacktivists to nation-states have the potential to impact the bottom line, along with the human rights of consumers and the public writ large. To help meet the multifaceted challenges replete in a rapidly globalizing world—and owing to the relative lack of binding international law to regulate both cybersecurity and the impact of business on human rights—companies are reconceptualizing what constitutes “due diligence.” This Article takes lessons from both the cybersecurity and human rights due diligence contexts to determine areas for cross-pollination in ...


Burwell V. Hobby Lobby Stores, Inc.: Creating Power For Corporations At The Cost Of Changing Women’S Lives, Tara Zabehi May 2017

Burwell V. Hobby Lobby Stores, Inc.: Creating Power For Corporations At The Cost Of Changing Women’S Lives, Tara Zabehi

The Journal of Business, Entrepreneurship & the Law

No abstract provided.


Troubled Waters Between U.S. And European Antitrust, D. Daniel Sokol Apr 2017

Troubled Waters Between U.S. And European Antitrust, D. Daniel Sokol

Michigan Law Review

Review of The Atlantic Divide in Antitrust: An Examination of US and EU Competition Policy by Daniel J. Gifford and Robert T. Kudrle.


Problems With Destination-Based Corporate Taxes And The Ryan Blueprint, Reuven S. Avi-Yonah, Kimberly Clausing Apr 2017

Problems With Destination-Based Corporate Taxes And The Ryan Blueprint, Reuven S. Avi-Yonah, Kimberly Clausing

Articles

With the election of Donald Trump and the Republican Party’s domination of Congress, House Speaker Paul Ryan’s blueprint for fundamental tax reform requires more careful analysis. The Ryan blueprint combines reduced individual rates with a destination-based cash flow type business tax applicable to all businesses. The destination-based business tax at the center of the blueprint has several major problems: It is incompatible with our WTO obligations, it is incompatible with our tax treaties, and it will not eliminate the problems of income shifting and inversions it is designed to address. In addition, these proposals generate vexing technical problems ...


Fiduciary-Isms: A Study Of Academic Influence On The Expansion Of The Law, Daniel B. Yeager Mar 2017

Fiduciary-Isms: A Study Of Academic Influence On The Expansion Of The Law, Daniel B. Yeager

Daniel B. Yeager

Fiduciary law aspires to nullify power imbalances by obligating strong parties to give themselves over to servient parties. For example, due to profound imbalances of legal know-how, lawyers must as fiduciaries pursue their clients’ interests, not their own, lest clients get lost in the competitive shuffle. As a peculiar hybrid of status and contract relations, politics and law, compassion and capitalism, fiduciary law is very much in vogue in academic circles. As vogue as it is, there remains room for my “Fiduciary-isms...”, a meditation on the expansion of fiduciary law from its origins in the law of trusts through partnerships ...


The Shifting Tides Of Merger Litigation, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon, Randall S. Thomas Mar 2017

The Shifting Tides Of Merger Litigation, Matthew D. Cain, Jill E. Fisch, Steven Davidoff Solomon, Randall S. Thomas

Faculty Scholarship

In 2015, Delaware made several important changes to its laws concerning merger litigation. These changes, which were made in response to a perception that levels of merger litigation were too high and that a substantial proportion of merger cases were not providing value, raised the bar, making it more difficult for plaintiffs to win a lawsuit challenging a merger and more difficult for plaintiffs’ counsel to collect a fee award.

We study what has happened in the courts in response to these changes. We find that the initial effect of the changes has been to decrease the volume of merger ...


Governance By Contract: The Implications For Corporate Bylaws, Jill E. Fisch Mar 2017

Governance By Contract: The Implications For Corporate Bylaws, Jill E. Fisch

Faculty Scholarship

Boards and shareholders are increasing using charter and bylaw provisions to customize their corporate governance. Recent examples include forum selection bylaws, majority voting bylaws and advance notice bylaws. Relying on the contractual conception of the corporation, Delaware courts have accorded substantial deference to board-adopted bylaw provisions, even those that limit shareholder rights.

This Article challenges the rationale for deference under the contractual approach. With respect to corporate bylaws, the Article demonstrates that shareholder power to adopt and amend the bylaws is, under Delaware law, more limited than the board’s power to do so. As a result, shareholders cannot effectively ...


The New Bond Workouts, William W. Bratton, Adam J. Levitin Feb 2017

The New Bond Workouts, William W. Bratton, Adam J. Levitin

Faculty Scholarship

Bond workouts are a famously dysfunctional method of debt restructuring, ridden with opportunistic and coercive behavior by bondholders and bond issuers. Yet since 2008 bond workouts have quietly started to work. A cognizable portion of the restructuring market has shifted from bankruptcy court to out-of-court workouts by way of exchange offers made only to large institutional investors. The new workouts feature a battery of strong-arm tactics by bond issuers, and aggrieved bondholders have complained in court. The result has been a new, broad reading of the primary law governing workouts, section 316(b) of the Trust Indenture Act of 1939 ...


A Legal Theory Of Shareholder Primacy, Robert J. Rhee Jan 2017

A Legal Theory Of Shareholder Primacy, Robert J. Rhee

Working Papers

Shareholder primacy is the most fundamental concept in corporate law and corporate governance. It is widely embraced in the business, legal, and academic communities. Economic analysis and policy arguments advance a normative theory that corporate managers should maximize shareholder wealth. Academic literature invariably describes shareholder primacy as a “norm.” But whether the concept is “law” is contested because, remarkably, we still do not have a coherent legal theory. Our understanding of a fundamental tenet of the field is flawed and incomplete. This article presents a positive legal theory of shareholder primacy. It answers the questions: Is shareholder primacy law? What ...


The Bylaw Puzzle In Delaware Corporate Law, David A. Skeel Jr. Jan 2017

The Bylaw Puzzle In Delaware Corporate Law, David A. Skeel Jr.

Faculty Scholarship

In less than a decade, Delaware’s legislature has overruled its courts and reshaped Delaware corporate law on two different occasions, with proxy access bylaws in 2009 and with shareholder litigation bylaws in 2015. Having two dramatic interventions in quick succession would be puzzling under any circumstances. The interventions are doubly puzzling because with proxy access, Delaware’s legislature authorized the use of bylaws or charter provisions that Delaware’s courts had banned; while with shareholder litigation, it banned bylaws or charter provisions that the courts had authorized. This Article attempts to unravel the puzzle.

I start with corporate law ...


Appraising Merger Efficiencies, Herbert J. Hovenkamp Jan 2017

Appraising Merger Efficiencies, Herbert J. Hovenkamp

Faculty Scholarship

Mergers of business firms violate the antitrust laws when they threaten to lessen competition, which generally refers to a price increase resulting from a reduction in output. However, a merger that threatens competition may also enable the post-merger firm to reduce its costs or improve its product. Attitudes toward mergers are heavily driven by assumptions about efficiency gains. If mergers of competitors never produced efficiency gains but simply reduced the number of competitors, a strong presumption against them would be warranted. We tolerate most mergers because of a background, highly generalized belief that most or at least many produce cost ...


When Is It Necessary For Corporations To Be Essentially At Home: An Exploration Of Exceptional Cases, Pricilla Heinz Jan 2017

When Is It Necessary For Corporations To Be Essentially At Home: An Exploration Of Exceptional Cases, Pricilla Heinz

Law Student Publications

This comment examines the current state of the law surrounding the exercise of general jurisdiction and forecasts the circumstances under which the Supreme Court is likely to clarify its recent decisions. Its purpose is to explore the principles announced in Goodyear Dunlop Tires Operations, S.A. v. Brown and Daimler AG v. Bauman and consider whether the due process rationales offered in the past coincide with the new essentially at home standard imposed for general jurisdiction. Moreover, this comment analyzes the reactions of the lower courts in the wake of these decisions and predicts where the Supreme Court is headed ...


Standing After Snowden: Lessons On Privacy Harm From National Security Surveillance Litigation, Margot E. Kaminski Jan 2017

Standing After Snowden: Lessons On Privacy Harm From National Security Surveillance Litigation, Margot E. Kaminski

Articles

Article III standing is difficult to achieve in the context of data security and data privacy claims. Injury in fact must be "concrete," "particularized," and "actual or imminent"--all characteristics that are challenging to meet with information harms. This Article suggests looking to an unusual source for clarification on privacy and standing: recent national security surveillance litigation. There we can find significant discussions of what rises to the level of Article III injury in fact. The answers may be surprising: the interception of sensitive information; the seizure of less sensitive information and housing of it in a database for analysis ...


Enterprise Without Entities, Andrew Verstein Jan 2017

Enterprise Without Entities, Andrew Verstein

Michigan Law Review

Scholars and practicing lawyers alike consider legal entities to be essential. Who can imagine running a large business without using a business organization, such as a corporation or partnership? This Article challenges conventional wisdom by showing that vast enterprises—with millions of customers paying trillions of dollars—often operate without any meaningful use of entities.

This Article introduces the reciprocal exchange, a type of insurance company that operates without any meaningful use of a legal entity. Instead of obtaining insurance from a common nexus of contract, customers directly insure one another through a dense web of bilateral agreements. While often ...


The Sec's Shift To Administrative Proceedings: An Empirical Assessment, Stephen J. Choi, Adam C. Prichard Jan 2017

The Sec's Shift To Administrative Proceedings: An Empirical Assessment, Stephen J. Choi, Adam C. Prichard

Articles

Congress has repeatedly expanded the authority of the SEC to pursue violations of securities laws in proceedings adjudicated by the SEC's own administrative law judges, most recently through the Dodd-Frank Act. We report the results from an empirical study of SEC enforcement actions against non-financial public companies to assess the impact of the Dodd-Frank Act on the balance between civil court and administrative enforcement actions. We show a general decline in the number of court actions and an increase in the number of administrative proceedings post-Dodd-Frank. At the same time, we show an increase in average civil penalties post-Dodd-Frank ...


The Deregulation Of Private Capital And The Decline Of The Public Company, Elisabeth De Fontenay Jan 2017

The Deregulation Of Private Capital And The Decline Of The Public Company, Elisabeth De Fontenay

Faculty Scholarship

From its inception, the federal securities law regime created and enforced a major divide between public and private capital raising. Firms that chose to “go public” took on substantial disclosure burdens, but in exchange were given the exclusive right to raise capital from the general public. Over time, however, the disclosure quid pro quo has been subverted: Public companies are still asked to disclose, yet capital is flooding into private companies with regulators’ blessing.

This Article provides a critique of the new public-private divide centered on its information effects. While regulators may have hoped for both the private and public ...


Formulary Apportionment And International Tax Rules, Reuven S. Avi-Yonah, Zachee Pouga Tinhaga Jan 2017

Formulary Apportionment And International Tax Rules, Reuven S. Avi-Yonah, Zachee Pouga Tinhaga

Book Chapters

Any proposal to adopt unitary taxation (UT) of multinationals has to contend with whether such taxation is compatible with existing international tax rules, and, in particular, with the bilateral tax treaty network. Indeed, some researchers have argued that the separate accounting (SA) method and the arm’s length standard (ALS), introduced in the early twentieth century, are so embodied in the treaties that they form part of customary international law, and are binding even in the absence of a treaty. We disagree, because the unitary approach is just as widely embodied in most of the current international tax treaties, and ...


One Size Does Not Fit All: A Contextual Approach To Fiduciary Duties Owed To Preferred Stockholders From Venture Capital To Public Preferred To Family Business, Juliet P. Kostritsky Jan 2017

One Size Does Not Fit All: A Contextual Approach To Fiduciary Duties Owed To Preferred Stockholders From Venture Capital To Public Preferred To Family Business, Juliet P. Kostritsky

Faculty Publications

This Article examines whether corporations should owe fiduciary duties to its preferred stockholders as preferred stockholders across all settings of preferred stock holding. In one context, sophisticated venture capitalists purchase preferred stock after carefully negotiating the stock price, control over the corporate governance, and other key stipulations by contract. Additionally, because the initial preferred stockholder could protect its interests through staged financing or board control, the preferred stockholder might not discount the stock even if it lacked protection since the other protective devices made the lack of such protections inconsequential so the initial holders won’t pay for these added ...


When Social Enterprises Fail, Jonathan Brown Jan 2017

When Social Enterprises Fail, Jonathan Brown

Pace Law Faculty Publications

This Article identifies the conflicts between social enterprise legislation and bankruptcy law and presents a normative argument for a legal regime that would harmonize the two. Focusing on benefit corporations, the most widely adopted social enterprise form, this Article observes that existing law leaves uncertainty as to the role of directors at a time of financial distress and will produce outcomes that are at odds with the core goals of social enterprise legislation. Then, drawing on academic proposals for contract-based systems of bankruptcy, this Article argues that just as a firm may opt out of a corporate governance norm of ...


Thoughts On Those Transperfect Ads, Lawrence A. Hamermesh Dec 2016

Thoughts On Those Transperfect Ads, Lawrence A. Hamermesh

Lawrence A. Hamermesh

No abstract provided.


Corporate Power Is Corporate Purpose I: Evidence From My Hometown, Leo E. Strine Jr. Dec 2016

Corporate Power Is Corporate Purpose I: Evidence From My Hometown, Leo E. Strine Jr.

Faculty Scholarship

This paper is the first in a series considering a rather tired argument in corporate governance circles, that corporate laws that give only rights to stockholders somehow implicitly empower directors to regard other constituencies as equal ends in governance. By continuing to suggest that corporate boards themselves are empowered to treat the best interests of other corporate constituencies as ends in themselves, no less important than stockholders, scholars and commentators obscure the need for legal protections for other constituencies and for other legal reforms that give these constituencies the means to more effectively protect themselves.

Using recent events in the ...


Country By Country Reporting And Corporate Privacy: Some Unanswered Questions, Reuven S. Avi-Yonah Dec 2016

Country By Country Reporting And Corporate Privacy: Some Unanswered Questions, Reuven S. Avi-Yonah

Articles

Corporate privacy is an oxymoron. Individuals have a right to privacy, which the Supreme Court has recognized at least since Griswold v. Connecticut (1965). Warren and Brandeis’ famous defense of the right to privacy (1890) clearly applied only to individuals, because only individuals have the kind of feelings that are affected by invasions of privacy. Corporations are legal entities, and the concept of privacy does not apply to them, as the Supreme Court held in 1906. Thus, any objection to making corporate tax returns public cannot rest on the right to privacy. In fact, corporate returns were made public in ...