Business Organizations Law Commons^™

Enforcing International Law Against Corporations: A Stakeholder Management Approach, Kishanthi Parella

Scholarly Articles

There is an important but oft neglected relationship between the problems of corporate governance and international law. Corporate managers grapple with how to respond to society's demands that their enterprises do better when it comes to protecting people and the planet. These demands take many forms, including increased pressure for “sustainability” and “environmental, social, and governance” (“ESG”) measures. These demands are made in response to the economic, social, environmental, and political crises facing our world and a recognition of the responsibility of corporations and other business actors to contribute to their resolution. What is often unrecognized is that many of …

Lobbying By Brief: Unveiling The Dominance Of Amicus Lobbying In The Development Of Business Law, Tomer Stein, W.C. Bunting

Scholarly Works

This Article uncovers the pervasive and significant impact of business law Amicus Lobbying, a strategic tactic whereby lobby groups have commandeered the amicus curiae filing process in state courts to shape business law according to their interests.

The Article makes three primary contributions to the literature. First, it presents the only comprehensive dataset of amicus curiae filings in business law cases. This hand-collected dataset encompasses nearly all business law amicus curiae filings from 2005 to 2022 in the key jurisdictions of New York, California, Delaware, Texas, and Nevada. Second, it reveals a striking empirical finding: lobby groups account for 67% …

How A “Superstar” Ceo Exposes The Necessity For Third Party D&O Insurance, Angela N. Aneiros, Karen Woody

Scholarly Articles

he influence that “superstar” CEOs have over a company’s board of directors can be alarming. Among other things, Elon’s ability to skirt personal liability for seemingly obvious breaches of duty has raised concerns within the realm of corporate governance and corporate regulation. While much has been written on Elon’s influence on Tesla’s board of directors, one area of the law that often gets overlooked that has exacerbated Elon’s corporate governance issues, is that of directors and officers (D&O) liability insurance. While personally insuring board members seems like a very "Elon" move, it could have broader implications beyond Elon. Are “superstar” …

Delegated Corporate Voting And The Deliberative Franchise, Sarah C. Haan

Scholarly Articles

Starting in the 1930s with the earliest version of the proxy rules, the Securities and Exchange Commission (SEC) has gradually increased the proportion of “instructed” votes on the shareholder’s proxy card until, for the first time in 2022, it required a fully instructed proxy card. This evolution effectively shifted the exercise of the shareholder’s vote from the shareholders’ meeting to the vote delegation that occurs when the share-holder fills out the proxy card. The point in the electoral process when the binding voting choice is communicated is now the execution of the proxy card (assuming the shareholder completes the card …

The Sec's (Ill-Fated) Stock Repurchase Transparency Reform: For Investor Protection, Lin (Lynn) Bai

Faculty Articles and Other Publications

In May 2023, the SEC adopted new transparency measures designed to improve oversight of corporate stock buybacks. However, the new regulation faced immediate and successful challenges in court, prompting the agency to suspend its implementation in November 2023 for further cost-benefit analysis. Critics contended that the new regulation would offer minimal additional benefit to investors given the current regulatory framework. Despite this legal setback, advocates for the re-proposal of the regulation persist. This article shows that the new regulation would open new avenues of legal recourse for investors, fortify their claims that might otherwise be dismissed, and unlock corporate records …

Tennessee's Dao Act: Positive Innovation Or Fringe Legislation, Joan Macleod Heminway

Scholarly Works

This essay responds to a recent development in unincorporated business associations law in the State of Tennessee. That legislative development is a 2022 amendment to Tennessee’s Revised Limited Liability Company Act, ostensibly creating a legal form of entity for the operation of decentralized autonomous organizations (the "DAO Act"). Remarkably, the DAO Act did not pass through the traditional channels for the review of business legislation in Tennessee, which include a review by members of the business bar (prototypically at least the Executive Council of the TBA Business Law Section) and the Business Services Division of the Tennessee Secretary of State. …

Delaware Beware, Anat Alon-Beck

Faculty Publications

This article conducts an in-depth exploration of the dynamic competition among states to attract businesses and determine the legal framework governing corporations. It adopts an innovative market-centric viewpoint, treating corporate law as a product within the broader context of charter competition among U.S. states. While the scholarly spotlight has predominantly shone on publicly traded giants, this article daringly delves into uncharted territory, unraveling the intricate incorporation and governance decisions of privately held “unicorns”—those elusive venture capital-backed behemoths that silently shape the economic landscape.

By unraveling the decision-making processes of where these economic powerhouses incorporate, the article challenges prevailing assumptions on …

Shareholder Primacy Versus Shareholder Accountability, William Wilson Bratton

Articles

When corporations inflict injuries in the course of business, shareholders wielding environmental, social, and governance ("ESG") principles can, and now sometimes do, intervene to correct the matter. In the emerging fact pattern, corporate social accountability expands out of its historic collectivized frame to become an internal subject matter-a corporate governance topic. As a result, shareholder accountability surfaces as a policy question for the first time. The Big Three index fund managers, BlackRock, Vanguard, and State Street, responded to the accountability question with ESG activism. In so doing, they defected against corporate legal theory's central tenet, shareholder primacy. Shareholder primacy builds …

Corporate Governance & International Law, Kishanthi Parella

Scholarly Articles

Stakeholder activism by nongovernmental organizations (NGOs), consumers, employees, and others can incentivize corporate managers to comply with international law on climate change, armed conflict, human rights, and access to medicine, among other issues. As such, stakeholder enforcement of international law has two distinct audiences: the corporation that is persuaded to change and fellow stakeholders who are persuaded to act. But familiar difficulties with collective action impede the success of stakeholder enforcement of international law. These challenges can compromise the ability of shareholders to monitor corporations; these same problems similarly jeopardize the ability of stakeholders to monitor corporate compliance with international …

A Roadmap To Nil And Taxation, Doron Narotzki, Yariv Brauner

American University Business Law Review

The landscape of college sports has dramatically changed in recent years. What was once considered a place for amateur athletes pursuing education now partially mirrors, at least for some student-athletes, the structure and financial dynamics of professional leagues such as the NFL, NBA, and MLB. However, the collegiate sports ecosystem still remains distinct, shaped by unique regulatory frameworks governed by the NCAA. This article reviews and analyses the implications of these changes, and focuses on the tax considerations surrounding Name, Image, and Likeness (NIL) rights and how the evolving nature of college sports also presents certain tax implications, some of …

Incorporating Unicorns: An Empirical Analysis, Anat Alon-Beck

Faculty Publications

There is a growing concern among regulators and academics about how to regulate unicorns - entities large enough to have a public impact yet remaining in the private domain. An examination of corporate charters within a selected sample of unicorn firms reveals an important finding: 97% of these entities are incorporated in Delaware. This concentration provides Delaware with significant leverage to shape regulatory frameworks, especially concerning the protection of parties who may lack the ability to safeguard their interests through contractual means.

This groundbreaking discovery on the dominance of Delaware showcases a substantial deviation from incorporation trends in other business …

The Theories Of Corporate Pershonhood And Their Three False Choices: Developing A Framework For Corporate Rights, Katharine Jackson

Faculty Articles and Other Publications

Scholars often use the theories of corporate personhood—aggregation theory, concession theory, and real entity theory—to justify corporate rights through analogy. That is, theories of corporate personhood attempt to explain what rights corporations ought to have based on what kind of person the corporation is like. If corporations are like individual human beings, then corporations should enjoy all the same rights that human beings do. If corporations are like states, then corporations should owe the same obligations that a state owes its citizens. Of course, many scholars have addressed the weaknesses of this kind of analogical reasoning. As Dewey argued long …

The Harm In The Fiduciary Myth, Kelli Alces Williams

Scholarly Publications

Fiduciary law has become the doctrine of choice in scholarship aiming to protect vulnerable parties from powerful decisionmakers. But fiduciary law cannot fill all the gaps in those impersonal, public relationships because the beneficiary class is large, disparate, and widely dispersed. Public leaders and decision makers cannot zealously pursue the interests of all parties vulnerable to their decision making and they are often driven by various personal interests in choosing which set of beneficiary interests to prioritize. The persistent myth that leaders of large groups are fiduciaries and that fiduciary obligation is the answer to all power imbalance problems harms …

Key Developments At The World Bank Inspection Panel (2013-2024), Dilek Barlas

Perspectives

Through the lens of important cases, this essay reflects on major developments that occurred at the Panel during the tenure of the author as the Executive Secretary of the World Bank Inspection Panel and shows how the Panel has evolved to improve accessibility, has influenced overall development policies, and has become a catalyst for institutional change. The essay observes that the Panel’s success has largely been due to its structural and operational independence, reporting as it does directly to the Bank’s Board of Executive Directors. However, there are challenges facing the Panel on certain issues, including most importantly its independence, …

Ending 30 Years Of Imf Exceptionalism: A Call For An Accountability Mechanism At The International Monetary Fund, Luiz Vieria

Perspectives

This year marks the 30^th anniversary of the World Bank’s Inspection Panel (WBIP or Panel), created as the result of grass-roots and international pressure on the Bank to address the well-documented negative impacts on marginalised communities of the Bank-financed Narmada dam and similar projects.

The establishment of the world’s first independent accountability mechanism (IAM) at the World Bank led to the creation of similar mechanisms at nearly all international financial institutions (IFIs), with the IMF an important exception. The establishment of the WBIP and other IAMs was a step-change in accountability, as previously IFIs were only accountable to shareholders …

Imf Human Rights Accountability: A Pragmatic Way To Break The Deadlock, Aldo Caliari

Perspectives

In the three decades since the 1993 establishment of the World Bank Inspection Panel, almost all development finance institutions (DFIs) have established analogous panels, ombudsperson offices or other independent accountability mechanisms (IAMs) to allow people who believe they have been harmed by the DFI’s activities to directly trigger processes of fact-finding, dispute resolution, and, if applicable, redress. The primary exception has been the International Monetary Fund.

World Bank's Roadmap And The Inspection Panel's Human Rights Responsibilities, Juan Pablo Bohoslavsky, C.P. Chandrasekhar

Perspectives

The World Bank has been under pressure to devise a process for “evolving” its mission, operations, and resources, acknowledging that decades of engagement with low- and middle-income countries has resulted, paradoxically and contrary to its official mission, in a “crisis of development.” The Bank bluntly notes in the opening to its paper “Evolving the World Bank Group’s Mission, Operations, and Resources: A Roadmap,” issued in December 2022, “after decades of progress, growth and poverty reduction have stalled.” Indeed, this “crisis of development” threatens to unleash political instability around the world.

Algorithmic Financial Regulation: Limits Of Computing Complex Adaptive Systems, Shuping Li

American University Business Law Review

This article examines the potential of and limits to the use of machine learning for financial regulation. Ideally, if we could fully understand the financial system and agree on long- and short-term regulatory goals, we would be able to write code that carries out the computation that extracts proper representations from the data and makes correct regulatory decisions. We cannot do this yet because of limited sources of data, the bias brought by human beings and algorithmic models, and the difficulty of improving uninterpretable models. Furthermore, since law is a combination of merits and facts, there are difficulties in establishing …

The Secret's Out: The Role Of Restrictive Covenants In Trade Secret Law, Magdalene Eallonardo

American University Business Law Review

Trade secrets derive economic value from their classified nature, which leads companies to implement legal measures to prevent the spread of their confidential company information to the public. Restrictive covenants within employment agreements are a common form of these legal measures. However, because of employers’ restrictive terms, states are placing regulations on the scope of these agreements. With limited ability to contract their employees away from sharing their confidential information with direct competitors, companies utilize alternate methods to protect their trade secrets.

Charter Schools And Emos: Who's In Charge, Brendan Glynn

American University Business Law Review

Charter schools are a popular sight in the educational field today. For the IRS to consider a charter school a 501(c)(3) organization, nonprofit charter schools must be organized and operated exclusively for educational purposes, meaning purposes relating to the instruction of individuals to improve their capabilities. To be organized for educational purposes, the articles of the organization must limit the entity to educational purposes while also preventing the organization from engaging in substantial noneducational activities. To operate exclusively for educational purposes, an organization’s activities must be substantially in furtherance of educational purposes while also not substantially benefitting a private individual. …