Law Commons^™

For Haven's Sake: Reflections On Inversion Transactions, Reuven S. Avi-Yonah

Articles

This article discusses “inversion” transactions, in which a publicly traded U.S. corporation becomes a subsidiary of a newly established tax haven parent corporation. In the last three years, an increasing number of these transactions have been taking place, undeterred by the shareholderlevel tax imposed by the IRS on them in 1994. The article first discusses the reasons for the increasing popularity of the transactions and the tax goals they aim at achieving (primarily avoiding subpart F and U.S. earnings stripping). The article then discusses the tax policy implications of these transactions. In the short run, the article suggests that the …

Citizenship Of Limited Liability Companies For Diversity Jurisdiction, Debra R, Cohen

Journal Articles

The limited liability company is an increasingly popular form of business organization. Due to its hybrid nature, however, the citizenship of a LLC for purposes of diversity jurisdiction is difficult to determine. Should the citizenship of a LLC be determined as if it were a corporation, in which case it has "entity" citizenship, or as if it were a partnership, in which case its citizenship is determined by the citizenship of "persons composing" the LLC?

This Article examines the history of the evolution of hybrid organizations like the LLC, and the rules for determining the citizenship of business organizations in …

Form And Function In Business Organizations, Richard A. Booth Marbury Research Professor Of Law

Faculty Scholarship

In this piece, I argue that the recent proliferation of forms of business organizations in addition to the traditional partnership and corporation may have arisen from the implicit recognition that various organizations may serve needs of business people in different types of businesses, and that traditional theory of the firm explanations are too narrowly focused on market failure explanations for firm formation. I identify at least five different factors that may motivate people to form a business organization and discuss how these different factors may militate in favor of one business form rather than another. I conclude that the collections …

Doing Well While Doing Good: Reassessing The Scope Of Directors' Fiduciary Obligations In For-Profit Corporations With Non-Shareholder Beneficiaries, Lisa M. Fairfax

Faculty Scholarship

This article explores corporate fiduciary duties in the context of for-profit companies that operate in traditionally non-profit spheres. The rise in “privatization”—a conversion from certain businesses being operated by nonprofit and government entities to operation by for-profit companies—has sparked considerable opposition, particularly when it occurs within industries that deliver some societal good such as health care or education. Opponents claim that for-profit companies cannot pay heed to their social or charitable commitments because they must focus on generating profits. In a related debate, many corporate scholars disagree about the proper aim of the corporation—with some insisting that it should serve …

Never Trust A Corporation, William W. Bratton

Georgetown Law Faculty Publications and Other Works

I would like to start by noting multitudinous objections to assertions made in Larry Mitchell's Corporate Irresponsibility: America's Newest Export. But I waive these points for purposes of this Symposium. I would prefer to take the occasion to celebrate the book. So I will make two points on the subject of corporate social responsibility on which the book and I stand in complete accord.

A Control-Based Approach To Shareholder Liability For Corporate Torts, Nina A. Mendelson

Articles

Some commentators defend limited shareholder liability for torts and statutory violations as efficient, even though it encourages corporations to overinvest in and to externalize the costs of risky activity. Others propose pro rata unlimited shareholder liability for corporate torts. Both approaches, however, fail to account fully for qualitative differences among shareholders. Controlling shareholders, in particular, may have lower information costs, greater influence over managerial decisionmaking, and greater ability to benefit from corporate activity. This Article develops a control-based approach to shareholder liability. It first explores several differences among shareholders. For example, a controlling shareholder can more easily curb managerial risk …

Stakeholder Protection In Germany And Japan, Mark J. Loewenstein

Publications

This Essay considers the stakeholder debate in the context of the German and Japanese legal systems. Although, nominally, corporations in those countries must operate in the interests of shareholders, in fact nonshareholder constituencies have considerable influence on corporate decision makers. Of equal importance, weak securities markets and ineffective or nonexistent legal protections for shareholders are also important factors in strengthening the position of nonshareholder constituencies and freeing directors to consider their interests. Thus, the stakeholder debate is more of an issue in the United States and Britain, where more shareholder-centic models flourish.

Venture Capital On The Downside: Preferred Stock And Corporate Control, William W. Bratton

Georgetown Law Faculty Publications and Other Works

This Article takes the occasion of the simultaneous collapse of the high technology stock market and the failure of the dot-coin startups, along with the subsequent retrenchment of the venture capital business, to examine the law and economics of downside arrangements in venture capital contracts. The subject matter implicates core concerns of legal and economic theory of the firm. Debates about the separation of ownership and control, relational investing, takeover policy, the law and economics of debt capitalization, and bankruptcy reform, all grapple with the downside problem of controlling and terminating unsuccessful managers for the benefit of outside debt and …