Business Organizations Law Commons^™

Substance Overload: A Comparative Examination Of Japanese Corporate Governance Law Through The Lens Of The Daiwa Bank Case, A. Reid Monroe-Sheridan

Washington International Law Journal

Japanese corporate governance law is facing a period of remarkable change. In light of Prime Minister Shinzo Abe’s push for corporate governance reforms and the explosive news of Olympus Corporation’s $1.7 billion accounting scandal in 2011, academics and practitioners alike are devoting renewed attention to the rules that govern Japan’s boardrooms. This increased focus brings to the fore two key questions about Japan’s modern corporate governance principles: how have they evolved and how are they applied in practice? To answer these questions, this article revisits the Daiwa Bank case, one of Japan’s most stunning business scandals. This international criminal conspiracy …

Home-Country Effects Of Corporate Inversions, Omri Marian

Washington Law Review

This Article develops a framework for the study of the unique effects of corporate inversions (meaning, a change in corporate residence for tax purposes) in the jurisdictions from which corporations invert (“home jurisdictions”). Currently, empirical literature on corporate inversions overstates its policy implications. It is frequently argued that in response to an uncompetitive tax environment, corporations may relocate their headquarters for tax purposes, which, in turn, may result in the loss of positive economic attributes in the home jurisdiction (such as capital expenditures, research and development activity, and high-quality jobs). The association of tax-residence relocation with the dislocation of meaningful …

Corporate Social Responsibility Versus Business And Human Rights: Bridging The Gap Between Responsibility And Accountability, Anita Ramasastry

Articles

This article explores the evolution of business and human rights (BHR) from a lawyer’s perspective and examines how it is contextually and conceptually different from corporate social responsibility (CSR) in its aims and ambitions. While CSR emphasizes responsible behavior, BHR focuses on a more delineated commitment in the area of human rights. BHR is, in part, a response to CSR and its perceived failure. This has led to a gap with two disciplines or strands of discourse that are diverging rather than converging. This article explores how the quest for accountability shapes a very different narrative for BHR, which takes …

White Paper: Options For A Treaty On Business And Human Rights, Anita Ramasastry, Douglass Cassell

Articles

The United Nations Human Rights Council decided in June 2014 to establish an Intergovernmental Working Group to “elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises.” The first meeting of the Working Group took take place in Geneva in July 2015. The Council did not further specify what sort of instrument should be drafted. The Center for Human Rights of the American Bar Association and the Law Society of England and Wales asked the present authors to prepare a “White Paper” on possible options for a treaty …

Outsourcing Corporate Accountability, Kishanthi Parella

Washington Law Review

This Article addresses the problem of preventing human rights violations abroad that result from the globalization of business. It specifically explores the challenge of improving labor standards in global value chains. The modern business has changed dramatically and has “gone global” in order to court foreign markets and secure resources, including labor. Familiar household names, such as Nike and Apple, have “outsourced” many of their functions to suppliers overseas. As multinational buyers, they dominate one end of the global value chain. At the opposite end of the value chain are the local managers and owners of the factories and workhouses …

Too Many Tiaras: Conflicting Fiduciary Duties In The Family-Owned Business Context, Karen E. Boxx

Articles

Family-owned businesses have been called the "backbone of the U.S. economy," but passing control of a family business to the next generation is so complex that the majority of family businesses do not survive the transition. A common scenario that leads to problems is where owners want to leave the business to their children but only one child is interested in and capable of managing the business.

A popular solution is to leave the interested child an equal share of the business, together with management control, and leave the other children's interests in the business in trust, with the manager …

The Globalization Of Corporate Law: The End Of History Or A Never-Ending Story?, Franklin A. Gevurtz

Washington Law Review

Considerable scholarship during the last few decades addresses the question of whether corporate laws are becoming global by converging on commonly accepted approaches. Some scholars have asserted that such convergence is occurring around the most efficient laws and institutions, thereby marking the “End of History” for corporate law. This Article responds to such assertions by developing three claims not previously given due attention in the convergence literature. First, it demonstrates that the history of corporations and corporate law has been one of seemingly constant movement toward global convergence, yet the resulting convergence is always incomplete or transitory. Next, it points …

Directors' Liability For Corporate Faults And Defaults—An International Comparison, Helen Anderson

Washington International Law Journal

Australia’s new Rudd Government has indicated to business leaders that it intends to review various aspects of corporate law, including the imposition of personal liability on directors for corporate fault. Their concern is that the present corporate law regime is causing directors to be overly cautious in making decisions, to the detriment of the efficient operation of companies and the well-being of our economy. At the same time, the government acknowledges the importance of imposing appropriate sanctions where a company or its officers fail to meet required standards. These are universal concerns. To inform this debate, this article will look …

Translating Unocal: The Expanding Web Of Liability For Business Entities Implicated In International Crimes, Anita Ramasastry, Robert C. Thompson, Mark B. Taylor

Articles

The Ninth Circuit ruled that a corporation could be held liable under the federal Alien Tort Claims Act for its complicity in a violation of international criminal law occurring outside the U.S. (Doe I v. Unocal Corp., 395 F.3d 932 (9th Cir. 2002)). Since then, litigants have filed increasing numbers of such cases. These cases raise two questions: (1) Is the United States the only country that provides judicial accountability for business entities involved in international crimes abroad? and (2) How are other countries "translating" the basic kinds of accountability that Unocal recognized into their own legal systems? This Article …

Transitioning The Family Business, Dwight Drake

Washington Law Review

By any measure, family-dominated businesses are the backbone of the American economy. Although a large majority of family businesses are managed by senior family members who are older than age 55 and more than 80 percent of such senior family members claim that they want the business to remain in the family, less than 30 percent of such businesses have tackled the challenge of developing a plan for transitioning the business to the next generation. For over 90 percent of such families, this planning challenge is aggravated by the fact that they have no diversified wealth: the family’s wealth is …

The Representative Power Of The Shareholders' General Meeting Under Chinese Law, Charles Zhen Qu

Washington International Law Journal

Under China’s company law regime, the power to represent the company resides not in the board of directors but in an individual person called a legal representative (fading daibiaoren) who is a senior officer of the company. The mechanism of legal representative, however, is often rendered ineffective as it is inherently susceptible to abuse. The mechanism becomes dysfunctional when the legal representative is unavailable. The legal representative’s unavailability, especially when the board of directors is also ineffective, raises the question of whether the general meeting has the power to control corporate actions. To answer this question, this Article considers the …

Transitioning The Family Business, Dwight Drake

Articles

By any measure, family-dominated businesses are the backbone of the American economy. Although a large majority of family businesses are managed by senior family members who are older than age 55 and more than 80 percent of such senior family members claim that they want the business to remain in the family, less than 30 percent of such businesses have tackled the challenge of developing a plan for transitioning the business to the next generation.

For over 90 percent of such families, this planning challenge is aggravated by the fact that they have no diversified wealth: the family’s wealth is …

The Nireco Poison Pill: The Impact Of A Court Injunction, Toshihiko Shimizu, Toshihiro Igi, Christopher J. Kodama

Washington International Law Journal

The emergence of a market for corporate control in Japan is a phenomenon that many commentators on Japan’s business and legal environs had been anticipating since the turn of the new millennium. A gradual decline in corporate crossshareholding and stable shareholding by financial institutions along with a concomitant increase in foreign and individual shareholders, a significant number of inefficient firms still being affected by Japan’s prolonged recession until recent years and trading at prices below their market value, and Commercial Code revisions making the legal environment more conducive to merger and acquisition activity and providing for more flexible restructuring mechanisms, …

Perverse Main Bank Rescue In The Lost Decade: Proof That Unique Institutional Incentives Drive Japanese Corporate Governance, Dan W. Puchniak

Washington International Law Journal

Two of the most prominent Japanese corporate governance scholars, Professors Miwa and Ramseyer (“M&R”), have recently published numerous articles and a book setting out their contrarian free-market theory of Japanese corporate governance. According to their theory, contemporary Japanese corporate governance is, and always has been, driven by free-market forces and not government incentives. M&R’s theory is enchanting in its simplicity and universality, as it uses standard economic theory to provide a single, and seemingly logical, solution to a myriad of complex legal, institutional, historical and cultural conundrums that have challenged observers of Japanese corporate governance for decades. Unfortunately, M&R’s theory …

Introduction To The New Company Law Of The People's Republic Of China, Steven M. Dickinson

Washington International Law Journal

This article briefly analyzes the new Company Law and its effects on doing business in China. After a brief history of the previous version of the law, this article examines the many changes to management and articles of association, capital requirements, limited liability companies, access to corporate information, piercing the corporate veil, third party loans, and legal remedies for improper actions. It goes on to look at the impact on the structure of foreign investments and discusses the likely effects of the new law in actual practice.

Strengthening Auditor Independence: Reestablishing Audits As Control And Premium Signaling Mechanisms, Sean M. O'Connor

Washington Law Review

As recent scandals have demonstrated, ensuring the independence of auditors from the publicly traded clients whose books they inspect is one of the most vexing problems in the financial world today. Arguably, the imposition of a mandatory audit system through the 1930s federal securities laws created the modem problem of auditor independence. The core issue is that the statutory audit is simply a commodified cost of doing business for issuers that imposes an impossible obligation to serve an unspecified "investing public" on the auditors. Yet, this investing public neither hires, fires, nor controls the auditors. Instead, the audit relationship is …

The Current State Of Equity Investments By Foreign Funds [In South Korea] And Related Legal Issues, Hee Chul Kang, Eugene Kim

Washington International Law Journal

On September 15, 2004, the South Korean press gave extensive news coverage to a series of private individual “Question & Answer” session meetings which the Capital Group Companies Fund (“Capital Group”) held with many of the top chief executive officers (“CEOs”) of major Korean corporations. Known worldwide as a top U.S. private equity management company, the Capital Group is currently the largest institutional investor in South Korea. As a major shareholder of large corporations such as Samsung Electronics, the Shin Han Financial Group, SK Group, and Hyundai Motors, the U.S. investment firm invited their CEOs to address questions and seek …

Risky Business: Directors Making Business Judgments In Washington State, Adam J. Richins

Washington Law Review

Section 23B.08.300 of the Revised Code of Washington (RCW) defines the general standards of conduct for directors in discharging corporate duties. The Washington State Legislature developed these standards to govern the manner in which directors perform their duties, rather than to impose liability on directors for negligent business decisions under the business judgment rule. Indeed, the business judgment rule, as defined by leading corporate-law jurisdictions and the American Bar Association, generally protects directors from liability associated with negligent business decisions so long as the director makes decisions in good faith, on an informed basis, without self-interest, and in accordance with …