Securities Law Commons^™

Standing Voting Instructions: Empowering The Excluded Retail Investor, Jill E. Fisch

All Faculty Scholarship

Despite the increasing importance of shareholder voting, regulators have paid little attention to the rights of retail investors who own approximately 30% of publicly traded companies but who vote less than 30% of their shares. A substantial factor contributing to this low turnout is the antiquated mechanism by which retail investors vote. The federal proxy voting rules place primary responsibility for facilitating retail voting in the hands of custodial brokers who have limited incentives to develop workable procedures, and current regulatory restrictions impede market-based innovation that incorporate technological innovations.

One of the most promising such innovations is standing voting instructions …

Disciplining Corporate Boards And Debtholders Through Targeted Proxy Access, Michelle M. Harner

Indiana Law Journal

Corporate directors committed to a failed business strategy or unduly influenced by the company’s debtholders need a dissenting voice—they need shareholder nominees on the board. This Article examines the biases, conflicts, and external factors that impact board decisions, particularly when a company faces financial distress. It challenges the conventional wisdom that debt disciplines management, and it sug-gests that, in certain circumstances, the company would benefit from having the shareholders’ perspective more actively represented on the board. To that end, the Article proposes a bylaw that would give shareholders the ability to nominate direc-tors upon the occurrence of predefined events. Such …

The Long Road Back: Business Roundtable And The Future Of Sec Rulemaking, Jill E. Fisch

All Faculty Scholarship

The Securities and Exchange Commission has suffered a number of recent setbacks in areas ranging from enforcement policy to rulemaking. The DC Circuit’s 2011 Business Roundtable decision is one of the most serious, particularly in light of the heavy rulemaking obligations imposed on the SEC by Dodd-Frank and the JOBS Act. The effectiveness of the SEC in future rulemaking and the ability of its rules to survive legal challenge are currently under scrutiny.

This article critically evaluates the Business Roundtable decision in the context of the applicable statutory and structural constraints on SEC rulemaking. Toward that end, the essay questions …

The Destructive Ambiguity Of Federal Proxy Access, Jill E. Fisch

All Faculty Scholarship

After almost seventy years of debate, on August 25, 2010, the SEC adopted a federal proxy access rule. This Article examines the new rule and concludes that, despite the prolonged rule-making effort, the new rule is ambiguous in its application and unlikely to increase shareholder input into the composition of corporate boards. More troubling is the SEC’s ambiguous justification for its rule which is neither grounded in state law nor premised on a normative vision of the appropriate role of shareholder nominations in corporate governance. Although the federal proxy access rule drew an unprecedented number of comment letters and is …

Corporate Governance And Accountability, Renee M. Jones

Renee Jones

This book chapter on Corporate Governance and Accountability is a contribution to the book CORPORATE GOVERNANCE - SYNTHESIS OF THEORY, RESEARCH, AND PRACTICE (Wiley, forthcoming 2010), edited by Ronald Anderson and H. Kent Baker. This chapter describes the sources of corporate governance standards for American corporations and analyzes the accountability mechanisms designed to ensure that corporate officials act faithfully in their management of corporate affairs. The chapter focuses on the financial reporting system under the U.S. securities laws which forms the foundation of the accountability system, and discusses structures and rules designed to ensure the integrity of financial reporting. The …

Then And Now: Professor Berle And The Unpredictable Shareholder, Jennifer G. Hill

Seattle University Law Review

Shareholders, and the relationship between shareholders and management, lay at the heart of Professor Berle’s scholarship. The goal of this Article is to compare the image of shareholders emerging from The Modern Corporation and Private Property and the Berle/Dodd debate with a range of contemporary visions of the shareholder that underpin some international regulatory responses to recent financial debacles, from Enron to the current global financial crisis. As the Article dis- cusses, these recent developments in the era of financial crises have prompted a reevaluation of the traditional image of the shareholder—and the role of the shareholder in the modern …

Shareholders, Unicorns And Stilts: An Analysis Of Shareholder Property Rights, Benedict Sheehy

Benedict Sheehy

Abstract: Shareholders rights advocates argue that shareholders have the right to control the corporation. This article examines the basis for the claims. It begins with an analysis of rights, then moves to an analysis of legal rights, which is followed by an analysis of property rights as a species of legal rights. The article then examines the historical context, rationale and development of shareholder rights which leads to the analysis of current shareholders’ rights. The article concludes with some comments and suggestions concerning future development of corporate governance thinking.