Business Organizations Law Commons^™

Transnational Delegation, Accountability And The Administrative Governance Of Biofuel Standards, Phillip Paiement

Transnational Business Governance Interactions Working Papers

The European Union’s 2009 Renewable Energy Directive delegated to privately run ‘voluntary schemes’ the task of monitoring biomass production sites and ensuring their compliance with the Directive’s sustainability requirements. This chapter assesses the consequences of the Commission’s delegation for the administrative governance architectures of non-state sustainable biofuel standards operating outside the EU, focusing in particular on the effects this governance interaction has on the involvement of vulnerable stakeholders in the governance of sustainable biofuels. Utilizing the Transnational Business Governance Interactions framework complemented by the theory of governance assemblages, this research provides a meso-level analysis of the character and effects of …

Federalism Of Personal Finance: State & Federal Retirement Plans, William Birdthistle

All Faculty Scholarship

In this Article, I consider possible approaches that attempt to improve the plans through which millions of Americans tend to their life savings. I begin by considering the inadequacies of our current system of defined contribution accounts and then address two possible alternatives: the first being a federal account universally available to Americans based largely on the model of the Thrift Savings Plan; the second being a system of statebased retirement accounts like those that have already been developed in a handful of states. Though I conclude that a single, federal plan would be superior, either alternative approach would be …

Tax Havens As Producers Of Corporate Law, William J. Moon

Faculty Scholarship

This Review Essay situates Christopher Bruner’s new book, Re-imagining Offshore Finance, within the literature examining the regulation of cross-border finance and highlights its import for thinking about the complicated (and contested) relationship between territorially-configured domestic laws and the increasingly liberal movement of capital. Part I sets out the book’s central thesis. In addition to highlighting Bruner’s novel framework identifying the factors that propel certain small jurisdictions into becoming magnets for cross-border finance, I outline the limits of the framework in accounting for the stability in the overall demand for the commercialization of sovereignty, only one of which is facilitating …

How And Why Corporations Became (And Remain) Persons Under Criminal Law, W. Robert Thomas

Florida State University Law Review

No abstract provided.

The Corporate Personhood Two-Step, Carliss N. Chatman

Scholarly Articles

The corporation cannot exist without its founders complying explicitly with the requirements for incorporation provided by state statutes. The artificial entity theory acknowledges that the corporation cannot and will not exist until its founders comply explicitly with the requirements for corporate formation and in-corporation imposed by the state. A corporation is also, by design, a new and distinct entity divorced from its people. The real entity theory acknowledges that once a corporation is formed, it has rights that belong only to the corporation it-self, wholly separate from its founders. By merging the artificial entity and real entity theories, the Court …

Corwin V. Kkr Financial Holdings Llc—An After-Action Report, Joseph R. Slights Iii, Matthew Diller

Scholarly Articles

Vice Chancellor Slights presented this speech as the Eighteenth Annual Albert A. Destefano Lecture On Corporate, Securities, and Financial Law at the Fordham Corporate Law Center on April 9, 2018. Includes an introduction by Matthew Diller, Dean of the Fordham University School of Law.

Intellectual Property Issues For Startups Participating In Entrepreneurship Support Programs In Wisconsin, Nathaniel S. Hammons

Marquette Intellectual Property Law Review

Wisconsin is not known as a bastion of startup activity. Yet the startup scene has changed significantly since the turn of the century, and the pace of change has been accelerating. In 2001, only eight early-stage Wisconsin companies raised capital, totaling less than $53 million. In 2016, by way of comparison, 137 early-stage Wisconsin companies raised more than $276 million in investment capital. As someone familiar with the state might surmise, more than half of the deals closed in 2016 were in the Madison area, home to the University of Wisconsin-Madison and large employers in information technology, healthcare, and life …

Celebrating Wisconsin Entrepreneurs: Lessons Learned From Wisconsin Entrepreneurs And Businesses, And Future Prospects For A Healthcare Sector That Is Healthcare Reform, Daniel S. Sem, Si Gou, Taleb Aljabban

Marquette Intellectual Property Law Review

Wisconsin has a rich history of entrepreneurial activity, which is often not appreciated beyond its well-recognized strength in the beer and cheese industries. However, Wisconsin’s entrepreneurial nature has been called into question. Recently, Wisconsin was ranked fiftieth in the United States for startup activity by the Kauffman Foundation. In contrast, Wisconsin ranks at the top of the country for startups that are local and established business with more longevity. The first half of this article will review some of the challenges and opportunities that have faced Wisconsin entrepreneurs, and will provide an overview of over 150 Wisconsin companies (Table 1), …

The Mystery Of Section 253(B), Matthew Gagnier

Marquette Intellectual Property Law Review

In 2014, Elon Musk, the renowned and socially-minded CEO of Tesla Motors, Inc., posted a blog on Tesla’s website that stated the company would be freeing up many of its patents involved in the creation of the company’s electric cars to any interested party. Yet again, Musk astounded the public by choosing the betterment of society over corporate profits—stirring up a more positive image than any other corporate personality. But there are numerous questions that Musk’s positive PR have drowned out: Where can you access the patents?; How did freeing up the patents get past the other executive officers and …

We Interrupt This Program...To Talk Of Transfer Restrictions, Daniel S. Kleinberger

Faculty Scholarship

A recent Iowa decision, REG Washington, LLC v. Iowa Renewable Energy LLC, is a useful first word on transfer restrictions applicable to ownership interests in a limited liability company, and more particularly transfer restrictions applicable to so-called transferable interests, i.e., economic rights. The decision’s analysis centers around the “pick your partner” principle and expressly rejects any analogy to corporate law cases addressing stock transfer restrictions. The decision raises certain issues and is hardly the last word on this topic.

Beyond Corporate Form: A Response To Dan Depasquale, Surbhi Sarang, And Natalie Bump Vena’S Forging Food Justice Through Cooperatives In New York City, Jonathan Brown

Elisabeth Haub School of Law Faculty Publications

In their article, Forging Food Justice Through Cooperatives in New York City, Dan DePasquale, Surbhi Sarang, and Natalie Bump Vena (the “Authors”) argue that consumer-owned and worker-owned cooperatives hold promise as a means for advancing policy objectives associated with “food justice,” namely building community wealth and power and providing more affordable access to healthy food in low-income and minority communities. Looking to examples of legislation and policies in other jurisdictions, they advocate for a wide range of policies to promote the viability of cooperatives in New York City, including reforms to cooperative corporation laws and strategies for better allocating funding …

Regulating The “Too Big To Jail” Financial Institutions, Jerry W. Markham

Brooklyn Law Review

This article addresses the “too big to jail” regulatory model in which large banks pay hundreds of billions of dollars to settle multiple and duplicative regulatory charges brought by a horde of state, federal, and even foreign regulators. The banks pay those massive settlements in order to keep their banking charters and to obtain immunity from prosecution for senior executives. In turn, regulators benefit from the headlines these fines generate. Much criticism has been directed at these settlements because the banks are allowed to continue business as usual and no senior executives are jailed. Other critics contend that these settlements …

Opacity, Fragility, & Power: Lessons From The Law Enforcement Response To The Financial Crisis, Gregory M. Gilchrist

Brooklyn Law Review

Review of Mary Kreiner Ramirez and Steven A. Ramirez, THE CARE FOR THE CORPORATE DEATH PENALTY: RESTORING LAW AND ORDER ON WALL STREET (New York 2017) The Case for the Corporate Death Penalty, by Mary Kreiner Ramirez and Steven A. Ramirez, argues that the limited law enforcement response to the 2008 financial crisis represented an unprecedented failure of the rule of law. It further maintains that the weak response by law enforcement was caused by the economic and political power of the largest financial institutions and those who run them. It concludes that the failure to vigorously prosecute the people …

Corporate Ethics: Approaches And Implications To Expanding The Corporate Mindset Of Profitability, 49 Loy. U. Chi. L.J. 637 (2018), Arthur Acevedo

UIC Law Open Access Faculty Scholarship

This Article discusses the convergence of law and ethics in the context of corporations. It begins by detailing past attempts at and limitations on regulating corporate conduct. It then explores the business judgment rule in the context of ethical conduct. Finally, it considers the growing influence of millennials and social investing on corporate conduct, and concludes by cautioning corporate directors to adopt ethical practices in order to remain relevant in the marketplace.

The (Un)Changing Derivative Suit, Jessica M. Erickson

Law Faculty Publications

The past 25 years brought great upheaval in shareholder litigation. The Private Securities Litigation Reform Act of 1995 (“PSLRA”) upended securities class actions. As a result of this legislation, institutional investors now play a far more prominent role in these cases (Choi, et al. 2005), but also face procedural hurdles nearly unprecedented in our legal system (Erickson 2016). More recently, the number of merger class actions skyrocketed, as shareholders began to challenge nearly every significant merger or acquisition, often in multiple jurisdictions across the country (Sinha 2016). To curb these suits, courts announced increased scrutiny of settlements and invited companies …

The Macpherson-Henningsen Puzzle, Victor P. Goldberg

Faculty Scholarship

In the landmark case of MacPherson v. Buick, an automobile company was held liable for negligence notwithstanding a lack of privity with the injured driver. Four decades later, in Henningsen v. Bloomfield Motors, the court held unconscionable the standard automobile company warranty which limited its responsibility to repair and replacement, even in a case involving physical injury. This suggests a puzzle: if it were so easy for firms to contract out of liability, did MacPherson accomplish anything?

Going Beyond Ethics And Compliance: The Growing Corporate Movement To Embrace Social Value Creation, Seth J. Green

School of Business: Faculty Publications and Other Works

A growing number of companies are embracing social value creation as a core part of their business strategy. This Essay illuminates why businesses are increasingly committed to doing well and doing good and then analyzes how corporate law is evolving to support this growing corporate movement.

Sexual Harassment And Corporate Law, Daniel Hemel, Dorothy S. Lund

Faculty Scholarship

The #MeToo movement has shaken corporate America in recent months, leading to the departures of several high-profile executives as well as sharp stock price declines at a number of firms. Investors have taken notice and taken action: Shareholders at more than a half dozen publicly traded companies have filed lawsuits since the start of 2017 alleging that corporate fiduciaries breached state law duties or violated federal securities laws in connection with sexual harassment scandals. Additional suits are likely in the coming months.

This Article examines the role of corporate and securities law in regulating and remedying workplace sexual misconduct. We …

The Rise Of Foreign Ownership And Corporate Governance, Merritt B. Fox

Faculty Scholarship

This chapter explores the link between corporate governance and the rise of foreign ownership. It presents statistics that illustrate the dramatic rise in foreign ownership over the last few decades and then seeks to explain this rise and its relationship to corporate governance. In order to situate the subject under study within its larger context, this explanation starts with an exploration of the factors independent of corporate-governance considerations that favor a global market for securities and those that impede it. It will be shown that the rise in foreign ownership globally can be explained in significant part by the weakening …

Is Corporate Governance A First Order Cause Of The Current Malaise?, Jeffrey N. Gordon

Faculty Scholarship

The US has evolved a regime of high-powered corporate governance in which managerial performance is disciplined through shareholder value metrics. This paper argues against over-stating the importance of this regime in creating problems of inequality, greater economic insecurity, and slower economic growth. Corporate governance acts principally as the transmission mechanism to the behaviour of the particular firm of changes in the global and domestic competitive environment. The critical problem is a risk-shift from shareholders, who now have access to robust diversification against firm-specific risks, and towards employees, whose concentrated firm-specific investments are hard to protect or diversify. The paper argues …

Economic Individualism And Preference Formation, Andrzej Rapaczynski

Faculty Scholarship

This note examines some issues involved in an attempt to go beyond the assumption, long-made by most economists, that people’s preferences are simply to be treated as “given” and that the principle of consumer sovereignty entails a refusal to consider some (or some people’s) revealed preferences as more authoritative than others. The most important break with that assumption has been the development of behavioral economics, which shows that people may not always know what they really want, and that economists have to develop a more critical approach, distinguishing people’s true preferences from those that are merely apparent. While this approach, …

How Investors Can (And Can't) Create Social Value, Paul Brest, Ronald J. Gilson, Mark A. Wolfson

Faculty Scholarship

Most investors throughout the world have a single goal: to earn the highest risk- adjusted financial returns. They would not accept a lower financial return from an investment that also produced social benefits.

More recently, an increasing number of socially-motivated investors have goals beyond maximizing returns. They also seek to align their investments with their social values (value alignment), and some also seek to cause the companies in which they invest to create more social value as a result of their investment (social value creation). We show in this essay that while it is relatively easy to achieve value alignment, …

Can Restitution Save Fragile Spiderless Networks?, Ariel Porat, Robert E. Scott

Faculty Scholarship

This Article examines the dramatic increase in business networks in recent decades and considers whether the law can play a useful role in supporting the efficient functioning of these inter-firm relationships for coordination and cooperation. Repeat play, reputational sanctions, and norms of trust and reciprocity are the common explanations for the flourishing of networks in many industries and places. But the evidence also shows that a certain class of networks often fails to survive or function effectively and beneficial cooperation among these network members is impaired. These fragile networks develop organically without a controlling party or hierarchy at the center …

Valuation Disputes In Corporate Bankruptcy, Kenneth M. Ayotte, Edward R. Morrison

Faculty Scholarship

Prior scholarship points to disagreements about valuation and judicial valuation error as key drivers of Chapter 11 outcomes. Avoiding valuation disputes and valuation errors is also the underlying driver of most proposed reforms, from Baird’s auctions to Bebchuk’s options. In this paper, we undertake a detailed examination of bankruptcy court opinions involving valuation disputes. Our paper has two goals. The first is to understand how parties and their expert witnesses justify their opposing views to the judge, and how judges decide between them. The second is to provide practical guidance to judges in resolving valuation disputes. We document surprisingly pervasive …

Protecting The Sacred Writing: The Operating Agreement, Daniel S. Kleinberger

Faculty Scholarship

This column provides practical steps toward protecting an LLC's written operating agreement from claims of oral or implied-in-fact modification. Such claims undercut the purpose of “reducing the agreement to writing,” replacing definiteness with uncertainty and substituting swearing matches for the written word.

How Can I Be A Party To A Contract And Yet Lack Standing To Sue Another Party For Breach?, Daniel S. Kleinberger

Faculty Scholarship

The distinction between direct and derivative claims follows necessarily from the concept of a legal person being separate and distinct from its owners, raises and resolves a question of standing, has serious practical consequences in litigation, and is central to the governance of any business entity. In a closely held business, the distinction usually protects the deal the owners have made for themselves. On some occasions, however, the distinction helps shelter a miscreant majority owner who has managed to harm a fellow owner indirectly.

This column will briefly describe the three approaches to the direct-derivative distinction found in the case …

Quacks Or Bootleggers: Who’S Really Regulating Hedge Funds?, Jeremy Kidd

Articles

Influential scholars of corporate law have questioned previous federal interventions into corporate governance, calling it quackery. Invoking images of medical malpractice, these critiques have argued persuasively that Congress, in responding to crises, makes policy that disrupts efficient private rules and established state laws. This Article applies the Bootleggers and Baptists theory to show that Dodd–Frank’s hedge fund rules are more than just negligent or reckless, but designed to benefit special interests that compete with the hedge fund model. Those rules offer no solutions to any real or perceived risks arising from hedge fund investing, but might offer an advantage to …

Propping Up Corporate Crime With Corporate Character, Miriam H. Baer

Faculty Scholarship

No abstract provided.

Constitutive Compliance, Edward Janger

Faculty Scholarship

No abstract provided.

The Big Crowd And The Small Enterprise: Intracorporate Disputes In The Close-But-Crowdfunded Firm, Martin Edwards

Journal Articles

Equity crowdfunding is a financial innovation that allows small businesses and startups to access capital through soliciting investment over the Internet. The current literature on crowdfunding has focused on its theoretical background and on the development of crowdfunding exemptions from the securities laws permitting the practice. There is less discussion of the impact of crowdfunding on corporate governance. This article fills that gap by outlining the potential for a panoply of intracorporate disputes between and among majority shareholders and “crowd” minority shareholders, placing the discussion within the longstanding—if uneasy—divide in judicial treatment of disputes in public corporations and close corporations. …