Business Organizations Law Commons^™

Should Shareholders Have A Greater Say Over Executive Pay??, Randall S. Thomas, Brian R. Cheffins

Vanderbilt Law School Faculty Publications

Executive pay arrangements in Britain's publicly quoted companies have been subjected to much criticism in recent years. Proposals that shareholders should have a greater direct say over managerial remuneration have been a by-product of the concerns expressed. Debate on this point, however, has been largely speculative. This is because there is little evidence available in the United Kingdom indicating how shareholders would exercise any new powers they might be given. This paper addresses the evidentiary gap by drawing upon the experience in the United States, where empirical work indicates that shareholder voting only operates as a potential check when pay …

Fair Value And Fair Price In Corporate Acquisitions, Rutheford B. Campbell Jr.

Law Faculty Scholarly Articles

In statutory corporate acquisitions, dissenters' rights entitle shareholders of acquired corporations to obtain a "fair value" for their consideration, while common-law fiduciary duties ensure that such shareholders receive a "fair price" in the transaction. Courts, however, have had difficulty defining and measuring fair value and fair price, leaving this area of the law in disarray. This Article reviews the current framework of appraisal rights and fiduciary duties and proposes refined definitions of fair value and fair price that are based on attractive moral and economic values widely shared by society. The proposal respects the expectations of shareholders and provides guidance …

The Limited Fiduciary Duties Owed By Corporate Managers To Preferred Shareholders: A Need For Change, Noelle M. Holladay

Kentucky Law Journal

No abstract provided.

Realigning Corporate Governance: Shareholder Activism By Labor Unions, Stewart J. Schwab, Randall S. Thomas

Michigan Law Review

Labor unions are active again - but this time as capitalists. The potential strength of union pension funds has long been noted, but until recently unions have held their stock passively or invested in union-friendly companies. In the 1990s, however, unions have become the most aggressive of all institutional shareholders. In most cases, it is hard to find a socialist or proletarian plot in what unions are doing with their shares. Rather, labor activism is a model for any large institutional investor attempting to maximize return on capital. Unions, union pension funds, individual union members, and labor-oriented investment funds are …

Corporate Democracy -- Not Such A Radical Idea, Carlin Meyer

Other Publications

No abstract provided.

The Duty Of Corporate Directors To Pay Dividends, Randall K. Justice

Kentucky Law Journal

No abstract provided.

Lessons From A Prophet On Vocational Identity: Profit Or Philanthropy?, Cheryl L. Wade

Faculty Publications

(Excerpt)

After sifting through state statutes that codify corporate behavior and the decisions interpreting those statutes, corporate attorneys may serve their clients and improve our society if they also consulted the teachings of a Baptist preacher. The Baptist preacher to whom I refer is Dr. Martin Luther King, Jr., and the lessons for attorneys and law professors concerned with social justice that can be derived from his life and teachings were the focus of the 1998 Southeast/Southwest Law Teachers of Color Conference. The utility of Dr. King's instruction and the value of his model for ethical living are obvious for …

Getting Out Of Business: Tax Costs And Opportunities In Exiting A Closely Held Business, Denise D. J. Roy

Faculty Scholarship

The primary purpose of this article is to encourage closely held business owners and their lawyers to consider exit costs, opportunities and strategies when making the initial choice-of-entity decision. A secondary purpose is to provide information about tax consequences and exit strategies useful to owners of businesses that are already up and running, whether in drafting a buy-sell agreement or planning for a specific transaction. Therefore, the article begins by comparing the major tax consequences of exiting the alternative entity types available to closely held businesses for tax purposes--C corporations, S corporations and partnerships. Part II of this article provides …

M&A: Survival Of The Fittest In The 21st Century, Strategic Positioning In The Banking And Communications Industries - Should A Bank Acquire, Merge, Or Divest, Maureen S. Bateman

Fordham Journal of Corporate & Financial Law

No abstract provided.

Cook And The Corporate Shareholder: A Belated Review Of William W. Cook's Publications On Corporations, Alfred F. Conard

Michigan Law Review

A Review of A Treatise on the Law of Stock and Stockholders, as Applicable to Railroad, Banking, Insurance, Manufacturing, Commercial, Business, Turnpike, Bridge, Canal, and Other Private Corporations by William W. Cook

Towards A Bargaining Theory Of The Firm, Manuel A. Utset

Scholarly Publications

No abstract provided.

Internal Governance Standards, Suramya Balachandran

LLM Theses and Essays

Corporate control has a variety of connotations; it can mean the group of individuals who are regarded as “the control” of a corporation, the office of a corporation, or a fiduciary relationship between the office holder and the corporation. Corporate control transactions are changes in a corporation’s structure motivated by the desire for growth of the corporation, such as setting up new divisions, acquiring or being acquired by another corporation, selling or buying stock, and entering or leaving markets. Control transactions have been a successful business practice since the 1980s. The first part of this thesis analyzes the benefits of …

Presumptions And Burdens Of Proof As Tools For Legal Stability And Change, Tamar Frankel

Faculty Scholarship

Presumptions and burdens of proof are used, among other purposes, to maintain legal stability and at the same time effect change. By imposing the burden of proof on the party asserting a certain outcome, courts can calibrate burdens of proof and substantive rules until experience points to rule retention or amendment. As agents of change, presumptions and burdens of proof are far more flexible and less brittle than rules.¹

This Article tells the story of presumptions and burdens of proof in litigation between corporate shareholders and managements. This litigation is replete with volatile presumptions and innovative burdens of proof, …

Section 338 And Its Foolish Consistency Rules - The Hobgoblin Of Little Minds, Douglas A. Kahn

Articles

The purposes of this Article are to examine whether there is any longer a reason for concern because a target corporation can choose selected assets for nonrecognition and to what extent the 1994 regulations properly deal with potentially abusive circumventions of tax goals. Before examining the current status of the consistency requirements, the historical background that led to the adoption of Section 338 and the operation of the section is discussed. The historical background includes: the judicially created Kimbell-Diamond rule, the codification and modification of that rule by the old version of Section 334(b)(2), the operation of the old version …

Withdrawal And Expulsion In Germany: A Comparative Perspective On The "Close Corporation Problem", Hugh T. Scogin Jr.

Michigan Journal of International Law

This article will examine the German legal system's experience with fashioning remedies for the "close corporation problem" and the underlying concepts that have shaped these remedies. Part I will trace the growth of the doctrines of withdrawal and expulsion in the context of Germany's troubled history. Part II will compare German and U.S. approaches on both practical and conceptual levels. On one level, the focus of the article is narrow. It deals with specific, technical solutions to only the most extreme examples of the close corporation problem. Such cases are not frequently litigated. Their doctrines do, however, constitute default rules …

Untenable Status Of Corporate Governance Listing Standards Under The Securities Exchange Act, Douglas C. Michael

Law Faculty Scholarly Articles

United States securities markets operate under a system of supervised self-regulation created by the Securities Exchange Act of 1934 (Exchange Act). That system includes substantive regulation of the traders and the issuers of securities traded in those markets through the use of listing standards.

These listing standards have a unique status. They are part of a self-regulatory system, but are not classic self-regulation. The markets do not govern the traders of which it consists; rather, it governs outsiders—the issuers. The markets and the Securities and Exchange Commissions have sought to control issuers in ways not clearly related to trading in …

Responsibility Of Investment Bankers To Shareholders, Ted J. Fiflis

Publications

No abstract provided.

Corporate Pro-Choice: New York Assumes An Anti-Takover Position, Paula Walter

Touro Law Review

No abstract provided.

A Rule Unvanquished: The New Value Exception To The Absolute Priority Rule, Clifford S. Harris

Michigan Law Review

This Note examines whether the new value exception remains part of the revised Bankruptcy Code. Part I discusses the background of the new value exception. Part II traces the development of the conflict concerning the survival of the new value exception subsequent to the adoption of the Code. It then discusses the Supreme Court's opinions in Mid/antic National Bank v. New Jersey Department of Environmental Protection and its progeny, which established the methodology for determining the impact of the revised Bankruptcy Code on preexisting bankruptcy law. Based on an analysis of the Midlantic doctrine, Part II concludes that Congress did …

Shareholder Passivity Reexamined, Bernard S. Black

Michigan Law Review

This article argues that shareholder monitoring is possible: It's an idea that hasn't been tried, rather than an idea that has failed. I defer to a second article currently in draft the question of whether more monitoring by institutional shareholders is desirable. Will direct shareholder oversight, or indirect oversight through shareholder-nominated directors, improve corporate performance, prove counterproductive, or, perhaps, not matter much one way or the other? What are the benefits and risks in giving money managers - themselves imperfectly monitored agents - more power over corporate managers? If more shareholder voice is desirable, how much more and …

Protecting Nonshareholder Interests In The Market For Corporate Control: A Role For State Takeover Statutes, Frank J. Garcia

University of Michigan Journal of Law Reform

Part I of this Note describes a phenomenon of modern corporate activity first identified over fifty years ago as the "separation of ownership and control." This separation gives rise to the need for a governing corporate norm; recognizing the normative aspect of this phenomenon has direct implications for the takeover debate.

Part II analyzes the problem of a target board's fiduciary duty as the modern version of the fundamental normative issue of corporate law. It argues that the norm of shareholder wealth maximization, assumed as the starting point by those most in favor of an active and minimally regulated control …

Giving Voice To Shareholder Choice, Jayne W. Barnard

Faculty Publications

No abstract provided.

Misreading The Williams Act, Lyman Johnson, David Millon

Michigan Law Review

This Article examines the emerging controversy over preemption of the most potent of recent antitakeover laws, the so-called business combination statutes recently passed by Delaware, New York, and other states, and Pennsylvania's director-approval statute. After examining the strategy employed by the states to shield these statutes from constitutional attack, we consider the issues raised by the preemption claim and the arguments currently being advanced by the SEC and others in favor of preemption. Resolving the preemption controversy requires inquiry into the original meaning and objectives of the Williams Act. We argue that this should involve attention not only to the …

Missing The Point About State Takeover Statutes, Lyman Johnson, David Millon

Michigan Law Review

In a recent article in this journal, Professor Richard Booth offers an extended appraisal of state legislation regulating hostile corporate takeovers. We think Booth's article requires comment for two reasons. The first reason is perhaps more obvious, though less interesting from our point of view. To be blunt, "unfairness" to shareholders due to coercion arising out of two-tier or partial offers simply does not occur with enough frequency to warrant a sixty-seven-page article in a major law review. According to recent congressional testimony by SEC Commissioner Cox, from 1982 to 1986 the number of two-tier offers declined from 18% of …

Ird And S Corporations, Gregory V. Gadarian, Jonathan G. Blattmachr

Touro Law Review

No abstract provided.

Beyond Managerialism: Investor Capitalism?, Alfred F. Conard

University of Michigan Journal of Law Reform

Capitalism, in most large public corporations, has been subtly transformed from a system of dominance by the suppliers of capital to a system of dominance by the managers, dubbed "managerialism." In many respects, managerialism is beneficial to investors and other enterprise constituencies, since managers' rewards typically grow with the profitability of the enterprise. But managerialism permits drastic wastes of resources when managers hang on to their jobs after they have become inefficient or spend lavishly to defend themselves against takeover bids. Derivative suits, shareholder proposals, independent directors, and other prescriptions have failed to stifle managerial abuses. This is the message …

Two Models Of Corporate Governance: Beyond Berle And Means, Lynne L. Dallas

University of Michigan Journal of Law Reform

This Article introduces a new model of corporate governance, which challenges, as did Berle and Means, the conclusions drawn from the traditional ownership model. Rather than focusing upon the inefficiencies of the large complex firm resulting from the separation of share ownership and control, however, this new model, which I call the power model, focuses upon the political nature of decision making in the large corporation, which exists regardless of the identity of the entrepreneur.

The Promise Of State Takeover Statutes, Richard A. Booth

Michigan Law Review

The purpose of this article is, first, to describe the problems associated with two-tier tender offers and the closely related, and perhaps still more coercive, partial tender offer. Second, the article will address the natural question why such offers have not already been banned, suggesting a better view of what coercion means in the context of a tender offer. Third, the article will offer a management-oriented view of coercion, explaining the legitimate interests of managers (and other groups) in resisting takeovers, as well as how greenmail and poison pills, though subject to abuse, can be used quite properly to combat …

The Corporate Social Responsibility Movement - The Latest In Maginot Lines To Save Capitalism, H J. Glasbeek

Dalhousie Law Journal

The modem corporation bad a battle to be accepted as a legitimate institution. In England it was initially seen as a device which might lead to the undermining of individual responsibility, in the United States as subjugating the individual and individualism to the needs of the organization, and in Canada as offending the dignity of labour and endangering the political entente. In 1932, Berle and Means showed that most of the wealth in the United States was in the hands of corporations and a large proportion of that corporate wealth was controlled by a relatively small number of dominant corporations. …

Should General Utilities Be Reinstated To Provide Partial Integration Of Corporate And Personal Income—Is Half A Loaf Better Than None?, Douglas A. Kahn

Articles

The General Utilities doctrine is the name given to the now largely defunct tax rule that a corporation does not recognize a gain or a loss on making a liquidating or nonliquidating distribution of an appreciated or depreciated asset to its shareholders. The roots of the doctrine, can be traced to a regulation promulgated in 1919 that denied realization of gain or loss to a corporation when making a liquidating distribution of an asset in kind. No regulatory provision existed which specified the extent to which realization would or would not be triggered by a nonliquidating distribution such as a …