Law Commons^™

The Spac Market, Usha Rodrigues, Michael Stegemoller

Scholarly Works

Special purpose acquisition companies (SPACs) exploded in popularity in the past few years, to such a degree that they made up 60% of IPOs in 2020, 66.3% in 2021, and 69.4% in 2022. Celebrities from Colin Kaepernick to Jay-Z have launched SPACs, but perhaps the most feverish attention came in October 2021, when a SPAC called Digital World Acquisition Corp (DWAC) announced plans to acquire Trump Media & Technology Group (TMTG), a social media company headed by former president Donald Trump.

The SPAC frenzy has now abated, a casualty of some combination of higher interest rates, regulatory crackdown, and oversupply. …

Standing On The Shoulders Of Llcs: Tax Entity Status And Decentralized Autonomous Organizations, Samuel D. Brunson

Georgia Law Review

Since the formation of the first decentralized autonomous organization in 2016, their use has exploded. Thousands of DAOs now try to take advantage of smart contracts to solve a problem that plagues business entities: the gulf between ownership and management. Armed with smart contracts and requiring token-holders to vote on any change in strategy, DAOs dispense with the management layer so necessary in traditional business entities.

DAOs owe their existence to technology. Without blockchain, without cryptocurrency, and without smart contracts, there would be no DAOs. But they owe their explosive to something much more unexpected: Treasury regulations.

In the wake …

Business Associations, Scott Lowry

Scholarly Works

This Article surveys a selection of noteworthy cases involving business associations that Georgia courts decided between June 1, 2022 and May 31, 2023. This Article also briefly highlights the 2023 update to the Georgia Nonprofit Corporation Code, sections 14-3-101–1703 of the Official Code of Georgia Annotated, which was signed by Governor Kemp on May 2, 2023, and took effect on July 1, 2023.

Esg And The Sec, Christopher Bruner

Popular Media

This piece is a review of an article by Virginia Harper Ho titled Modernizing ESG Disclosures, 2022 U. Ill. L. Rev. 277. Bruner is a contributing editor to JOTWELL’s Corporate Law section.

Corporate Governance Reform And The Sustainability Imperative, Christopher Bruner

Scholarly Works

Recent years have witnessed a significant upsurge of interest in alternatives to shareholder-centric corporate governance, driven by a growing sustainability imperative—widespread recognition that business as usual, despite the short-term returns generated, could undermine social and economic stability and even threaten our long-term survival if we fail to grapple with associated costs. We remain poorly positioned to assess corporate governance reform options, however, because prevailing theoretical lenses effectively cabin the terms of the debate in ways that obscure many of the most consequential possibilities. According to prevailing frameworks, our options essentially amount to board-versus-shareholder power, and shareholder-versus stakeholder purpose. This narrow …

Artificially Intelligent Boards And The Future Of Delaware Corporate Law, Christopher Bruner

Scholarly Works

The prospects for Artificial Intelligence (AI) to impact the development of Delaware corporate law are at once over- and under-stated. As a general matter, claims to the effect that AI systems might ultimately displace human directors not only exaggerate the foreseeable technological potential of these systems, but also tend to ignore doctrinal and institutional impediments intrinsic to Delaware's competitive model – notably, heavy reliance on nuanced and context-specific applications of the fiduciary duty of loyalty by a true court of equity. At the same time, however, there are specific applications of AI systems that might not merely be accommodated by …

Panel Three: How Should Spacs Be Treated Going Forward (Ipos, Mergers, Or Distinctly Different?), Usha Rodrigues, Gregg A. Noel, Rick Flemming, Michael Stegemoller

Scholarly Works

From the Symposium: Here to Stay: Wrestling with the Future of the Quickly Maturing SPAC Market

Panel addressing and examining the policy concerns around special purpose acquisition companies (SPACs).

Artificially Intelligent Boards And The Future Of Delaware Corporate Law, Christopher Bruner

Scholarly Works

This article argues that the prospects for Artificial Intelligence (AI) to impact corporate law are at once over- and under-stated, focusing on the law of Delaware – the predominant jurisdiction of incorporation for US public companies. Claims that AI systems might displace human directors not only exaggerate AI’s foreseeable technological potential, but ignore doctrinal and institutional impediments intrinsic to Delaware’s competitive model – notably, heavy reliance on nuanced applications of the fiduciary duty of loyalty by a true court of equity. At the same time, however, there are discrete AI applications that might not merely be accommodated by Delaware corporate …

Delaware’S Dominance And The Future Of Organizational Law, Peter Molk

Georgia Law Review

Delaware dominates the market for business formations.
Two main theoretical explanations have been offered to justify
Delaware’s continued success. One focuses on the state’s
credible commitment to producing responsive organizational
law in the future. The other looks to the network effects that
continue to encourage new formations once Delaware already
dominates. Yet, other than continued observation of Delaware’s
dominance, little empirical support exists for either theory.
This Article empirically tests entrepreneurs’, investors’, and
lawyers’ appetite for Delaware’s credible commitment. I use the
recent Delaware Supreme Court decision of Gatz Properties v.
Auriga Capital Corp., which was a negative shock to …

Does Tax Matter? Evidence On Executive Compensation After 162(M)'S Repeal, Gregg Polsky, Brian Galle, Andrew Lund

Scholarly Works

As part of the most sweeping federal tax reform in a generation, the Tax Cuts and Jobs Act (“TCJA”) radically altered the tax treatment of compensation paid to senior executives of public companies. Prior to the TCJA, payment of such compensation in excess of one million dollars was non-deductible except to the extent the compensation was performance-based. The TCJA eliminated the exception so that all senior executive compensation above one million dollars is now non-deductible regardless of whether it is performance-based or not.

This reform provides a natural experiment to study the role of tax law in influencing managerial pay …

From Property Rights To Liberty Rights: We The Corporations, A Review Essay, Laura Phillips-Sawyer

Scholarly Works

A long-standing, and deeply controversial, question in constitutional law is whether or not the Constitution's protections for “persons” and “people” extend to corporations. Law professor Adam Winkler's We the Corporations chronicles the most important legal battles launched by corporations to “win their constitutional rights,” by which he means both civil rights against discriminatory state action and civil liberties enshrined in the Bill of Rights and the Constitution (p. xvii). Today, we think of the former as the right to be free from unequal treatment, often protected by statutory laws, and the latter as liberties that affect the ability to live …

The Ip Of Ipas, Stephen Wolfson, Brian Roth, Chase Scott, Dustin Watts, Charles Hicks, Shivani Patel

Other Colloquium, Conferences, and Symposia

Hosted by the Journal of Intellectual Property Law, this panel brought Brian Roth (Southern Brewing Co.), Chase Scott (Taylor, Feil, Harper & Lumsden, P.C.), and Dustin Watts (Terrapin Beer Co.) together with Stephen Wolfson (Research & Copyright Services Librarian, UGA Law School) and students from the Journal of Intellectual Property Law to discuss how breweries are navigating intellectual property issues. Free koozies to commemorate the event were distributed.

Overlapping Legal Rules In Financial Regulation And The Administrative State, Matthew C. Turk

Georgia Law Review

Reforms which seek to overhaul the Dodd-Frank Act
have begun to gain support within the Trump
Administration and Congress. The leading proposals go
beyond technical matters and reflect a wholesale
critique: financial regulation has become too
burdensome, too complex, and grants too much
discretion to regulators. This Article argues that what is
really at stake in these debates is the distinct issue of
“regulatory overlap”—the joint use of multiple legal
rules to address a common market failure. It begins by
developing a general framework for analyzing
overlapping legal rules of all kinds. That framework is
then applied in case studies …

Dual Class Stock In Comparative Context, Christopher Bruner

Scholarly Works

Review of the article by Marc T. Moore, Designing Dual Class Sunsets: The Case for a Transfer-Centered Approach, University College London Faculty of Laws Working Paper No. 9/2019, available at SSRN.

What The Hack?! Reexamining The Duty Of Oversight In An Age Of Data Breaches, Amanda M. Payne

Georgia Law Review

Due to the proliferation of electronic data and
advancements in technology, data breaches have become
commonplace. Data breaches are a threat to
corporations of all sizes and can have devastating
impacts. Focusing solely on Delaware law, this Note
explores how doctrines such as the business judgment
rule, exculpation provisions, and heightened pleading
standards have left shareholders with limited recourse
in holding directors liable for the catastrophic
consequences of data breaches. Recognizing that
shareholders have been unsuccessful alleging
Caremark-type claims arising out of a data breach, this
Note argues that the expansion of bad faith in Walt
Disney provides alternative ground …

Enhanced Scrutiny On The Buy-Side, Afra Afsharipour, J. T. Laster

Georgia Law Review

Empirical studies of acquisitions consistently find
that public company bidders often overpay for targets,
imposing significant losses on bidder shareholders.
Numerous studies have connected bidder overpayment
with managerial agency costs and behavioral biases that
reflect management self-interest. For purposes of
corporate law, these concerns implicate the behavior of
fiduciaries—the officers and directors of the acquiring
entity—and raise questions about whether those
fiduciaries are fulfilling their duty of loyalty. To address
comparable sell-side concerns, the Delaware courts
developed an intermediate standard of review known as
enhanced scrutiny. There has been little exploration,
however, of whether the rationales for applying
enhanced scrutiny …

Asset Partitioning And Financial Innovation, Christopher Bruner

Scholarly Works

Review of the article by Ofer Eldar and Andrew Verstein titled “The Enduring Distinction between Business Entities and Security Interests”, 92 Southern California Law Review, no. 2 (2019).

There's A Problem With Buybacks, But It's Not What Senators Think, Daniel J. Hemel, Gregg D. Polsky

Scholarly Works

In a deeply divided Washington, one of the few issues on which leading lawmakers on both sides of the aisle appear to agree is that corporations should be discouraged from buying back their stock from shareholders. This short article argues that, while this anti-buyback sentiment is misguided, there nevertheless are good tax policy arguments for reforming the tax treatment of buybacks. The article recommends adoption of a 1969 proposal made by Professor Marvin Chirelstein that would recharacterize (for tax purposes) buybacks as a pro rata cash dividend, followed by sales of shares from the shareholders who participate in the buyback …

Do Conflicts Of Interest Require Outside Boards? Yes. Bsps? Maybe., Usha Rodrigues

Scholarly Works

From the Symposium: Outsourcing the Board: How Board Service Providers Can Improve Corporate Governance

Boards of directors are curious creatures. The law generally requires corporations to have them—indeed, they are the focus of the corporate law we teach in Business Associations in U.S. law schools. The corporation is managed by directors or under their direction; directors hire and fire officers; directors are necessary for fundamental transactions.

But the reason why corporations have directors is not entirely clear. In the prototypical privately held corporation, the family firm, the same individuals serve both as directors and officers. The CEO (better known as …

Corporate Governance Reform In Post-Crisis Financial Firms: Two Fundamental Tensions, Christopher Bruner

Scholarly Works

The manner in which financial firms are governed directly impacts the stability and sustainability of both the financial sector and the "real" economy, as the financial crisis and associated regulatory reform efforts have tragically demonstrated. However, two fundamental tensions continue to complicate efforts to reform corporate governance in post-crisis financial firms. The first relates to reliance on increased equity capital as a buffer against shocks and a means of limiting leverage. The tension here arises from the fact that no corporate constituency desires risk more than equity does, and that risk preference only tends to be stronger in banks, and …

Learning To Be More Than A Lawyer, Carol Morgan

Scholarly Works

No abstract provided.

Book Review: Global Lawmakers: International Organizations In The Crafting Of World Markets By Susan Block-Lieb And Terence C. Halliday, Melissa J. Durkee

Scholarly Works

Susan Block-Lieb and Terence Halliday gradually build up an empirically grounded, meticulously realized argument that individual lawmakers matter. When one allows facts to inform theory rather than the other way around, the authors show, what becomes clear is that individual lawmakers are not just governmental delegates, but a whole variety of professionals, industry association representatives, and others with some stake in the lawmaking process. These actors work not just through formal processes, but also through an array of informal ones. Most importantly, their presence matters to the content of the legal norms that take hold around the world. The book …

Corporations And Sustainability, Beate Sjåfjell, Christopher Bruner

Scholarly Works

This chapter introduces the Handbook, providing an overview of its aims and structure, as well as the core research questions that the contributions to it collectively address. It discusses sustainability-related problems associated with the legal form of the corporation, and provides background on state-of-the-art research in natural sciences and other relevant fields that inform our understanding of sustainability. It concludes with specific research questions and a presentation of the Handbook’s structure.

Explaining Choice-Of-Entity Decisions By Silicon Valley Start-Ups, Gregg Polsky

Scholarly Works

Perhaps the most fundamental role of a business tax advisor is to recommend the optimal entity choice for nascent business enterprises. Nevertheless, even in 2018, the choice-of-entity analysis remains highly muddled. Most tax practitioners across the United States consistently recommend flow-through entities, such as LLCs and S corporations, to their clients. In contrast, a discrete group of highly sophisticated tax professionals, those who advise start-ups in Silicon Valley and other hotbeds of start-up activity, prefer C corporations.

Prior commentary has described and tried to explain this paradox without finding an adequate explanation. These commentators have noted a host of superficially …

To Understand Us V. Microsoft, Consider 'Acme V. Shamrock', Peter B. Rutledge, Amanda W. Newton

Popular Media

The February 27, 2018, Supreme Court argument in United States v. Microsoft Corp. raises profound questions about issues of executive power, corporate governance, technology, judicial power and international affairs. At stake for the government is the scope of its investigative authority to obtain information located in a foreign country, irrespective of that country’s laws. At stake for Microsoft is its ability to organize its international corporate affairs and the predictability of the laws that will govern those affairs. This article analyzes the potential effects of this critical Supreme Court case.

The Cost Of Appraisal Rights: How To Restore Certainty In Delaware Mergers, Matthew E. Miehl

Georgia Law Review

Delaware's legislature created appraisal rights to
ensure that minority shareholders received fair
compensation for shares that were involuntarily sold in
a merger. Modern securities practices blur the line
between a share's equity interest and its voting interest,
which enables appraisal arbitrage-individuals,
particularly hedge funds, petitioning for appraisal
rights over shares that another person has the voting
rights to. Instances of appraisalarbitragein Delaware
mergers are soaring and causing corporate buyers to be
uncertain about a merger's ultimate price. This Note
contends that Delaware's legislature can ameliorate
this problem by establishing a contemporaneous
ownership requirement and by initiating efforts to
centralize share …

The Power Few Of Corporate Compliance, Todd Haugh

Georgia Law Review

Corporate compliance in most companies is carried out under the assumption that unethical and illegal conduct occurs in a more or less predictable fashion. That is, although corporate leaders may not know precisely when, where, or how compliance failures will occur, they assume that unethical employee conduct will be sprinkled throughout the company in a roughly normal distribution, exposing the firm to compliance risk but in a controllable manner. This assumption underlies many of the common tools of compliance — standardized codes of conduct, firm-wide compliance trainings, and uniform audit and monitoring practices. Because regulators also operate under this assumption, …

Crowdfunding Signals, Darian M. Ibrahim

Georgia Law Review

Entrepreneurs can now “crowdfund,” or sell securities to unaccredited investors over the Internet, to raise capital. But will these companies be able to attract the follow-on investors (angels and venture capitalists) that are necessary for long-term success? Angels and VCs face extreme levels of information asymmetry when deciding whether to fund a company. Signals can reduce this asymmetry. Early commentary argues a company only crowdfunds as a last resort for fear of sending a negative signal about the company’s quality to follow-on investors. This Article argues the inverse. This Article argues a successful crowdfunding campaign can send a positive signal …

The Up-C Revolution, Gregg D. Polsky, Adam H. Rosenzweig

Scholarly Works

Over the past few years, a revolutionary new tax structure, known as the Up-C, has become increasingly popular, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the legacy owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange …

Tournament Of Managers: Lessons From The Academic Leadership Market, Usha Rodrigues

Scholarly Works

Why do firms usually make, not buy, their chief executive officers (CEOs)? Public corporations hire their CEOs from within the firm 78% of the time. They do so although earlier studies have found no clear evidence that internal hires perform better than external ones. So why do firms prefer them? Few scholars have focused on this simple question.

The reason why firms favor internal candidates matters not only in its own right, but also for an overlooked reason: it informs the controversial question of executive compensation. Currently board-compensation committees look to peer benchmarks to set executive pay. But, taking cues …