Business Organizations Law Commons^™

Delaware's Dominance, Wyoming's Dare: New Challenge, Same Outcome?, Pierluigi Matera

Faculty Scholarship

Despite increasing criticism, Delaware's dominance in corporate law has not experienced a significant decline: as of today, 67.8 percent of Fortune 500 companies are still incorporated in its jurisdiction. Nevada is known as Delaware's most important competitor, with an aggressive strategy that has overridden the efforts of any other jurisdiction. Yet, its success has been limited to a specific market segment: small firms with low institutional shareholding and high insider ownership.

Scholars suggest several explanations for both the rise and the staying power of Delaware. These explanations are essentially subsumed under the credible commitment theory and the network theory. According …

Bias And Biometrics: Regulating Corporate Responsibility And New Technologies To Protect Rights, Erika George

Faculty Scholarship

A growing body of literature has documented the ways in which algorithms and new technology are being deployed in ways that discriminate and violate human rights. The regulatory environment is still evolving, but not as rapidly as new technologies are being introduced by private corporations and implemented in public settings. Governments are using AI in immigration and asylum determinations and law enforcement, arenas where racism and xenophobia can often arise. In the aftermath of the racial justice uprisings following the murder of George Floyd, some technology firms pledged to reconsider providing surveillance technology to police without protections in place. This …

The Alchemy Of Effective Auditor Regulation, Sarah J. Williams

Lewis & Clark Law Review

The audit profession has repeatedly failed in its obligation to accurately opine on financial statements prepared by companies that trade in U.S. markets. The list of entities that have contributed to the quest for effective regulation of these auditors is long; it includes the American Institute of Certified Public Accountants (AICPA), the U.S. Securities and Exchange Commission (SEC), Congress, outside directors of public companies, and the Public Company Accounting Oversight Board (PCAOB), a recent congressional creation. Yet, despite 50 years of effort, the formula for efficacious oversight of the audit profession remains elusive.

This Article is the first in a …

The Promise Of Patent-Backed Finance For Smes And Universities, And Shifting Patent Eligible Subject Matter, Mattias Karlsson Dinnetz, Michael S. Mireles

Lewis & Clark Law Review

This Article reviews and addresses some of the problems concerning adequate capital to develop patented inventions and products, and inhibiting the widespread use of patents to raise financing. The Article divides the IP finance market into three separate, but interrelated markets and analyzes problems, including U.S. patent-eligible subject matter doctrine, within those markets impeding patent-backed financing. The Article provides numerous proposals, some of which are in the literature, and calls for additional research for addressing the issues.

Securitizing Notes Of Small Businesses And Needy Workers, Tamar Frankel

Faculty Scholarship

Businesses, whether large ones or small ones, such as restaurants and small shops, are presently closed and some of their employees have been laid off.¹ Currently, the government is lending money to these small businesses² and the now unemployed workers for their sustenance. It then collects the payments from some of the borrowers and the source of the rest of the money is taxes.³ Since not all, or perhaps only a few, small businesses own real estate, they might sign notes promising to repay the loans but can offer no asset backing. Presumably, the nation’s financial deficit …

Corporate Criminal Liability: End It, Don’T Mend It, Stephen F. Smith

Journal Articles

From the Author

In this Article, I make the case in favor of abolishing corporate criminal liability. Criminal liability for corporations is peculiar, given that “entity liability” does not otherwise exist in criminal law. The legal system appropriately deals with law-breaking within other entities (such as police departments and labor unions) solely through criminal prosecutions of the individual offenders and civil suits against the entities within which criminality occurred. Corporate criminal liability is another example of overcriminalization, in which criminal law is unjustifiably used to address problems better dealt with through other means. Finally, corporate criminal liability is fundamentally incompatible …

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 …

Shadow Contracts, Jessica S. Jeffers, Anne M. Tucker

Scholarly Works

This project explores side letters in private market funds. Side letters, separate agreements between a fund and an investor, act as an invisible amendment to the main contract. This article introduces a new use case for side letters: impact invest- ments, where funds target social, as well as financial returns. Using a hand-col- lected data set, we examine the scope and role of side letters in this growing space. Side letters as "shadow contracts" demonstrate the Easterbrook/Fischel theories in action, namely that parties "write their own tickets," tailoring agreement terms to their specific needs within the framework of corporate governance …

Empirical Evidence On Robot Taxation: Literature Review And Technical Analysis, Bret N. Bogenschneider

American University Business Law Review

The literature on robot taxation has continued to expand since 2018 with numerous articles now referring to empirical evidence. The evidence presented in prior studies comprises abstract modeling and statistical pattern reviews with no statistically significant findings reported to date. Notably, one article is an advocacy piece by a tech lobbyist who at one point purchased priority Google results for the search "robot taxation." In some cases, technical errors are sufficient to reverse the stated results. Examples of error in empirical analyses include (i) motivated reasoning, such as the failure to model simpler or best explanations; (ii) lack of causal …

Moonshots, Matthew Wansley

Articles

In the last half-century, technological progress has stagnated. Rapid advances in information technology disguise the slow pace of productivity growth in other fields. Reigniting technological progress may require firms to invest in moonshots—long-term projects to commercialize innovations. Yet all but a few giant tech firms shy away from moonshots, even when the expected returns would justify the investment. The root of the problem is corporate structure. The process of developing a novel technology does not generate the kind of interim feedback that shareholders need to monitor managers and managers need to motivate employees. Managers who anticipate these agency problems invest …

The Extraterritorial Reach Of Section 10(B): A Wolf Hunt Off Wall Street, Radley Gillis

Emory Law Journal

Born to combat the market effects of the Great Depression, the Securities Exchange Act of 1934 protects American investors and maintains American confidence in the U.S. securities market. These objectives are largely accomplished through the imposition of liability from Section 10(b) of the Securities Exchange Act and the SEC’s Rule 10b-5. These federal laws impose civil and criminal penalties for domestic insider trading and securities fraud violations. Because Section 10(b) and Rule 10b-5 only apply domestically, when securities violations occur both within the United States and abroad, the reach of federal law becomes questionable, leaving federal courts with a complex …

Against Corporate Activism: Examining The Use Of Corporate Speech To Promote Corporate Social Responsibility, W.C. Bunting

Oklahoma Law Review

No abstract provided.

Duty And Diversity, Chris Bummer, Leo E. Strine Jr.

Ira M. Millstein Center for Global Markets and Corporate Ownership

In the wake of the brutal deaths of George Floyd and Breonna Taylor, lawmakers and corporate boards from Wall Street to the West Coast have introduced a slew of reforms aimed at increasing Diversity, Equity, and Inclusion (“DEI”) in corporations. Yet the reforms face difficulties ranging from possible constitutional challenges to critical limitations in their scale, scope, and degree of legal obligation and practical effects.

In this Article, we provide an old answer to the new questions facing DEI policy and offer the first close examination of how corporate law duties impel and facilitate corporate attention to diversity. Specifically, we …

I Can Still Hear You Saying You Would Never Break The Chain: How Higher Education Admissions Policies Put Law Firms At Risk Of Losing Corporate Clients, Jolie Abrams

Emory Business Law Review

No abstract provided.

Lifting Labor’S Voice: A Principled Path Toward Greater Worker Voice And Power Within American Corporate Governance, Leo E. Strine Jr., Aneil Kovvali, Oluwatomi O. Williams

Ira M. Millstein Center for Global Markets and Corporate Ownership

The dramatic decline in corporate gainsharing with American workers over the last two generations has contributed to stagnating wages, soaring inequality, and economic insecurity. There are global causes of greater inequality and depressed pay that go beyond the decline in workers’ share. But many public policymakers and economists believe that the reduced share of corporate prof its that American workers receive has been a major factor in the much larger increase in inequality that has occurred in the United States, compared to its market economy allies in the Organization for Economic Co-operation and Development (OECD). To some, the explanation for …

In Re The Walt Disney Co. Derivative Litigation Rewritten, Hillary A. Sale

Georgetown Law Faculty Publications and Other Works

In re The Walt Disney Co. Derivative Litigation is notable for upholding the broad latitude courts afford to boards through the business judgment rule. The case addressed a $130 million termination package delivered to former Disney CEO, Michael Ovitz, after fourteen months of underperformance at the company. This rewritten opinion, to be published in “Feminist Judgements: Rewritten Corporate Law,” (Kelli Alces Williams, Anne Choike, & Usha R. Rodrigues, eds.) (Cambridge Univ. Press, forthcoming 2022), follows the style of the Delaware Supreme Court and reaches the same outcome with a different approach. The opinion expounds on the corporate governance practices in …

Contractual Evolution, Matthew Jennejohn, Julian Nyarko, Eric L. Talley

Faculty Scholarship

Conventional wisdom portrays contracts as static distillations of parties’ shared intent at some discrete point in time. In reality, however, contract terms evolve in response to their environments, including new laws, legal interpretations, and economic shocks. While several legal scholars have offered stylized accounts of this evolutionary process, we still lack a coherent, general theory that broadly captures the dynamics of real-world contracting practice. This paper advances such a theory, in which the evolution of contract terms is a byproduct of several key features, including efficiency concerns, information, and sequential learning by attorneys who negotiate several deals over time. Each …

Taking Corwin Seriously, Itai Fiegenbaum

Lewis & Clark Law Review

Corporate law’s most important development is founded on a misunderstanding of the channels and consequences of shareholder empowerment. The Article’s title references the seminal Delaware Supreme Court decision that ruled that a positive shareholder vote effectively insulates a friendly sale from judicial oversight. Central to Corwin’s reasoning is the notion that the shareholder vote provides an effective restraint against insider overreaching. Yet every deal that includes a premium over the market price is assured of shareholder approval. The doctrinal lynchpin’s real-life insignificance exposes a baffling inconsistency in contemporary takeover jurisprudence.

This Articles makes two novel contributions to the bourgeoning scholarship …

Platform-Enabled Crimes: Pluralizing Accountability When Social Media Companies Enable Perpetrators To Commit Atrocities, Rebecca Hamilton

Scholarly Articles in Law Reviews & Journals

Online intermediaries are omnipresent. Each day across the globe, the corporations running these platforms execute policies and practices that serve their profit model, typically by sustaining user engagement. Sometimes, these seemingly banal business activities enable principal perpetrators to commit crimes. Online intermediaries, however, are almost never held to account for their complicity in the resulting harms. This Article introduces the concept of platformenabled crimes into the legal literature to highlight the ways in which the ordinary business activities of online intermediaries enable the commission of crime. It then focuses on a subset of platform-enabled crimes—those in which a social media …

Contracting For Process, David Snyder

Scholarly Articles in Law Reviews & Journals

This article introduces the concept of contracting for process and considers when it is likely to be the best contract design. Contracting for process is in widespread use, but it often goes unnoticed. Some characteristics of contracting for process suit it particularly well to situations of uncertainty, including the radical uncertainty that results from fundamental disruptions such as COVID-19. Parties can employ this design for both contracts made or renegotiated during a crisis and for contracts made in ordinary times. The concept articulated here, however, is not confined to contexts of uncertainty or complexity; it can be used to achieve …

Lawful Work While Undocumented: Business Entity Solutions, Kit Johnson

Faculty Articles

Immigration law and business-associations law rarely enter the same conversation. This Article argues, however, that business entity formation—such as the use of limited liability companies—has the potential to not only expand opportunities for undocumented migrants but also to significantly benefit the U.S. economy. As such, this Article seeks to make a round of introductions: introducing immigration scholars and lawyers to concepts of business entity formation that can radically change the lives of undocumented persons in the United States and introducing corporate scholars and lawyers to the ways in which their work can intersect with immigration law to effect social and …

Developments In The Laws Affecting Electronic Payments And Financial Services, Sarah Jane Hughes, Stephen T. Middlebrook, Tom Kierner

Articles by Maurer Faculty

The past year proved to be a busy period for the regulation of electronic payments and financial services. In this year’s survey, we discuss rulemakings, enforcement actions, and other litigation that has significantly impacted the law governing payments and financial services. Part II addresses the ongoing fight between federal and state authorities over which should properly regulate Fin- Tech entities and describes some new steps the Office of the Comptroller of the Currency (“OCC”) has taken to assert its authority in this area. Part III details an enforcement action that California regulators took against a FinTech company they determined had …

Virtual Annual Meetings: A Path Toward Shareholder Democracy And Stakeholder Engagement, Yaron Nili, Megan Wischmeier Shaner

Faculty Articles

From demanding greater executive accountability to lobbying for social and environmental policies, shareholders influence how managers run modern companies. In corporate doctrine, the principal venue reserved for shareholders to influence and engage with management and each other is the annual shareholders meeting. Historically, the annual meeting was a vibrant forum for shareholder democracy and occasionally even a platform for debating pressing social issues. For decades, however, the role of the annual meeting in corporate governance has been in decline, resulting in today’s largely pro forma annual meetings. This Article explores how technological integration can resurrect the annual meeting as the …

Corporate Resiliency And Relevancy In The Private Ordering Era, Megan Wischmeier Shaner

Faculty Articles

Firm-specific private ordering has flourished in the twenty-first century. Public companies are seeing more and more governance contracting in traditional venues such as the bylaws and charter, as well as in less conventional places like shareholder agreements and dual-class-like contracts. Decisions legitimizing private ordering in the corporate setting contain strong contractarian language and rely heavily on contract – and not corporate – principles to justify their holdings. In addition, recent statutory amendments have chipped away at traditionally mandatory features of the corporation, thereby reinforcing the contractual view of the corporate form and fueling the private ordering movement. All told, the …

The 2022 Global Philanthropy Environment Index Singapore, Tan K. B. Eugene

Research Collection Yong Pung How School Of Law

The three indicator questions in this section pertain to the laws and regulations governing philanthropic organizations (POs). The scoring questions for this category cover three aspects of regulations: (A) formation and registration; (B) operations; and (C) dissolution.

Purpose Driven Companies In The United States, Alicia E. Plerhoples

Georgetown Law Faculty Publications and Other Works

The United States is the birthplace of benefit corporations precisely because of American society’s over-reliance on the private sector to solve societal problems. U.S. federal and state regulation continuously fails to provide robust social safety nets or prevent ecological disasters. American society looks to companies to do such work. U.S. social enterprise entities attempt to upend the U.S. legal framework which binds fiduciaries to focus on shareholder value. These entities are permitted, and sometimes required, to take into account environmental, social, and governance (“ESG”) impacts of their operations, essentially internalizing ESG costs that would otherwise be paid by American communities …

Monitoring Facebook, Hillary A. Sale

Georgetown Law Faculty Publications and Other Works

Few companies still in business have a track record as negative as Facebook. Facebook has paid billions of dollars in government fines and paid hundreds of millions in private settlements. Yet, the financial penalties are actually minimal relative to the harm done. Facebook seems to have been involved one way or another in privacy breaches, organized crime, election manipulation, suicide, and even genocide. Mark Zuckerberg, who still controls Facebook, appears to ignore the consequences of his choices, seemingly prioritizing profits over people. He appears to disregard the law and operate without integrity or honesty, excommunicating insiders who speak out or …

Soft Law, Risk Cultures, And Law Abidingness: The Caremark Connection, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

As Vice Chancellor, Chancellor, Chief Justice, and recidivist law review author, Leo Strine has had much to say about the often-frustrating effort at corporate behavior modification. One point he makes very insistently is that pursuant to their state-granted charters, corporations are authorized to take part only in lawful business, not any profitable business. Respect for life-giving law is thus a necessary corollary of good corporate citizenship. But good citizenship is so hard to instill, which irks him. An angry display of this is Strine’s Delaware Supreme Court dissenting opinion in City of Birmingham Retirement System v. Good, involving Duke …

The Diversity Risk Paradox, Veronica Root Martinez

Faculty Scholarship

There is a growing body of literature discussing the proper role of diversity, equity, and inclusion efforts by and within public firms. A combination of forces brought renewed energy to this topic over the past few years. The #MeToo movement demonstrated a whole host of inequities faced by women within workplaces. Business Roundtable’s 2019 Statement on the Purpose of a Corporation rejected the view that the purpose of the corporation was solely to be focused on the maximization of shareholder wealth. And, in 2020, the murder of George Floyd ignited a racial reckoning within the United States, which prompted many …