Business Organizations Law Commons^™

Team Production Revisited, William Wilson Bratton

Articles

This Article reconsiders Margaret Blair and Lynn Stout's team production model of corporate law, offering a favorable evaluation. The model explains both the legal corporate entity and corporate governance institutions in microeconomic terms as the means to the end of encouraging investment, situating corporations within markets and subject to market constraints but simultaneously insisting that productive success requires that corporations remain independent of markets. The model also integrates the inherited framework of corporate law into an economically derived model of production, constructing a microeconomic description of large enterprises firmly rooted in corporate doctrine but neither focused on nor limited by …

Shareholder Wealth Maximization: A Schelling Point, Martin Edwards

St. John's Law Review

(Excerpt)

Imagine a reality television game show where two contestants begin the game in two different places in New York City. The object of the game is for the two contestants to find each other, but they do not know anything about each other and they have no way of communicating. If they succeed, both contestants win a prize. If they fail, they get nothing. With no ability to explicitly bargain over the meeting, the parties have to make an educated guess about what the other person is most likely to do. Most people, confronted with this sort of tacit …

The Cost Of Doing Business? Corporate Registration As Valid Consent To General Personal Jurisdiction, Matthew D. Kaminer

Washington and Lee Law Review Online

Every state has a statute that requires out-of-state corporations to register with a designated official before doing business there, but courts disagree on what impact, if any, those statutes can or should have on personal jurisdiction doctrine. A minority of states interpret compliance with their registration statutes as the company’s consent to general personal jurisdiction, meaning it can be sued on any cause of action there, even those unrelated to the company’s conduct in that state. The United States Supreme Court upheld this “consent by registration” theory over 100 years ago, but since then has manifested a sea change in …

It's None Of Your Business: State Regulation Of Tribal Business Undermines Sovereignty And Justice, Robin M. Rotman, Sam J. Carter

Faculty Publications

The U.S. Constitution grants the federal government plenary power over American Indian affairs, yet states are increasingly attempting to assert regulatory and tax jurisdiction over tribal businesses. This overreach threatens tribal sovereignty and contravenes the terms of treaties entered between the United States and American Indian tribes. This Article begins by examining the legal foundations of federal, state, and tribal relations. It then examines recent cases across four business sectors - gaming, tobacco sales, petroleum sales, and online lending - in order to illustrate the pervasive jurisdictional challenges faced by courts in cases involving tribal businesses. This Article offers three …

Sustainable Business Law? The Key Role Of Corporate Governance And Finance, Jason J. Czarnezki, Colin Meyers

Elisabeth Haub School of Law Faculty Publications

Lawyers, law schools, and corporate entities have shown an increased interest in sustainable business strategies. This is reflected by the increase in sustainability practice groups, law school courses, and textbooks focusing on the relationship between sustainability and business law; lawyers moving into executive-level sustainability positions in the private sector; and the proliferation of corporate sustainability policies, as well as increased interest in mitigating climate risk and engaging in sustainable finance. But what exactly is sustainable business law, and what role do lawyers play in advancing sustainability in the corporate world? This Article argues that “sustainable business law” has emerged as …

Sacred Corporate Law, Giancarlo Anello, Sergio Alberto Gramitto Ricci, Mohamed Arafa

Faculty Works

This Article investigates the sacred origins of the corporate form. It sheds light on the sacred rituals performed to establish Ancient Roman cities as legal entities. It discusses the role of the Roman Catholic Church in developing the corporate form and in giving birth to a systemized set of rules regulating corporations, which we commonly call corporate law. It analyzes the limitations to the use of the corporate form in Islamic law as well as the streams of Islamic law jurisprudence that recognize legal capacity to specific entities with religious, social, or charitable purposes. It surveys the characteristics of two …

Corporate Governance Gaming: The Collective Power Of Retail Investors, Sergio Alberto Gramitto Ricci, Christina M. Sautter

Faculty Works

The GameStop saga and meme stock frenzy have shown the pathway to the most disruptive revolution in corporate governance of the millennium. New generations of retail investors use technologies, online forums, and gaming dynamics to coordinate their actions and obtain unprecedented results. Signals indicate that these investors, whom we can dub wireless investors, are currently expanding their actions to corporate governance. Wireless investors’ generational characteristics suggest that they will use corporate governance to pursue social and environmental causes. In fact, wireless investors can set in motion a social movement able to bring business corporations to serve their original partly-private-partly-public purpose. …

Corporate Venture Capital, Darian M. Ibrahim

Faculty Publications

This Article makes the case for corporate venture capital as a potentially game-changing entrant into entrepreneurial finance. Part II begins by retracing the ancillary players in entrepreneurial finance and their roles in the startup ecosystem. After finding each of them incapable of denting the venture capitalist’s current dominance, Part III introduces the large corporation as venture capitalist. Part III discusses the growing scale of corporate venture capital and why it may be desirable for startups, innovation, and society as a whole. Part IV looks at legal differences that may become important for corporate venture capitalists to consider, including securities, antitrust, …

We Have To Tell Them What?: The New Corporate Transparency Act And Forming Business Entities In Massachusetts, James J. Wheaton, Gustavo De La Cruz Reynozo

Faculty Publications

The details and requirements of business entity formation have traditionally been the sole province of state law. Most states, like Massachusetts, maintain corporate annual report filing requirements that involve the public disclosure of corporate officers and directors, and some impose similar requirements for LLCs or other business entities. Those requirements focus on active managers of the entities, not information about the beneficial ownership of entities formed under their laws. However, the recently enacted federal Corporate Transparency Act (CTA) will fundamentally change entity disclosure.

By January 1, 2022, the Treasury Department will be promulgating regulations that will require every state filing …

The Breakdown Of The Public–Private Divide In Securities Law: Causes, Consequences, And Reforms, George S. Georgiev

Faculty Articles

As a regulatory scheme, U.S. securities law has traditionally been designed around a set of lines—the “public–private divide”—which separate public companies, public capital, and public markets, from private companies, private capital, and private markets. Until the early 2000s, the lines were successful in establishing two largely coherent legal realms—a highly regulated public realm and a lightly regulated private realm. A series of bold and often-inconsistent reforms between 2002 and 2020, however, have transformed this longstanding regime into a low-friction system wherein public capital flows to both public and private companies, private capital is ever more abundant, and firms can effectively …

Why The Congressional Review Act Should Be Repealed, Alex Lipow

William & Mary Environmental Law and Policy Review

The Congressional Review Act (“CRA”) is a procedure that allows the political branches to quickly repeal certain regulations promulgated by administrative agencies without going through the arduous rule-making process traditionally required. Although it had been successfully used only once before 2017, President Trump and Republicans in Congress used the CRA to repeal sixteen regulations in 2017 and 2018 while President Biden and Democrats in Congress used the CRA three times in 2021. Because the CRA has been used rarely, and its central provisions are barely adjudicated in the judiciary, there are interesting legal questions about how expansively the law may …

The Federal Option: Delaware As A De Facto Agency, Omari Scott Simmons

Washington Law Review

Despite over 200 years of deliberation and debate, the United States has not adopted a federal corporate chartering law. Instead, Delaware is the “Federal Option” for corporate law and adjudication. The contemporary federal corporate chartering debate is, in part, a referendum on its role. Although the federal government has regulated other aspects of interstate commerce and has the power to charter corporations and preempt Delaware pursuant to its Commerce Clause power, it has not done so. Despite the rich and robust scholarly discussion of Delaware’s jurisdictional dominance, its role as a de facto national regulator remains underdeveloped. This Article addresses …

Racism As A Human Rights Risk: Reconsidering The Corporate 'Responsibility To Respect' Rights, Erika George

Faculty Scholarship

Darnella Frazer, a teenage witness to a fatal police encounter, used social media to share her cell phone video footage capturing a white police officer casually kneeling on the neck of a handcuffed Black man named George Floyd for nearly nine minutes. Her video rapidly went viral, sparking civil unrest across the United States (US) and protests around the world.¹ Independent experts of the Special Procedures of the United Nations Human Rights Council came together to issue a joint statement condemning 'systemic racism' and 'state sponsored racial violence' in the US.² George Floyd was not the first unarmed …

The New Law On Foreign Interference – What’S Next For Businesses, Tan K. B. Eugene, Benjamin Joshua Ong

Research Collection Yong Pung How School Of Law

In a joint commentary, SMU Associate Professor of Law Eugene Tan and SMU Assistant Professor of Law Benjamin Joshua Ong discussed what the Foreign Interference (Countermeasures) Bill (Fica) means for businesses. They opined that businesses could have disclosure policies for themselves and their stakeholders, akin to conflict of interest disclosures. They also noted that more can be done to clarify the limits to government powers under Fica, and pointed out that conversations about foreign interference must go beyond Fica.

The New Law On Foreign Interference: What's Next For Businesses?, Tan K. B. Eugene, Benjamin Joshua Ong

Research Collection Yong Pung How School Of Law

The Foreign Interference (Countermeasures) Bill (Fica) was passed in Parliament on Monday after about 10 hours of impassioned debate. Despite the government agreeing to several amendments proposed by the Workers' Party, the substance was not changed in any significant way. Although the government provided more details on how Fica is to operate, more details will be unveiled when it comes into operation. What does all this mean for businesses?

Rico Had A Birthday! A Fifty-Year Retrospective Of Questions Answered And Open, Randy D. Gordon

Faculty Scholarship

The Racketeer Influenced and Corrupt Organizations Act (RICO) came into the world in 1970, a time of great social upheaval that was accompanied by shifting attitudes towards both crime and civil litigation. From the outset, the statute’s complexity, ambiguity, and uncertain purpose have confounded courts and commentators. At least some doubts as to the statute’s meaning and application arise because it has criminal and civil components that subject it to the twin—yet antithetical—social impulses to be “tough on crime” while containing a perceived “litigation explosion.” In this Article, I situate RICO in this larger context and offer that context as …

A Gilti Fix For An Employment Tax Glitch, Richard Winchester

Pepperdine Law Review

Self-employed individuals who operate through a business entity can often dictate how much employment tax they pay, if any. That’s because the rules permit them to control whether their earnings count as labor income – which is subject to employment tax – or the returns on any capital invested in their business – which is not subject to the tax. The GILTI rules enacted as part of the 2017 Tax Act assume that capital investments generally earn a 10 percent annual rate of return. That same assumption can be used to allocate the earnings of a self-employed individual between the …

Corporate Governance Gaming: The Collective Power Of Retail Investors, Sergio Alberto Gramitto Ricci, Christina M. Sautter

Nevada Law Journal

The GameStop saga and meme stock frenzy have shown the pathway to the most disruptive revolution in corporate governance of the millennium. New generations of retail investors use technologies, online forums, and gaming dynamics to coordinate their actions and obtain unprecedented results. Signals indicate that these investors, whom we can dub wireless investors, are currently expanding their actions to corporate governance. Wireless investors’ generational characteristics suggest that they will use corporate governance to pursue social and environmental causes. In fact, wireless investors can set in motion a social movement able to bring business corporations to serve their original partly-private partly-public …

Liability Of Maker Towards Subject Of Negligent Statement: Tan Woo Thian V Pricewaterhousecoopers, Kee Yang Low, Sheena Xuan Hui Heng

Research Collection Yong Pung How School Of Law

Negligent misstatement cases typically involve claims by the recipient of the statement. Since Spring v Guardian Assurance, there has been an increasing number of cases where the plaintiff is the subject of the negligent misstatement, which is quite a very different matter. In Tan Woo Thian v PricewaterhouseCoopers Advisory Services Pte Ltd, Singapore’s High Court and Court of Appeal consider the legal intricacies of such a claim.

Implementing An Insolvency Framework For Micro And Small Firms, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Micro-, small-, and medium-sized enterprises (MSMEs) represent the vast majority of businesses in most countries around the world. Despite the economic relevance of these firms, most insolvency jurisdictions do not provide adequate responses to MSMEs. Moreover, with a few exceptions, the academic literature on insolvency law has not traditionally focused on the treatment of MSMEs in insolvency. This article seeks to contribute to the debate by exploring the primary features and problems of MSMEs in insolvency as well as the weaknesses of the ordinary insolvency framework to deal with MSMEs. It also provides a general overview of the primary reforms …

The Rise Of Pre-Packs As A Restructuring Tool: Theory, Evidence And Policy, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

The use of pre-packs as a restructuring tool has been traditionally popular in the United Kingdom and the United States. In recent years, however, several jurisdictions around the world, including Singapore, India, Spain, the Netherlands and the Philippines have promoted the use of pre-packs. By shortening the length of insolvency proceedings, pre-packs have the ability to reduce the costs of financial distress—especially those associated with the loss of reputation, employees, suppliers, consumers and goodwill. Thus, pre-packs can help maximise the value of the firm for the benefit of debtors, creditors, and society as a whole. However, the conflict of interests, …

Insolvency Law In Emerging Markets, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

A well-functioning corporate insolvency system can serve as a valuable tool to promote entrepreneurship, innovation, access to finance and economic growth. Therefore, if having an efficient insolvency framework is essential for any country, it becomes even more important for emerging economies due to their potential for growth and their greater financial needs. Unfortunately, the academic literature has generally paid more attention to the regulation of corporate insolvency in developed countries. Thus, with some notable exceptions, it has largely omitted the debate about the optimal design of insolvency law in jurisdictions that, in addition to requiring a more active policy debate, …

Bill Ab5 And The Gig Economy, Peter Buckley

University of Miami Business Law Review

This paper explores California Assembly Bill No. 5 and its effect on the “gig economy.” Notably, this paper takes an in-depth look at companies providing cheap services to California residents and the detrimental effects on California business models by labeling independent contractors as employees. I will contrast the Bill with previous California court decisions on independent contracts and the joint ballot initiatives being jointly proposed by Uber, Lyft, DoorDash, and other gig companies. Within this paper I will refer to workers as “drivers” for the sake of simplicity; however, it should be noted that these companies refer to them as …

Rock The Cash-Bah! How Alston Presents A New Challenge To The Amateurism Justification And Ways The Ncaa Can Modernize To Remain Afloat, John Y. Doty

University of Miami Business Law Review

During the last decade, antitrust litigation involving Division I athletes and the NCAA has resulted in changes to the NCAA’s rules, presenting a threat to amateurism. As athletes have voiced concerns about their likeness being used without permission in video games, the difficulty of balancing sports and academics, and going to bed hungry when millions of dollars in profits are being made off of them, the NCAA has allowed conferences and schools to provide student-athletes with stipends for cost of attendance expenses. However, even though the NCAA has modified its rules, athletes continue to ask for more, and courts have …

A Means To An End: How The Expansion Of The Federal Arbitration Act Of 1925 By The Supreme Court Created A Loophole For Corporations To Avoid Claims By Consumers And Workers Alike, Brittany L. Pushkin

University of Miami Business Law Review

A Means to an End: How the Expansion of The Federal Arbitration Act of 1925 by the Supreme Court Created a Loophole for Corporations to Avoid Claims by Consumers and Workers Alike Arbitration is rarely thought of outside the legal and business world by the everyday lay person. Whether we know it or not—all of us, in some capacity, have agreed to a mandatory arbitration clause. A contract for cellular service, an employer-employee arrangement, or an agreement to open a bank account are just a few common examples that lock not only clients, but also employees, in contracts that contain …

A More Pixelated Union: A Look At The Path To Unionization In The Video Game Industry Under Trump’S National Labor Relations Board, William C. Selfridge

University of Miami Business Law Review

In the past twenty years, the video game industry has become one of the largest entertainment industries not only in the United States but in the entire world. Yet as video game sales continue to increase at massive rates, it seems the conditions for those making the games have not improved with it, at least according to some in the know. While other entertainment industries have moved to unionize, those in the video game industry have yet to take that leap. To make matters worse, during the administration of President Donald J. Trump, the National Labor Relations Board (“NLRB”) shifted …

Wells Fargo & Co. V. U.S.: A Potential Beginning Of The End Of The Objective Reasonable Basis Tax Penalty Defense, Beckett G. Cantley, Geoffrey C. Dietrich

University of Miami Business Law Review

The Internal Revenue Code (“IRC”) § 6662(a) permits the IRS to impose a twenty-percent (20%) accuracy-related penalty to an underpayment of tax, and there are several different defenses to this penalty depending on the facts of the case and the reason for the penalty.3 One of the most common accuracy-related penalties is the negligence penalty.4 Although there are multiple different reasons for the application of an accuracy-related penalty, only one penalty may be applied for each understatement.5 If a taxpayer faces the negligence penalty, one common defense is that the taxpayer’s return position has a reasonable basis under the relevant …

The Hottest Employee Benefit Of 2020: Employers Offer To Repay Employees’ Student Loan Debt, Anne Kotlarz

University of Miami Business Law Review

The Student Loans Crisis has spread like wildfire reaching a whopping $1.56 trillion worth of debt. What started off as the Federal government’s initiative to encourage Americans to invest in their future through obtaining secondary education, has turned into a systemic crisis that burns just as hot as global warming. Lobbyists are currently petitioning Congress to enact meaningful legislation to extinguish the flames of the growing student loan debt. Most notably, the private sector is proposing congressional reform to amend the tax code to enable employers to offer employees student loan repayment assistance tax-free. This article delves into this proposal …

Taking The Long View On Shorting: Market Manipulation And Gme, Andrew Steiner

SLU Law Journal Online

In this article, Andrew Steiner provides an overview of the events surrounding the GameStop short squeeze coordinated by retail investors on the internet forum WallStreetBets over the last year and the possible legal fallout. While some traditional institutional investors call for regulatory intervention, retail investors have pointed the finger at trading app Robinhood.

Heads Up! Arkansas Has A New Llc Act, Carol Goforth

Arkansas Law Notes

This past legislative session Senate Bill 601, sponsored by Senator Jonathan Dismang, was enacted into law, becoming Ark. Act 1041 on April 30, 2021. This act repeals the old LLC Act and adopts the Uniform Limited Liability Company Act (“ULLCA”), with minimal changes from the uniform language. This short piece points out some basic information about the Arkansas ULLCA and some of the major changes in Arkansas law applicable to LLCs. While lawyers will obviously need to consult the new statute when actual issues arise, this article should at least provide a “heads up” notice to practitioners with LLCs or …