Comparative and Foreign Law Commons^™

Shareholder Exit Signs On Us And Eu Highways, Raluca Papadima

Raluca Papadima

Open Sesame: The Myth Of Alibaba's Extreme Corporate Governance And Control, Yu-Hsin Lin, Thomas Mehaffy

Brooklyn Journal of Corporate, Financial & Commercial Law

In September 2014, Alibaba Group Holding Limited (Alibaba) successfully launched a $25 billion initial public offering (IPO), the largest IPO ever, on New York Stock Exchange. Alibaba’s IPO success witnessed a wave among Chinese Internet companies to raise capital in U.S capital markets. A significant number of these companies have employed a novel, but poorly understood corporate ownership and control mechanism—the variable interest entity (VIE) structure and/or the disproportional control structure. The VIE structure was created in response to the Chinese restriction on foreign investments; however, it carries the risk of being declared illegal under Chinese law. The disproportional control …

Gandhi’S Prophecy: Corporate Violence And A Mindful Law For Bhopal, Nehal A. Patel

Nehal A. Patel

AbstractOver thirty years have passed since the Bhopal chemical disaster began,and in that time scholars of corporate social responsibility (CSR) havediscussed and debated several frameworks for improving corporate responseto social and environmental problems. However, CSR discourse rarelydelves into the fundamental architecture of legal thought that oftenbuttresses corporate dominance in the global economy. Moreover, CSRdiscourse does little to challenge the ontological and epistemologicalassumptions that form the foundation for modern economics and the role ofcorporations in the world.I explore methods of transforming CSR by employing the thought ofMohandas Gandhi. I pay particular attention to Gandhi’s critique ofindustrialization and principle of swadeshi (self-sufficiency) …

Transplanting Contractual Terms: The Influence Of The Common Law In The Civil Law Of Contracts, A View From The Periphery, Dario Laguado

Dario Laguado

This paper suggests a model of contractual innovation that takes into account the bottom-up transplant of legal devices from the core to the periphery. This model properly weighs the tension and differences between places of production and places of reception and the process of misreading that goes along with the transplant. It serves to explain the innovation that has been produced as a result of the influence of common law contracts in Colombia and South America. Evidence shows that this model can be generally applied to the process of transplantation in many jurisdictions around the world. The main features of …

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.

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

Journal Articles

Flooding is the most common natural catastrophe Americans face, accounting for 90% of all damage caused by natural catastrophes. Hurricanes Katrina and Sandy, for example, collectively caused over $160 billion in damage, but only approximately 10% of the Hurricane Katrina victims and 50% of the Hurricane Sandy victims had insurance to cover their flood losses. Consequently, both their homes and lives were left in ruins in the wake of the storms. Nationwide, only approximately 7% of homeowners have insurance that covers flood losses even though the risk of flooding is only increasing as coastal areas continue to be developed and …

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

Christopher C. French

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 Long Road To Reformulating The Understanding Of Directors' Duties: Legalizing Team Production Theory?, Thomas Clarke

Seattle University Law Review

In this Article, the historical evolution of corporate governance is considered, highlighting the different eras of governance, the dominant theoretical and practical paradigms, and the reformulation of paradigms and counter paradigms. Two alternative and sharply contrasting theorizations, one collective and collaborative (the work of Berle and Means), the other individualistic and contractual (agency theory and shareholder value) are focused upon. The explanatory potential of Blair and Stout’s team production theory is elaborated, along with its conception of the complexity of business enterprise, with a mediating hierarch (the board of directors) securing a balance between the interests of different stakeholders. The …

The Failure Of Corporate Internal Controls And Internal Information Sharing: A Conceptual Framework For Taiwan, Chang-Hsien Tsai

Chang-hsien (Robert) TSAI

Although East Asian jurisdictions such as Taiwan have been adopting similar models of Anglo-American independent directors and audit committees in recent years, we can find that common issues are failure of internal controls, in general, and dysfunctional internal information-sharing mechanisms, in particular. To accommodate Taiwan’s reform trend towards furthering the adoption of independent directors and audit committees, this paper offers a roadmap for conceptual solutions which are harmonic with each other as prerequisites to enable monitors of management to have the incentives and means to exercise their oversight. First, the board’s duty to monitor should be reiterated while being transplanted …

Directors’ Legal Duties And Csr: Prohibited, Permitted Or Prescribed In Contemporary Corporate Law?, Benedict Sheehy, Donald Feaver

Benedict Sheehy

Abstract: The interaction between CSR obligations and directors’ legal duties is seriously under examined. This article addresses that lack by examining directors’ duties in case law and legislation across the major commonwealth countries and the USA. It provides an analysis of leading cases and examines how they deal with the issues of the shareholder primacy doctrine, corporate legal theory, CSR and directors’ duties. The article reviews fiduciary relations and duties, analyses the directors’ duties to exercise power in the best interests of the company as a whole and for proper purposes. As this area of law is highly contested there …

Ending Judgment Arbitrage: Jurisdictional Competition And The Enforcement Of Foreign Money Judgments In The United States, Gregory Shill

Gregory Shill

Recent multi-billion-dollar damage awards issued by foreign courts against large American companies have focused attention on the once-obscure, patchwork system of enforcing foreign-country judgments in the United States. That system’s structural problems are even more serious than its critics have charged. However, the leading proposals for reform overlook the positive potential embedded in its design.

In the United States, no treaty or federal law controls the domestication of foreign judgments; the process is instead governed by state law. Although they are often conflated in practice, the procedure consists of two formally and conceptually distinct stages: foreign judgments must first be …

After Privacy: The Rise Of Facebook, The Fall Of Wikileaks, And Singapore’S Personal Data Protection Act 2012, Simon Chesterman

Simon Chesterman

This article discusses the changing ways in which information is produced, stored, and shared — exemplified by the rise of social-networking sites like Facebook and controversies over the activities of WikiLeaks — and the implications for privacy and data protection. Legal protections of privacy have always been reactive, but the coherence of any legal regime has also been undermined by the lack of a strong theory of what privacy is. There is more promise in the narrower field of data protection. Singapore, which does not recognise a right to privacy, has positioned itself as an e-commerce hub but had no …

Exit, Voice And International Jurisdictional Competition: A Case Study Of The Evolution Of Taiwan’S Regulatory Regime For Outward Investment In Mainland China, 1997-2008, Chang-Hsien Tsai

Chang-hsien (Robert) TSAI

This Article explores the interplay of demand and supply forces in the market for law through international jurisdictional competition led by offshore financial centers. To do so it uses the example of the evolution of a regulatory regime imposed by an onshore jurisdiction, Taiwan, to control outward investment into mainland China (“China-investment”). The argument is that jurisdictional competition brought about by capital mobility or exit will provoke legal changes to prevent the departure of capital when laws reduce the value of remaining within the jurisdiction. The case study is used to examine the extent to which jurisdictional competition fuelled by …

International Jurisdictional Competition Under Globalization: From The U.S. Regulation Of Foreign Private Issuers To Taiwan’S Restrictions On Outward Investment In Mainland China, Chang-Hsien Tsai

Chang-hsien (Robert) TSAI

Drawing a lesson from the story that the Sarbanes-Oxley Act drives away foreign issuers and then their physical exit provokes a change in the U.S. regulation of non-U.S. issuers, this article takes as another case study the phenomenon that Taiwanese firms list shares overseas, to further test how usual law market demand and supply forces (or underlying exit and voice rights) interplay under international jurisdictional competition. Put simply, both cases of the U.S. and Taiwan significantly elaborate that law market forces underlying international jurisdictional competition are similarly at work even on both sides of the Pacific Ocean. Specifically, globalization strengthens …

Foreword: In Berle’S Footsteps, Charles R.T. O'Kelley

Seattle University Law Review

On the weekend of November 6–8, 2009, scholars from around the world gathered in Seattle for a symposium—In Berle’s Footsteps—celebrating the launch of the Adolf A. Berle, Jr. Center on Corporations, Law and Society. As founding director of the Berle Center, I described our undertaking: “It is with a profound sense of obligation to the legacy that has been entrusted to my care, that I announce the launching of the Adolf A. Berle, Jr. Center on Corporations, Law and Society. It is a privilege to follow in Berle’s footsteps.”

Opening Remarks, Chancellor William B. Chandler Iii

Seattle University Law Review

Law is, in many ways, a backwards-looking field. We litigate over facts that have already occurred, challenge deals that have already been signed, and apply rules of decision based on previously-established precedent or statutes already enacted. To the extent that this Center and the symposium reflect on Berle’s work, they too are an exercise in looking back. Indeed, some might say the establishment of a Center named in Berle’s honor is a monument to the past.

Securities Intermediaries And The Separation Of Ownership From Control, Jill E. Fisch

Seattle University Law Review

The Modern Corporation & Private Property is a paradigm-shifting analysis of the modern corporation. The book is perhaps best known for the insights of Berle and Means about the separation of ownership from control and the consequences of that separation for the allocation of power within the corporation. The Berle and Means story focuses on the shareholder as the owner of the corporation. Berle and Means saw the mechanism of centralized management—in which the shareholder retains the economic interest but not the control rights associated with ownership—as threatening the conception of shareholder interests in terms of property rights. In particular, …

Rethinking The Separation Of Ownership From Management In American History, Kenneth Lipartito, Yumiko Morii

Seattle University Law Review

In <em>The Modern Corporation and Private Property</em>, Adolf Berle and Gardiner Means would use AT&T as a prime example of what they saw as a dangerous new trend, the replacement of ownership-based capitalism with giant corporations controlled by a small group of propertyless managers. Indeed, AT&T became Berle and Means’ favorite example. . . . As we shall see, however, the claim that AT&T was a leading example of the separation of ownership from management is incomplete. More importantly, the common interpretation of Berle and Means’ work is mistaken, placing the emphasis incorrectly on the number of shareholders and reading …

The Modern Corporation As Social Construction, Mark S. Mizruchi, Daniel Hirschman

Seattle University Law Review

Classic works, Mark Mizruchi and Lisa Fein argued, share a particular fate. Authors often cite classic works without reading them—or without reading them carefully. . . . Yet perhaps no single work fits the above description better than one of the most important books on the large corporation ever published: Adolf Berle and Gardiner Means’s The Modern Corporation and Private Property. One can speculate that few works in the social sciences have been as often cited and as little read. As a consequence, we would expect The Modern Corporation to be a good candidate for either selective interpretation or …

Berle And The Entrepreneur, Charles R.T. O'Kelley

Seattle University Law Review

In the first and last four chapters (“the Five Chapters”) of The Modern Corporation and Private Property, Adolf Berle, Jr. describes in sweeping terms a fundamental transformation of the American economy. . . . Writing more than ten years before Berle, another seminal scholar, Frank Knight . . . developed a theory of the entrepreneur as part of his larger effort to more carefully explain the theoretical underpinnings of a free-market economy. . . . Given Knight’s prominence and the fact that Knight apparently reached dramatically different conclusions than did Berle concerning the consequences flowing from separation of ownership …

Revisiting Berle And Rethinking The Corporate Structure, Kelli A. Alces

Seattle University Law Review

Adolf Berle and Gardiner Means painted what remains a defining portrait of corporate law. The separation of ownership and control they described and the agency costs it causes are still a central concern of the law of corporate governance. For that reason, Berle’s work is relevant nearly eighty years after its publication. Seemingly forgotten, however, is that Berle’s enduring description of the corporate structure was published before most of today’s corporate law was in place. His work preceded the Securities Act of 1933 and the Securities Exchange Act of 1934 and even preceded the dominance of Delaware common law in …

Monitoring To Reduce Agency Costs: Examining The Behavior Of Independent And Non-Independent Boards, Anita Anand, Frank Milne, Lynnette Purda

Seattle University Law Review

Berle and Means’s analysis of the corporation—in particular, their view that those in control are not the owners of the corporation—raises questions about actions that corporations take to counter concerns regarding management’s influence. What mechanisms, if any, do corporations implement to balance the distribution of power in the corporation? To address this question, we analyze boards of directors’ propensity to voluntarily adopt recommended corporate governance practices. Because board independence is one way to enhance shareholders’ ability to monitor management, we probe whether firms with independent boards of directors (which we define as boards with either an independent chair or a …

Power Without Property, Still: Unger, Berle, And The Derivatives Revolution, Cristie Ford, Carol Liao

Seattle University Law Review

We are in a time when the notion of property is in flux. The derivatives revolution has shattered the “atom of property” well beyond what was originally imagined in 1932 by Adolf Berle and Gardiner Means. This disaggregation has had fascinating, and often adverse, effects on corporate law and securities regulation. Moreover, the phenomenon has had the unexpected effect of permitting some parties that already possess considerable social, economic, and political power to accumulate even more.

The New Financial Assets: Separating Ownership From Control, Tamar Frankel

Seattle University Law Review

In The Modern Corporation and Private Property, Adolf A. Berle and Gardiner Means wrote about the separation of ownership from control in corporations. They noted that the interests of the controlling directors and managers can diverge from those of the shareholder owners of the firm. . . . There are those who consider such a decoupling beneficial. Others express the same concern that Berle and Means have expressed. And depending on what one focuses on in viewing the pluses and minuses of these separations, one could reach different conclusions. I reach a number of conclusions. First, the separation of …

Neo-Brandeisianism And The New Deal: Adolf A. Berle, Jr., William O. Douglas, And The Problem Of Corporate Finance In The 1930s, Jessica Wang

Seattle University Law Review

This essay revisits Adolf A. Berle, Jr. and The Modern Corporation and Private Property by focusing on the triangle of Berle, Louis D. Brandeis, and William O. Douglas in order to examine some of the underlying assumptions about law, economics, and the nature of modern society behind securities regulation and corporate finance in the 1930s. I explore Douglas and Berle’s academic and political relationship, the conceptual underpinnings of Brandeis, Berle, and Douglas’s critiques of modern finance, and the ways in which the two younger men—Berle and Douglas—ultimately departed from their role model, Brandeis.

Enumerating Old Themes? Berle’S Concept Of Ownership And The Historical Development Of English Company Law In Context, Lorraine E. Talbot

Seattle University Law Review

This paper offers some tentative suggestions as to why Berle’s work has been read and interpreted so selectively in the United Kingdom. I suggest that this must be partly attributable to the historical developments in English company law that entrenched the notion of shareholder ownership claims. Specifically, unincorporated associations’ normative values—that members are owners and there is no distinction between small organizations with no share dispersal and large organizations with wide share dispersal—have a continuing influence on this entrenched notion of shareholder ownership claims. First, I provide an overview of the origins of English company law. Next, I address how …

Berle’S Vision Beyond Shareholder Interests: Why Investment Bankers Should Have (Some) Personal Liability, Claire Hill, Richard Painter

Seattle University Law Review

This essay, published in a symposium on the work of Adolf Berle, approaches the Berle-Dodd debate from the perspective that corporate managers have responsibilities beyond pursuing the interests of shareholders. Stock based executive compensation, designed to align managers’ interests with those of shareholders, has, in the investment banking industry in particular, failed to avert, and may have caused, managers (in this case, bankers) to take excessive risks that in the present financial crisis inflicted great damage on creditors and on society as a whole. We describe here the broad outlines of a proposal that we will discuss in future publications …

The Birth Of Corporate Governance, Harwell Wells

Seattle University Law Review

Part I of this Article briefly examines the concept of “corporate governance” and argues for dating the concept’s origins to the debates of the 1920s. Part II then moves on to examine early scholarly and popular discussions of the separation of ownership and control. After surveying the historical developments that produced the recognizably modern corporate economy around the turn of the century, it examines early scholarly and popular discussions of the separation of ownership and control, focusing on three major thinkers, Louis D. Brandeis, Walter Lippmann, and Thorstein Veblen. It argues that, while each of these authors examined the separation …