Business Organizations Law Commons^™

Litigator's Thumbnail Guide To The Warn Act, David A. Santacroce

Articles

When large companies choose to lay off workers or close down plants without prior notice, they can be subject to extensive liability under the federal Worker Adjustment and Retraining Notification Act (WARN), including 60 days backpay to all affected workers, daily fines to local government, and attorney fees generated during the suit. In the following article, the author presents the bare bones basics of WARN in order for employees and their advocates to understand how and when WARN applies.

Improving Charitable Accountability, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

This Article focuses upon a persistent problem of the nonprofit sector--its lack of accountability to the public. Director, officer, and organizational responsibilities will be analyzed. Past and current approaches to secure accountability of charitable assets will be discussed, and a proposal for improving charitable accountability will be suggested through the creation of public-private charity commissions at the state level under the aegis of the attorney general.

Sorting Through The Soup: How Do Llcs, Llps And Lllps Fit Withing The Regulations And Legal Doctrines?, Daniel S. Kleinberger

Faculty Scholarship

In a children' book published in 1946, Ben Ross Berenberg described an imaginary amalgam called the churkendoose - "part chicken, turkey, duck and goose." In 1977, Wyoming invented a business law churkendoose: the limited liability company - part corporation, part general partnership, part limited partnership. That churkendoose has revolutionized the law of business organizations, becoming the vehicle of choice for tens of thousands of ventures every month and causing the IRS to radically overhaul its approach to taxing business entities. This article explores how preexisting regulatory and common law apply to LLCs and the related organizations known as limited liability …

Too Busy To Mind The Business? Monitoring By Directors With Multiple Board Appointments, Stephen P. Ferris, Murali Jagannathan, Adam C. Pritchard

Articles

We examine the number of external appointments held by corporate directors. Directors who serve larger firms and sit on larger boards are more likely to attract directorships. Consistent with Fama and Jensen (1983), we find that firm performance has a positive effect on the number of appointments held by a director. We find no evidence that multiple directors shirk their responsibilities to serve on board committees. We do not find that multiple directors are associated with a greater likelihood of securities fraud litigation. We conclude that the evidence does not support calls for limits on directorships held by an individual.

When Good Mergers Go Bad: Controlling Corporate Managers Who Suffer A Change Of Heart, Celia R. Taylor

University of Richmond Law Review

No abstract provided.

Oklahoma Shareholder And Director Inspection Rights: Useful Discovery Tools?, Johnathan D. Horton

Oklahoma Law Review

No abstract provided.

Innovation In Corporate Law, Katharina Pistor, Yoram Keinan, Jan Kleinheisterkamp, Mark D. West

Faculty Scholarship

In most countries large business enterprises today are organized as corporations. The corporation with its key attributes of independent personality, limited liability and free tradeability of shares has played a key role in most developed market economies since the 19th century and has made major inroads in emerging markets. We suggest that the resilience of the corporate form is a function of the adaptability of the legal framework to a changing environment. We analyze a country's capacity to innovate using the rate of statutory legal change, the flexibility of corporate law, and institutional change as indicators. Our findings suggest that …

Panel Presentation: Securities Regulation And Corporate Responsibility, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

What I want to do is talk about the big picture, as John suggested, and consider the likely spillover effects of Sarbanes-Oxley. I want to do this in a discretely administrative law-oriented way, taking two themes that were very visible and driving forces behind the legislation. The first, as Mary suggested in her opening remarks, is a question about federalism. It has been common for the last twenty years, at least, to trot out - as John just did - a distinction between federal and state spheres of competency. The SEC is on the disclosure side, while the substance of …

Foreword: Revisiting Gilson And Kraakman’S Efficiency Story, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

Gilson and Kraakman's ‘Mechanisms of Market Efficiency’ is part of the canon of modem corporate law scholarship, one of a handful of articles that has profoundly influenced the way we think about the field. It is also enigmatic, warranting a fresh look by those who think they know what it says from some long-ago reading or second-hand references by other authors.

One For A, Two For B, And Four Hundred For C: The Widening Gap In Pay Between Executives And Rank And File Employees, Susan J. Stabile

University of Michigan Journal of Law Reform

This Article, focuses on executive pay in relation to that of rank and file workers. It examines the standard justifications for the vast and increasing pay gap between executives (particularly CEOs) and rank and file workers and finds that such arguments do little more than attempt to justify in economic terms a situation that exists for a very different reason. Instead, the author argues, the real reason such a huge and widening gap in pay between executive and rank and file workers exists is market failure in the mechanisms of setting executive pay, aggravated by the shareholder primacy norm, which …

For Haven's Sake: Reflections On Inversion Transactions, Reuven S. Avi-Yonah

Articles

This article discusses “inversion” transactions, in which a publicly traded U.S. corporation becomes a subsidiary of a newly established tax haven parent corporation. In the last three years, an increasing number of these transactions have been taking place, undeterred by the shareholderlevel tax imposed by the IRS on them in 1994. The article first discusses the reasons for the increasing popularity of the transactions and the tax goals they aim at achieving (primarily avoiding subpart F and U.S. earnings stripping). The article then discusses the tax policy implications of these transactions. In the short run, the article suggests that the …

Doing Well While Doing Good: Reassessing The Scope Of Directors' Fiduciary Obligations In For-Profit Corporations With Non-Shareholder Beneficiaries, Lisa M. Fairfax

Faculty Scholarship

This article explores corporate fiduciary duties in the context of for-profit companies that operate in traditionally non-profit spheres. The rise in “privatization”—a conversion from certain businesses being operated by nonprofit and government entities to operation by for-profit companies—has sparked considerable opposition, particularly when it occurs within industries that deliver some societal good such as health care or education. Opponents claim that for-profit companies cannot pay heed to their social or charitable commitments because they must focus on generating profits. In a related debate, many corporate scholars disagree about the proper aim of the corporation—with some insisting that it should serve …

Convergence In Corporate Governance - Possible, But Not Desirable, Brett H. Mcdonnell

Villanova Law Review (1956 - )

No abstract provided.

Citizenship Of Limited Liability Companies For Diversity Jurisdiction, Debra R, Cohen

Journal Articles

The limited liability company is an increasingly popular form of business organization. Due to its hybrid nature, however, the citizenship of a LLC for purposes of diversity jurisdiction is difficult to determine. Should the citizenship of a LLC be determined as if it were a corporation, in which case it has "entity" citizenship, or as if it were a partnership, in which case its citizenship is determined by the citizenship of "persons composing" the LLC?

This Article examines the history of the evolution of hybrid organizations like the LLC, and the rules for determining the citizenship of business organizations in …

A Control-Based Approach To Shareholder Liability For Corporate Torts, Nina A. Mendelson

Articles

Some commentators defend limited shareholder liability for torts and statutory violations as efficient, even though it encourages corporations to overinvest in and to externalize the costs of risky activity. Others propose pro rata unlimited shareholder liability for corporate torts. Both approaches, however, fail to account fully for qualitative differences among shareholders. Controlling shareholders, in particular, may have lower information costs, greater influence over managerial decisionmaking, and greater ability to benefit from corporate activity. This Article develops a control-based approach to shareholder liability. It first explores several differences among shareholders. For example, a controlling shareholder can more easily curb managerial risk …

Form And Function In Business Organizations, Richard A. Booth Marbury Research Professor Of Law

Faculty Scholarship

In this piece, I argue that the recent proliferation of forms of business organizations in addition to the traditional partnership and corporation may have arisen from the implicit recognition that various organizations may serve needs of business people in different types of businesses, and that traditional theory of the firm explanations are too narrowly focused on market failure explanations for firm formation. I identify at least five different factors that may motivate people to form a business organization and discuss how these different factors may militate in favor of one business form rather than another. I conclude that the collections …

Venture Capital On The Downside: Preferred Stock And Corporate Control, William W. Bratton

Georgetown Law Faculty Publications and Other Works

This Article takes the occasion of the simultaneous collapse of the high technology stock market and the failure of the dot-coin startups, along with the subsequent retrenchment of the venture capital business, to examine the law and economics of downside arrangements in venture capital contracts. The subject matter implicates core concerns of legal and economic theory of the firm. Debates about the separation of ownership and control, relational investing, takeover policy, the law and economics of debt capitalization, and bankruptcy reform, all grapple with the downside problem of controlling and terminating unsuccessful managers for the benefit of outside debt and …

Never Trust A Corporation, William W. Bratton

Georgetown Law Faculty Publications and Other Works

I would like to start by noting multitudinous objections to assertions made in Larry Mitchell's Corporate Irresponsibility: America's Newest Export. But I waive these points for purposes of this Symposium. I would prefer to take the occasion to celebrate the book. So I will make two points on the subject of corporate social responsibility on which the book and I stand in complete accord.

Stakeholder Protection In Germany And Japan, Mark J. Loewenstein

Publications

This Essay considers the stakeholder debate in the context of the German and Japanese legal systems. Although, nominally, corporations in those countries must operate in the interests of shareholders, in fact nonshareholder constituencies have considerable influence on corporate decision makers. Of equal importance, weak securities markets and ineffective or nonexistent legal protections for shareholders are also important factors in strengthening the position of nonshareholder constituencies and freeing directors to consider their interests. Thus, the stakeholder debate is more of an issue in the United States and Britain, where more shareholder-centic models flourish.

Tax Competition And E-Commerce, Reuven S. Avi-Yonah

Articles

In the last four years, there has been increasing concern by developed countries about the potential erosion of the corporate income tax base by "harmful tax competition" (in the European Union since 1997, in the OECD since 1998). However, the data on tax competition available to date present a mixed and somewhat puzzling picture. On the one hand, there is considerable evidence that effective corporate income tax rates in many countries have been declining, and that the worldwide effective tax rates on multinational enterprises (MNEs) have been going down as well. On the other hand, macroeconomic data from developed countries …

Capital Punishment: Corporate Criminal Liability For Gross Violations Of Human Rights, Diane Marie Amann

Scholarly Works

These remarks were presented on February 24, 2001, in a panel concluding a conference entitled "Holding Multinational Corporations Responsible Under International Law" at Hastings College of the Law, San Francisco, California.

Globalization And Tax Competition: Implications For Developing Countries, Reuven S. Avi-Yonah

Articles

This article analyses the effects of tax competition on developing countries. Since the 1980s, globalization and greater capital mobility have led many developing countries to adopt the policy of competing with one another to attract capital investment. One of the main forms taken by this competition has been the granting of tax holidays and other tax reductions to investing multinationals. This paper reviews the normative arguments for and against this type of tax competition, from a global perspective. It then examines these arguments in depth from the point of view of developing countries. The conclusion in general is that, since …

Is International Bankruptcy Possible?, Frederick Tung

Michigan Journal of International Law

Although international business firms proliferate, there is no international bankruptcy system. Instead, bankruptcy law remains a matter for individual states. The failure of a multinational firm therefore raises difficult questions of conflict and cooperation among national bankruptcy laws. In the discourse over the appropriate design for an international bankruptcy system, universalism has long held sway as the dominant idea, embraced nearly universally by bankruptcy scholars. Universalism offers a simple and elegant blueprint for international bankruptcy. Under universalism, the bankruptcy regime of the debtor firm's home country would govern worldwide, enjoying global reach to treat all of the debtor's assets and …

The U.S. Treasury's Subpart F Report: Plus Ça Change, Plus C'Est La Même Chose?, Reuven S. Avi-Yonah

Articles

On 29 December 2000, the U.S. Treasury Department released its long-awaited study of Subpart F, entitled “The Deferral of Income Earned through U.S. Controlled Foreign Corporations." This study was commenced in the aftermath of the controversy that ensued from the issuance and subsequent withdrawal of Notice 98-11. The study was originally expected to be issued in 1999 in response to the report published that year by the National Foreign Trade Council, which advocated significant changes in Subpart F. The Treasury Study’s delayed issuance at the end of the Clinton Administration means that it only has (at best) persuasive force for …

A Property Theory Perspective On Russian Enterprise Reform, Michael Heller

Book Chapters

Why have Russian enterprises performed so poorly since privatization? This is a problem with many answers, each independently sufficient: the bleak mix includes vacillating macroeconomic policy, endemic corruption, a corrosive tax structure, poor human capital, and so forth. Even well-performing companies must hide good results because visible profits or dividends provoke confiscatory taxation and mafia visits. In such a difficult environment, the rule of law generally, and corporate governance in particular, may seem not to count. Macroeconomic implosions dwarf subtle distinctions in corporate dividend rules or minority voting rights.

Berle And Means Reconsidered At The Century's Turn, William W. Bratton

Georgetown Law Faculty Publications and Other Works

Part I places Berle and Means in the context of the legal theory of its day by comparing the work of Dewey on the theory of the firm and Douglas on corporate reorganization. This discussion highlights two progressive assumptions Berle and Means shared with these business law contemporaries-a confidence in the efficacy of judicial intervention to vindicate distributive policies and a distrust of the institution of contract. These assumptions would, in the long run, cause the book's prescription to land wide of the mark. After 1980, Berle and Means lost their paradigmatic status due to a combination of skepticism respecting …

Tax, Trade And Harmful Tax Competition: Reflections On The Fsc Controversy, Reuven S. Avi-Yonah

Articles

This article contrasts three approaches to dealing with the BEPS problem: adopting a unitary taxation regime, ending deferral, and adopting anti-base-erosion measures. It concludes that while the first approach is the best long-term option, the other two are more promising as immediate candidates for adoption in the context of U.S. tax reform and the OECD BEPS project.

Poison Pills And The European Case, Jeffrey N. Gordon

University of Miami Law Review

No abstract provided.

Looking A Gift Horse In The Mouth: An Analysis Of Free Internet Stock Offerings, Joel Michael Schwarz

Michigan Telecommunications & Technology Law Review

How much should an investor pay for one share of stock in Yahoo? Or a share of stock in America Online? As publicly traded companies, one need only consult the stock charts in any local newspaper to determine the value the market has placed on these shares. Despite what many Internet sector analysts have professed to be astronomically high valuations, these publicly traded companies possess easily verifiable valuations determined by the free market forces that constitute the building blocks of our economy, and safeguarded by the oversight of federal regulators such as the Securities & Exchange Commission ("SEC"). But what …

Shareholder Oppression In Close Corporations: The Unanswered Question Of Perspective, Douglas K. Moll

Vanderbilt Law Review

The doctrine of shareholder oppression protects the close corporation minority stockholder from the improper exercise of majority control.! Nevertheless, when a close corporation minority shareholder asserts that the majority shareholder has acted "oppressively" towards him, the minority's chance of success may very well depend on the perspective from which shareholder oppression is viewed. Consider the following two decisions:

In Priebe v. O'Malley, the controlling shareholders of a close corporation terminated the employment of Myron Priebe, a minority shareholder, for "unsatisfactory" work performance.! Priebe sued, asserting that the termination amounted to oppressive conduct! The trial court noted that "Priebe was not …