Business Organizations Law Commons^™

Charting New Frontiers: A Legal Literature Review Of Social Entrepreneurship And Impact Investing 2018–2023, Anne M. Tucker

Scholarly Works

This Article surveys 177 articles published in U.S. law reviews and journals between 2018–2023 that contribute to the fields of social enterprise, social finance and impact investing. The Article extends our earlier legal literature review of the same fields from 2007-2017.Our collective 17-year review of this span of legal literature documents the legal issues examined by scholars with respect to the development of sophisticated alternative business forms, like the Delaware Public Benefit Corporation; the growth in impact investing; the enduring academic interest in corporate purpose; and the effects that developments related to ESG and corporate sustainability are having on the …

Business Risk, Capital Markets, And Sustainable Companies, Christopher Bruner

Scholarly Works

Corporate sustainability is inherently bound up with corporate risk, and particularly with risk-taking incentives of various corporate actors – including directors and officers who manage the business, and shareholders who can exert pressure upon corporate governance in various ways. This article sets out a framework for thinking about corporate risk-taking incentives and how they might be reformed to curb excessive risk and externalization of costs, thereby improving corporate sustainability.

Numerus Clausus No More: A Fundamental Shift In Delaware Corporate Law, Usha Rodrigues

Scholarly Works

This Essay applies Thomas Merrill and Henry Smith’s theory of numerus clausus—the idea that a limited menu of legal forms reduces transaction costs—to the world of business entities. Historically, investors had a straightforward choice: the decentralized general partnership or the centralized corporation, each with predictable governance and liability rules. Even innovations like the LLC, benefit corporation, and L3C merely expanded the list of standard options, preserving a clear, finite set of organizational forms.

But recent changes in Delaware corporate law have shattered this standardization norm. The addition of Section 122(18) to the Delaware General Corporation Law, combined with increasing reliance …

Corporate Personhood, Corporate Rights, And The Contingency Of Corporate Law, Christopher Bruner

Scholarly Works

Corporate personhood and corporate rights are co-constitutive in nature, meaning that they are mutually constructed – there is no singular, one-way causal path between a conception of corporate personhood and a conception of corporate rights. Consequently, modes of reasoning that purport to deduce the substance and extent of corporate rights from the mere fact of corporate personhood are logically circular. Although the relationship between corporate personhood and corporate rights is real and significant, this relationship cannot, in and of itself, comprehensively specify the content of corporate rights; their substance can only be specified by reference to external normative criteria. The …

Intermediaries And Differentiated Voting, Usha Rodrigues

Scholarly Works

This article explores the implications of differentiated voting—precatory, volitional, veto, and vetting—for institutional intermediaries such as mutual funds and pension funds. Building on the work of Jill Fisch and Jeff Schwartz, the piece argues that fund managers should exercise informed fiduciary judgment rather than rely on pass-through voting, which often proves impractical for retail investors. While precatory proposals on broad governance or ESG issues may allow meaningful shareholder input, director elections, bylaw amendments, mergers, and conflicted transactions require the expertise and discretion of intermediaries. Using Tesla as a case study, the article illustrates how different voting categories operate in …

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 …

Debt’S Emotional Encumbrances, Pamela Foohey

Scholarly Works

This chapter focuses on the role of emotions in the theory and practice of commercial and consumer credit laws, including bankruptcy, in the United States. It assesses knowledge about people’s emotions regarding personal and business financial problems, and evaluates how “money law” systems account for these emotions. This assessment finds that emotions surrounding taking on and being able to pay back debt differ between business leaders and people who shoulder household debt. These differences are traceable in large part to historical understandings of the respectability of incurring debt. This history has shaped the development of bankruptcy, commercial, and consumer credit …

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 …

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 …

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.

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.

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 …

Learning To Be More Than A Lawyer, Carol Morgan

Scholarly Works

No abstract provided.

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 …

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).

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.

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 …

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 …

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 …