Business Organizations Law Commons^™

Non-State Actors For Profit: Revisiting Transnational Corporations' Personhood And Responsibility Under International Law, Katayoon Beshkardana, Faraz Shahlaei

Northwestern Journal of International Law & Business

The growing impact of Transnational Corporations (TCs) on international trade, investment, and human rights raises the question of international corporate responsibility. For international responsibility, TCs must be recognized as subjects of international law with legal personality. Apart from states as the primary subjects of international law, such status has been granted to inter-governmental organizations (IGOs). The factors that contributed to the IGOs’ recognition as international law subjects seem to be present for TCs today. While the International Court of Justice granted such legal status to IGOs, for TCs, the best path to recognition would be to establish a global authority …

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 …

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 …

“Say On Pay”: The Movement To Reform Executive Compensation In The United States And European Union, Marisa Anne Pagnattaro, Stephanie Greene

Northwestern Journal of International Law & Business

In the aftermath of an array of economic failures, there is a growing movement to reform executive compensation. Concerned that executive compensation structures reward inappropriate risk taking and create a short-term perspective, the United States and the European Union are taking steps to reform the ways executives are compensated. Part I analyzes governmental and regulatory action in the United States, including SEC disclosure rules and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Part II details new initiatives in the European Union that recommend changes to remuneration for directors of listed companies and remuneration in the financial services sector, …

More Than Best Friends: Expansion Of Global Law Firms Into The Indian Legal Market, Chris Vena

Northwestern Journal of International Law & Business

Over the past half century, there has been an accelerating trend towards liberalization in the legal services industry. International free trade agreements have sought to promote open markets for legal services. The United States, United Kingdom, many European countries, Australia, Japan, Russia, China, and Singapore have all opened their legal markets to foreign law firms. India is something of an anomaly in this regard. Although it has one of the world's largest economies and has benefited greatly from liberalization in many industries, India's legal industry remains closed. Competition for foreign capital with other developing nations, particularly China, makes this an …

Law Without Order In Chinese Corporate Governance Institutions, Donald C. Clarke

Northwestern Journal of International Law & Business

The substantive norms of Chinese corporate governance have been studied extensively inside and outside China. Yet much less attention has been paid to the Chinese institutional environment that determines whether and how far those norms will be made meaningful. While complaints about general lack of enforcement are common, less common are analyses that concretely tie institutional capacity to specific enforcement problems. This Article aims to fill that gap. It surveys a number of state and non-state channels for the enforcement of corporate governance rules and standards in China, from markets to regulatory bodies, looking at the specific capacities of each. …

Lowering The Cost Of Rent: How Ifrs And The Convergence Of Corporate Governance Standards Can Help Foreign Issuers Raise Capital In The United States And Abroad, Kyle W. Pine

Northwestern Journal of International Law & Business

Since the early 1990s the United States has experienced a dramatic growth in the number of foreign firms choosing to trade their shares in U.S. markets. Meanwhile, Europe and other markets have not experienced this effect to the same extent. there has been an observable worldwide growth in stock market capitalization since the 1990s with an increasing number of foreign issuers choosing to cross-list their shares abroad, usually in the United States. Traditional explanations for why firms choose to cross-list have focused primarily on access to trade in more liquid markets. A more convincing theory for why firms cross-list, attributed …

Corporate Governance Convergence: Lessons From The Indian Experience, Afra Afsharipour

Northwestern Journal of International Law & Business

Over the past two decades, corporate governance reforms have emerged as a central focus of corporate law in countries across the development spectrum. Various legal scholars studying these reform efforts have engaged in a vigorous debate about whether globalization will lead to convergence of corporate governance laws toward one model of governance: namely the Anglo-American, dispersed shareholder model, or whether existing national characteristics will thwart convergence. Despite rapid economic growth and reforms in developing countries such as India, the legal literature discussing this debate primarily focuses on developed economies. This Article examines recent corporate governance reforms in India as a …

A Forensic Study Of Daewoo's Corporate Governance: Does Responsibility For The Meltdown Solely Lie With The Chaebol And Korea?, Joongi Kim

Northwestern Journal of International Law & Business

At the end of 1999, one of the largest conglomerates in the world, the Daewoo Group, collapsed in a spectacular fashion. During its peak, Daewoo was a sprawling enterprise with over 320,000 employees with 590 subsidiaries overseas that operated in over 110 countries. Its management received widespread praise and academic recognition for its success. Yet, when the Asian financial crisis hit in 1997, it managed to commit a deception worth 22.9 trillion won ($15.3 billion) that was termed the "biggest accounting fraud in history, surpassing WorldCom and Enron . . . ." Years later, inner-workings of the conglomerate are finally …

Ec Reforms Of Corporate Governance And Capital Markets Law: Do They Tackle Insiders' Opportunism?, Luca Enriques, Matteo Gatti

Northwestern Journal of International Law & Business

Company and capital markets laws are rapidly evolving everywhere: there are few countries around the world where they have not been the subject of reform or where at least a reform agenda has not been devised. There are various reasons for this, both global and local. Among the global (or common) reasons for reform, two at least deserve to be singled out: large-scale market crises or prominent economic scandals, and financial development.

Business Implications Of Divergences In Multi-Jurisdictional Merger Review By International Competition Enforcement Agencies, W. Adam Hunt

Northwestern Journal of International Law & Business

Antitrust and competition laws lie at the nexus of international law and business. Since 1890, antitrust law has expanded from its origins of regulating trusts in the United States to what is now a global body of law. However, this expansion has not come without drawbacks. As the number of worldwide competition review and enforcement agencies in both developing and developed nations continues to increase, multinational businesses contemplating mergers are faced with growing uncertainty and transaction costs. These escalating costs have led business community leaders to conclude "that greater harmonization of merger law enforcement, at both the substantive and the …

A Comparative Analysis Of Shareholder Protections In Italy And The United States: Parmalat As A Case Study, Lorenzo Segato

Northwestern Journal of International Law & Business

The goal of this article is to compare the protections offered to minority shareholders by the Italian system of corporate law with those offered by the U.S. legal system of corporate and securities law in order to determine if Parmalat's minority shareholders would have been better off had Parmalat been an American company listed in the U.S. financial market. This analysis will reveal several weaknesses in Italian corporate and securities laws, thereby providing a basis for suggestions on how to improve minority shareholders' rights in Italy based on the U.S. experience. Section II of this paper provides an overview of …

Shock Therapy' For Aktiengesellschaften: Can The Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice And Prospects?, Hudson T. Hollister

Northwestern Journal of International Law & Business

The Sarbanes-Oxley Act (Act) of 20021 was the U.S. Congress's hasty response to the wave of corporate scandals that had begun to devastate U.S. investor confidence during the previous year. Its sixty-six pages contain a wide range of measures designed to enhance the quality and independence of corporate audits and disclosure under the U.S. securities-regulation regime. The Act applies to public corporations-corporations that are required to file regular financial reports under the Securities Exchange Act of 1934 (Exchange Act). Objections from German corporations and observers were particularly vigorous. At least one German foreign private issuer registered with the SEC has …

The Alien Tort Claims Act: Temporary Stopgap Measure Or Permanent Remedy, Borchien Lai

Northwestern Journal of International Law & Business

As the world has become smaller through technological advances in travel and communication, the international marketplace has grown larger. The United Nations ("U.N.") estimates that the number of multinational corporations tripled between 1988 and 1997 to 60,000. As these corporations increase their investments abroad, they also face proportionately increasing pressure from investors to run successful operations and increase profits. The result of this dynamic is well-documented. Multinational corporations invest heavily in underdeveloped countries where natural resources are abundant and labor is cheap. To facilitate operations in the country, the corporations must establish a rapport with the host governments-and often, in …

Beyond The Alien Tort Claims Act: Alternative Approaches To Attributing Liability To Corporations For Extraterritorial Abuses, Barnali Choudhury

Northwestern Journal of International Law & Business

At one time, the only social responsibility of a business was to increase its profits. During this period, businesses prized dictatorships for their ability to provide stable environments and consumers were not concerned with either where or by whom the shoes they wore were made. However, the increase in globalization changed perceptions. Multinational corporations ("MNCs") began to benefit immensely from globalization and those outside of the MNC environment started to realize that an MNC's profit gains brought about a corresponding responsibility to manage any adverse effects of producing those gains . Suddenly, a company's success was measured by factors other …

A Road Map For Corporate Governance In East Asia, Chee Keong Low

Northwestern Journal of International Law & Business

Much has transpired since the inadequacies of corporate governance practices in East Asia were glaringly exposed by the Asian financial crisis. The crisis brought to the foreground numerous deficiencies, which had common roots in excessive over-leverage as well as the lack of transparency, disclosure and accountability. These issues have been explicitly recognized with the release of the White Paper on Corporate Governance in Asia by the Asian Roundtable on Corporate Governance in June 2003.

By responding in part to the White Paper, this article sets out a "roadmap" whose ultimate objective is the enhancement of the practice of corporate governance …

Corporatization And Privatization: A Chinese Perspective, Yuwa Wei

Northwestern Journal of International Law & Business

Although the enterprise reform in China has its own causes, it conforms to the current movement of commercializing public enterprises in a global sense. Thus, over the course of its enterprise reform, China has the advantage of drawing lessons and gaining wisdom from the experience of other jurisdictions. Consequently, China may achieve two goals, commercializing its public sector and standardizing the practice of its corporatized enterprises, at the same time. Meanwhile, the Chinese enterprise reform will provide an interesting case for comparative study, since the country is pioneering a different path in the process of corporatizing and privatizing its public …

Getting From Salbu To The Tipping Point: The Role Of Corporate Action Within A Portfolio Of Anti-Corruption Strategies, Thomas W. Dunfee, David Hess

Northwestern Journal of International Law & Business

Salbu's "big questions" identify core issues for scholars on bribery and corruption. Salbu asks: (1) when may it be ethical to pay a bribe, (2) whether the Foreign Corrupt Practices Act's ("FCPA") provisions on "routine government action" permit us to distinguish between appropriate and inappropriate facilitative payments, (3) whether non-governmental organizations ("NGOs") should supplant the role of governments in fighting corruption, and (4) whether corporate principles can have an impact in the fight against corruption. Our focus is primarily on the latter question, but encompasses all of them. Implicit in Salbu's list is the question of whether a single magic …

Development Of North Korea's Legal Regime Governing Foreign Business Cooperation: A Revisit Under The New Socialist Constitution Of 1998 , Eric Yong-Joong Lee

Northwestern Journal of International Law & Business

A primary purpose of this article is to examine the formation of North Korea's legal regime governing foreign business cooperation and its evolution in the post-Kim Il Sung era. Since initiating its open-door policy in the early 1990s, North Korea has developed the legal framework for external economic cooperation. The Law of the Democratic People's Republic of Korea ("DPRK") on Foreign Investment of 1992 and its 1999 revision has especially represented North Korea's legal and policy direction towards inducing foreign capital investment, as well as establishing a legal basis for the following laws and regulations in this field. The main …

A Role For The Wto In International Merger Control, Andre Fiebig

Northwestern Journal of International Law & Business

Although this paper follows on those new proposals, and addresses many of the same problems, the international merger control regime proposed here fundamentally differs in its approach. Although there is certainly a beneficial role for an international institution in merger control, the current proposals are too ambitious. Instead of focussing on the allocation of cross-border transactions, this paper suggests that the focus should be on the cases which present no treat to competition, and yet are scrutinized by several different national competition law regulators. An international institution, probably within the framework of the World Trade Organization ("WTO"), should be created …

The Treatment Of Global Mergers: An Australian Perspective, S.G. Corones

Northwestern Journal of International Law & Business

The purpose of this article is to examine some recent global mergers from an Australian perspective. The article begins by considering the administrative tribunal and Court structure in Australia, as well as the procedural, substantive. and remedial aspects of Australian laws regulating global mergers. It then considers the Merger Guidelines and their focus on the unilateral and co-ordinated post-merger effects that are likely to occur. The article examines a number of recent global mergers. including Coopers & Lybrand/Price Waterhouse, BAT/Rothmans, Pepsi Co/Smith's Snack Foods and Coca-Cola/Cadbury Schweppes, as well as their assessment by the ACCC. Finally, it considers some of …

Transnational Competition Law Aspects Of Mergers And Acquisitions, William M. Hannay

Northwestern Journal of International Law & Business

As more and more U.S. companies engage in overseas operations, even the most routine merger or acquisition seems to have a transnational component which requires analysis and perhaps premerger notification under an increasing number of foreign "competition laws" (or what we call antitrust laws). An understanding of those competition rules has become an imperative for American lawyers.

Perspective: Foreign Direct Investments In China - Practical Problems Of Complying With China's Company Law And Laws For Foreign-Invested Enterprises, Anyuan Yuan

Northwestern Journal of International Law & Business

Foreign investors in China face a legal system and legal issues that are very different from those found in the United States. This article seeks to illustrate some of the important differences in China's corporate law that govern or affect foreign investors' interests. The purpose of this article is to help foreign investors become aware of legal problems and investment risks in creating a foreign-invested enterprise in China. This article also proposes changes to existing Chinese laws that will more reasonably accommodate the legal concerns and protect the legal interests of foreign investors (as well as incidentally benefiting domestic Chinese …

China's Evolving Company Legislation: A Status Report, Preston M. Torbert

Northwestern Journal of International Law & Business

As China's economic reforms have progressed, however, the need for a company law has become apparent. The two principal reasons are, first, the need to reform existing state-owned enterprises and, second, the need to create a means for foreign investment in reformed state-owned enterprises. For political reasons, there appears to be no perceived need for the company law to encourage larger privately-owned enterprises.

How Does Europe Regulate Powers Within Its Corporations? What Might The Answer Mean For The U.S.? An Essay And Review Of European Company Laws: A Comparative Approach, Donald C. Jr. Dowling

Northwestern Journal of International Law & Business

European Company Laws: A Comparative Approach is a compilation of ten essays by various authors on the jurisprudence of corporate control within Europe. The book focuses on the company laws within the various member states, somewhat to the exclusion of the emerging EC-level corporate laws. Yet while European Company Laws concerns itself with member states' internal company laws, the book's goal is much loftier than merely compiling the European states' corporate statutes into some sort of practitioners' guide. Rather, European Company Laws attempts to divine jurisprudential truths about the regulation of power within the European company by examining the European …

Towards The Harmonization Of Ec-Member States' Regulations On Takeover Bids: The Proposal For A Thirteenth Council Directive On Company Law, Nathalie Basaldua

Northwestern Journal of International Law & Business

In its White Paper Program advocating the removal of all remaining internal barriers in the Common Market by 1992, the Commission for the European Communities ("Commission") expressed a need for harmonizing the laws of the Member States on takeover bids and announced that it would be bringing forward a proposal for a directive on this subject. Urged by the European Parliament and after consultations with experts from Member States and interest groups, the Commission adopted the Proposal for a Thirteenth Council Directive on Company Law concerning takeover and other general bids (the "Proposal" or "proposed Directive"). Before this text enters …

Ec Merger Control In The 1990s: An Overview Of The Draft Regulation, Frank L. Fine

Northwestern Journal of International Law & Business

The wave of mergers and acquisitions experienced during the last several years in the United States is now on its way to Europe. The Commission of the European Communities ('Commission') recently reported that cross-border mergers and stock purchases of majority shareholdings in the European Community ('EC' or 'Community') have surged from 29 in 1983-1984 to 52 in 1985-1986. Acquisitions by non-EC companies, particularly United States and Japanese firms, are also likely to increase dramatically. The Community has become a field ripe for merger activity largely because both European and non-European companies are keen to position themselves in anticipation of '1992,' …

Japan And The Bigness Mystique, Gary R. Saxonhouse

Northwestern Journal of International Law & Business

Walter Adams and James Brock are correct. There is little overseas evidence to support the proposition that there is a close link between international competitiveness and firm size. As Adams and Brock point out, the Japanese experience, in particular, highlights the absence of any intimate connection between these variables. The distinctive vitality of Japan's small-scale sector is a very old story. Whether it is the last decades of the Tokugawa period (1600-1868), the Meiji period (1868-1912), the Taisho period (1912-1926), or the Showa (1926-1989) period, commentators have invariably noted the surprising persistence of Japan's smaller-scale enterprises. Where once they were …

The Bigness Mystique And The Merger Policy Debate: A Comment From West Germany, Ingo L.O. Schmidt

Northwestern Journal of International Law & Business

After eight years of an antitrust policy dominated by the principles of the Chicago School, which is better characterized as a protrust merger policy, the United States and the European Community are confronted with a new wave of mergers. The arguments for mergers are the same as in the 1960s: merger-induced bigness promotes international competition, efficiency, and technological progress. In this context, Adams and Brock in their excellent analysis ask the right questions. But did merger-induced corporate giantism provide salvation for European industry? Did it provide world-class competitiveness? Was it a success and a model of industrial policy worthy of …

Towards A European Company Law, Dominique Carreau, William L. Lee

Northwestern Journal of International Law & Business

The prospect of creating a genuine "European" company law was raised as early as 1959, just two years after the signing of the Treaty of Rome establishing the European Economic Community. Curiously, the initiative was taken by practitioners and scholars and not by the business community, which expressed little interest in such an innovation at that time. The first steps were taken by the French Notaries Public who, at their 57th Annual Congress, suggested that it might be desirable "to adopt, by means of an international convention, a comprehensive company law, probably restricted to societes anonymes (large, publicly held [French] …