Mandatory Rules Research Articles

The Law and Policy of Government Access to Private Sector Data (‘B2G Data Sharing’)

The tremendous rate of technological advancement in recent years has fostered a policy de-bate about improving the state’s access to privately held data (‘B2G data sharing’). Access to such ‘data of general interest’ can significantly improve social welfare and serve the common good. At the same time, expanding the state’s access to privately held data poses risks. This chapter inquires into the potential and limits of mandatory access rules, which would oblige private undertakings to grant access to data for specific purposes that lie in the public interest. The article discusses the key questions that access rules should address and develops general principles for designing and implementing such rules. It puts particular emphasis on the opportunities and limitations for the implementation of horizontal B2G access frameworks. Finally, the chapter outlines concrete recommendations for legislative reforms.

Do People Like Mandatory Rules? The Impact of Framing and Phrasing

Market regulation has traditionally focused on disclosure duties, yet mounting evidence questions their effectiveness. The efficacy of nudges is similarly doubted, especially when suppliers counter their effects. Consequently, there is growing interest in mandatory regulation of the content of contracts. Previous studies have examined public opinion about nudges but not about mandatory rules.We explore how the formulation of mandatory rules might affect their judged desirability, focusing on the choices: (1) between negative and positive formulation; and (2) between merely establishing substantive mandatory rules and supervising the wording of the contract as well. We also examine laypersons’ general attitude toward mandatory rules.We report the results of four studies, conducted with a representative sample of 968 US adults and 795 MTurk master workers. Contrary to our conjecture, we found that subjects generally judged wording rules as more desirable than merely substantive ones, and positive rules as more desirable than negative ones. There also appears to be strong support for pro-customer mandatory rules, even among conservative people. These results arguably legitimize more, and more effective, mandatory rules. They also suggest that the relative paucity of mandatory rules in US law is not due to public opposition to them but to other reasons.

Continuation of security rights in movable assets in conflict of laws – Austrian approach reconsidered

AbstractIn decision no. 3 Ob 249/18sOGH [2019] 3 Ob 249/18s. the Austrian Supreme Court (Oberster Gerichtshof, OGH) acknowledged a security right in a movable asset acquired abroad, although publicity requirements under Austrian law have not been observed before and after the movable asset crossed the Austrian border. Consequently, only the law of the country in which the movable asset is located upon the completion of the acquisition or loss shall be applicable to the acquisition or loss of a right in rem. Whether the transaction has been completed or not, is determined by the lex causae. No subsequent change in the applicable law occurs in relation to this question.The decision is analysed in this paper in the context of the former jurisprudence of the Austrian Supreme Court, which has been overturned by the present decision, and the positions published to date in legal literature. In addition, this paper provides an overview including aspects relating to EU law, the debate regarding overriding mandatory rules and fraus legis.

Choice of court agreements and derogation from competition law

Japanese courts have held that a choice of court agreement should be respected even if it would lead to derogation from domestic competition law. The exception is where there would be such a discrepancy between the outcomes before the designated foreign court and the Japanese courts that it would be intolerable to enforce the agreement from the standpoint of maintaining the public policy objectives of Japanese competition law. However, this paper puts forward an alternative approach as the more appropriate course to take, submitting that choice of court agreements should generally be respected by courts in competition law claim situations, unless they are obviously unreasonable or contrary to public policy on their face. At the jurisdictional stage, a court should not treat an agreement as invalid merely because it could potentially lead to a derogation from domestic competition law, even where such law is regarded as a body of overriding mandatory rules.

The ‘DAC 6’ and Its Compatibility with Some of the Founding Principles of the European Legal System(s)

The current article has two main ‘centres of gravity’. First, it proposes a critical description of the primary points of the European Council Directive known as the ‘DAC 6’ for which the deadline for transposition into the domestic legislation of the Member States is rapidly approaching at the time of this writing. The description is contextualized in the findings of the Base Erosion and Profit Shifting (BEPS) Project. Subsequently, the authors address some of the main points raised by scholars and commentators with regard to its contents, especially the possibility that the mandatory disclosure rules clash with the professional privilege of certain tax advisors, the principle against self-incrimination, or the risk that it will initiate a ‘race to the bottom’ in the sanctioning powers to be exercised by Member States. Administrative cooperation, Mutual Assistance, DAC 6, Directive 2011/16/EU, Directive 2018/822/EU, Professional Privilege, Self-Incrimination, European Convention on Human Rights, Penalties System, Race to the Bottom

Empirical Evidence on Audit Quality under a Dual Mandatory Auditor Rotation Rule

Regulators in the US ruled against introducing mandatory firm rotations in addition to the existing rule for periodic partner rotations. In contrast, European regulators ruled in favor of a dual mandatory rotation rule in which both audit firm and audit partner rotations are required. Employing a unique setting where a dual regime of audit and firm rotations are required, we assess the net benefit (cost), of audit firm rotation incrementally to partner rotation. Specifically, we analyze several earnings-based measures of audit quality along with the market perception of audit quality. Controlling for partner rotation, we do not find that firm rotations have a positive incremental effect. In contrast, we find audit partner rotation under the dual regime appears to improve both the earnings-based measures of audit quality, and market perceptions of earnings. Our evidence suggests that any benefit arising from dual rotation is likely to be driven by the change in partner. However, whether the audit firm rotation should still be required is unclear, given that the observed benefits arising from the audit partner rotation could potentially be preconditioned on audit firm rotation.

Mandatory CSR expenditure and stock return

Purpose India has mandated corporate social responsibility (CSR) expenditure under Section 135 of the Indian Companies Act, 2013 – the first national jurisdiction to do so. The purpose of this paper is to examine the impact of mandated CSR expenditure on firms’ stock returns by using actual CSR spending data, whereas the previous studies mostly focus on voluntary CSR proxied by CSR scores. Design/methodology/approach The authors estimate their baseline regression by using ordinary least squares(OLS) method. Although the baseline regression involving CSR expenditure and stock returns using ordinary least squares method are estimated, endogeneity and reverse causality biases are addressed by using two-stage least squares and generalized method of moments approaches. These approaches contribute mitigating endogeneity bias and biases associated with unobserved heterogeneity and simultaneity. Findings The findings document that mandatory CSR expenditure has a negative impact on firms’ stock returns which supports the “shareholders” expense’ view. This result remain robust after controlling for endogeneity bias and the use of both standard and robust test statistics. The authors however observe that this result holds for the firms with actual CSR expenditure equal to the mandated amount but does not hold for the firms with actual CSR expenditure greater than the mandated amount. Therefore, the authors provide evidence that CSR expenditure’s impact on stock returns depends on whether firms simply comply the regulation or voluntarily chose an amount of CSR expenditure above the mandated amount. Originality/value The primary contribution is to present a valid and robust evidence of negative effect of mandated CSR spending on firms’ stock returns when the mandatory CSR spending rule is already in place. This study contributes by examining the impact of mandated CSR spending on stock during post-implementation period (2015-2017), whereas other studies by Dharampala and Khanna (2018); Kapoor and Dhamija (2017); and Mukherjee et al. (2018) mainly examined the impact of legislation on Indian CSR. The authors use mandated actual CSR expenditure, whereas previous studies mostly focus on voluntary CSR proxied by CSR scores.

Exposing the Public Interest Dimension of the Digital Single Market: Public Undertakings as a Model for Regulating Data Sharing

The availability of public and private data plays a crucial role for the digital single market. Increasing the availability of data by incentivizing and mandating public and private actors to share their data ranks high on the EU policy agenda. When designing suitable legal data sharing regimes, there is an inevitable need to balance multiple public and private interests. While there have been considerable discussions on data sharing between private businesses (B2B), no binding rules have been established yet. In contrast, public undertakings are increasingly covered by mandatory rules. This article focuses on data sharing regulation for public undertakings, which lie at the state-market interface. The way their data is regulated offers a prototype for how to reconcile business reasoning with the public interest. In particular, the article inquires into the design of the recast Public Sector Information (PSI) Directive regarding public undertakings as well as into different national rules which mandate access to public undertakings’ data. On this basis, it discusses four general characteristics which can inform other strands of regulatory debate on data sharing in the EU.

Contractual Time Limits to Commence Arbitration

Arbitration and multi-tier dispute resolution clauses may contain a time limit to commence arbitration. The expiry of such a time limit could have different legal results. First, it could make the arbitration clause ineffective. Second, it could extinguish the claim or prevent its enforcement through legal proceedings. In the latter case, the contract provision about the time limit would have to be examined with regard to its compliance with mandatory provisions of the law applicable to limitation periods. Even the determination of the law applicable to limitation periods causes considerable difficulty. It is another difficult issue to determine which provisions of the law applicable to limitation periods are mandatory and, if so, whether the contract provision complies with the limits of the law. Once it is established that the contract provision is valid, the acts necessary to prevent the expiry of the time limit would have to be examined. limitation period, preclusion period, extinctive prescription, time bar, commencement of arbitration, mandatory rule, jurisdiction, applicable law, interpretation, validity.

Positive Spillovers in International Corporate Taxation and the European Union

The international spillover effects of specific domestic policies and practices have been subjected to increasing scrutiny from a range of international organizations, academia, and civil institutions with tax policy and practice both central in this discussion. Nevertheless, the extant international tax spillover analyses explore a limited set of spillover pathways or indicators that have been criticized in the literature for not being sufficiently inclusive. The focus of this article is on a newly launched index that includes a comprehensive set of plausible pathways in which spillovers occur. The Corporate TaxHaven Index (CTHI) explores twenty key tax spillover indicators under five categories and assesses sixty-four countries’ tax systems in order to identify policies that should be considered for corporate tax reform to mitigate cross-border tax spillovers. This article particularly aims to highlight international corporate tax spillover pathways in the European Union Member States’ domestic tax laws, regulations and documented administrative practices but limits its scope to domestic tax rules that dispense with positive spillovers. Finally, it analyses Member States’ current performance and concludes with recommendations for future tax reforms in the European Union. Tax spillovers, Corporate Tax Haven Index, transparency rules, public accountability, country by country reporting, mandatory disclosure rules, tax rulings, extractive contracts, anti-avoidance rules, controlled foreign company rules, deduction limitation.

Stock Buybacks as an Executive Compensation Problem

This Article is the first academic study to systematically analyze the overall sensitivity of executive compensation to stock buybacks. Specifically, my analysis of executive compensation arrangements of CEOs included in the S&P 500 Index reveals that buybacks can enhance a record high portion of incentive compensation, corresponding, on average, to one-third of total CEO pay. I further show that, despite the focus of financial economists on the ability of buybacks to mechanically improve per share performance measures that determine executives’ annual bonuses, repurchases can, in addition and to a much greater extent, boost performance measures that decide executives’ long-term incentive awards. I argue, first, that because a buyback can increase pay even when it would destroy firm value, executives are motivated to conduct buybacks excessively. Second, I explain that this potential motivates executives to game their incentive compensation arrangements and turn them from pay for performance into pay for manipulation. Third, I find that the impacts of buybacks on executive pay are camouflaged in firms’ public filings. These distorted incentives and the lack of transparency are likely to lead firms to underinvest in productive capabilities, disguise poor financial performance, and contribute to the creation of a market bubble that increases the likelihood of another financial crisis. Borrowing from dividend protection, which safeguards executive stock and option awards from the automatic decline in the stock price that dividends trigger, I suggest applying buyback protection, which would shield executive pay from the mechanical performance improvement that stock buybacks stimulate. Because I do not expect a mandatory rule requiring firms to adopt buyback protection to be effective I propose a novel regulatory reform to make the impact of stock buybacks on executive pay transparent. Transparency can be expected to push boards, shareholders, and proxy advisors to pressure firms to adopt buyback protection.

End‐user modeling of quality for web components

AbstractWith years of frantic development, when release fast and release often was the mandatory rule for web technologies and services, the open source paradigm and online distribution repositories have imposed de facto standards for quality assessment in fast‐paced innovation processes. Nowadays, however, in pursuit of productivity, security, and user satisfaction, the industry is beginning, through the introduction of new standards such as ECMAScript 6 or web components, to consider software engineering mandates for web technologies. This article reports a quality model aligned with international standard ISO/IEC 25010, covering web components technology, which ultimately aims to improve adoption by the software engineering industry, traditionally wary of agile Internet practices, the open source paradigm, and public repositories. Our research also presents an experimentation platform on which end users have validated the quality properties, highlighting the implicit connection with the perceived quality. The key result of our research convinces us that user ratings are suitable as a testing mechanism for product quality and quality‐in‐use metrics in order to define an absolute scale of comparison for web component quality.

Features of formation of land plots for construction and maintenance of buildings of educational establishments

In the article the normative-legal base on formation of land plots for construction and maintenance of buildings of educational institutions, in particular, it analyses the Law of Ukraine «About education» from 05.09.2017 year. It is established that the ability to obtain the right of permanent use of land granted to all without an exception educational institutions regardless of their form of ownership (previously, this right could only acquire higher education institutions), transfer for permanent use to the educational institutions of the land on which are located buildings and structures of such institutions is: the academic building, laboratories, dormitories, libraries and such. Also decided on the number of subjects in educational institutions include legal entities of public or private law the main activity of which is educational activities. The study was conducted on the example of the development of the land for teaching and Educational complex «Preschool educational establishment - General educational school No. 11» city of Tokmak of Zaporizhzhya region. Evaluated current use of lands of the city of Tokmak. We also study the category of land that can be transmitted to educational institutions for permanent use, in particular, of agricultural land and defense, as for other categories of land, the legislation does not contain mandatory rules as to the impossibility of their transfer for permanent use to educational institutions. Justified the procedure of formation of land plots for construction and maintenance of buildings of educational institutions. Keywords: land, construction and maintenance of buildings of educational institutions, institutions of higher education, permanent use.

Електронний податковий аудит як науково-правова категорія

Статтю присвячено дослідженню поняття електронний аудит як окремої правової категорії, доктринальних підходів щодо зазначеного поняття. Проведено аналіз правового забезпечення передумов формування доктринальних понять застосування електронного аудиту, фактичного правого забезпечення окремих складових цілісної системи аудиту.

The Case for Non-Binary, Contingent, Shareholder Action

Shareholder action is exercised mainly through a binary system: for example, the shareholders vote either to approve a proposal or to reject it. They either follow the recommendation of management and vote with management or vote against it. In case of contention between incumbents and insurgents, shareholders need to determine whom to trust. Disclosures and proxy advisory firms’ recommendations add to the information the shareholders might consider before casting their binary vote. However, retail investors as well as small investors are generally underequipped and restricted economically from reaching an informed and educated shareholder decision, and thus vote infrequently. Abuse of insider information further disadvantages retail investors. Yet, corporate decisions are based on the choice of the majority of the shareholder vote and retail investors are assumed to rely on disclosed information when making investment decisions. The new generation of Special Purpose Acquisition Companies (SPACs), currently representing about half of the U.S. going-public transactions, is one example that illustrates the weakness of the binary system and the consequent vulnerability of small and unsophisticated shareholders. Remarkably, investors in SPACs can vote yes on management proposed acquisition transactions and, nonetheless, simultaneously choose to redeem their shares. Unsophisticated retail investors may not realize that they, as well, will be better off if they redeem their shares even though the transaction received the approval of the majority of the shareholder vote. This Article puts forward a proposal to amend the law and allow shareholders to act in a way that is contingent upon a simultaneous non-contingent action by other shareholders. For example, a shareholder of a SPAC should be able to choose to redeem her shares iff at least a specified percentage of redemption rights are exercised unconditionally. Similarly, a shareholder who has preemptive rights should have the right to exercise her rights with a limit that caps her participation and maintains her percentage holdings in the company. Generally, shareholders should have the option to act contingently when they are exercising a shareholder right, such as preemptive rights, appraisal rights, and when they are given a choice to participate in transactions such as tender offers and stock-buybacks. Unlike mandatory disclosure rules imposed on insiders, the proposed non-binary, contingent, shareholder action treats all shareholders equally and increases the power of the shareholder's action without incurring high costs of collaboration and communication among the shareholders..

Amazing Penal Institutions and the Dwelling Circumstances of Inmates

Interestingly enough, there are many types of penal institutions all over the world. Most of them are overcrowded, and harsh, humiliating conditions and mandatory rules surround the inmates. Other prisons swim on the sea, or located in picturesque environment over the sea or in one of the Tuscan archipelagos, or located in a dukedom. The rest could represent “five star” penal institutions with all amenities, conveniences, and facilities of tennis court, horse riding or swimming in the sea. Eco prisons also exist with solar panels, bio diesel, recycling, and cultivations. Inmates may live in communities, without the supervision of prison wardens and the lack of window-grates, moreover, they move free. They buy their “own cells”, and playing children, stalls, restaurants, hairdresser’s, and even a hotel are in the vicinity of their “cells”. Other penal institutions accommodate the family members as well, which help children bound their convicted parents, and “disguise” the penal institution in order not to face real prison conditions. Even in the middle of the desert, in military tents inmates are located, and dressed in pink clothes to avoid T-shirt theft. Others are locked in a stone desert or far away in Siberia. Whereas one penal institution can locate only two convicts, others may accommodate ten thousand ones. There is a wide spectrum, which can range from the most lenient penal institutions, to the strictest ones.

Shareholder Stewardship in India: The Desiderata

The goal of this paper is to examine whether the stewardship code, which emanated in circumstances that are specific to the United Kingdom (UK), is capable of transposition to other jurisdictions that experience different corporate structures as well as legal and institutional mechanisms. It does so in the context of India, which has introduced a series of stewardship codes for different types of institutional investors. This paper cautions against the wholesale adoption of a UK-style stewardship code in India due to the specific factors that are at play in that jurisdiction, and instead calls for a sui generis approach to stewardship. At least three reasons necessitate such a departure from the UK stewardship approach. First, while the prominence of institutional investors in the UK in the context of companies with dispersed ownership inspired the UK-style stewardship code, the roles and challenges that institutional investors experience in India in the context of concentrated shareholding are considerably different. Second, the goals of stewardship vary from the UK, where the focus is on the long-term financial sustainability of beneficiaries of institutional investors, to India, which follows a pluralistic stakeholder approach to corporate law. Third, the traditional mode in the UK of using a code-based soft law approach to implementation of stewardship is unsuitable to the Indian circumstances that steadfastly rely on mandatory rules in the form of hard law in the corporate arena.

Mandatory Audit Partner Rotations and Audit Quality in the United States

SUMMARYThis study uses a sample of mandatory partner rotation events hand collected from SEC filings to investigate the relation between mandatory audit partner rotation and audit quality in the United States. Across a variety of control groups and audit quality proxies, we do not find evidence consistent with rotation materially improving audit quality (i.e., “fresh look”). Although somewhat limited, the only statistically significant evidence we document suggests that audited financial statements may be more likely to contain a material misstatement (i.e., subsequently be restated) following a mandatory audit partner rotation, particularly when the audit firm tenure is short. We also provide evidence from client disclosures that mandatory rotation rules trigger auditor-client realignment. Together, our results provide important evidence on the merits of mandatory partner rotation rules in the United States.JEL Classifications: M40; M41; M42.Data Availability: Data are publicly available from sources identified in the article.

Mandatory Disclosure Rules: Spotlight on Germany

In this article, the author discusses the German legislation to transpose the DAC-6 into domestic law. In particular, he discusses terms used in the DAC-6 that have their own definition in the German bill, as well as guidance on the interpretation of certain terms that are undefined in the DAC-6. In this regard, he also points out issues that may arise due to differences in the approach applied by other Member States.

Goldilocks (Control) and the Three Bears: Panel on Takeovers and Mergers v. King

The UK takeover regulatory landscape must be understood in the context of the interplay between enforcement of the rules and how investors behave in the face of those rules from a corporate governance perspective. From a legal standpoint, the courts have historically never been involved in the regulation of takeover transactions in the UK. However, section 955 of the Companies Act 2006 now enables the Panel on Takeovers and Mergers to seek court enforcement when a party fails to comply with the City Code on Takeovers and Mergers. Although a potentially useful mechanism to support the Panel in its administration of the Code, it was doubted whether the Panel would ever elect to rely on the provision as it involves exposing its regulatory monopoly to judicial scrutiny. The Scottish Court of Session decisions in Panel on Takeover and Mergers v. King mark the first time the Panel has chosen to rely on Section 955, in the context of enforcing the Mandatory Bid Rule. This paper analyses how this important rule is applied and enforced in practice, as well as the relationship between the Panel and the courts. The facts of the decisions also occasion consideration of an investment tactic that can be deployed to avoid triggering the Mandatory Bid Rule, namely what we define as ‘goldilocks control’.