Principles Of Corporate Law Research Articles

Bebchuk's Case for Increasing Shareholder Power: An Opposition

This paper sets out the view that Lucian Bebchuk's for increasing shareholder is exceedingly weak. It demonstrates that Bebchuk's proposed overthrow of core Delaware corporate law principles risks extraordinarily costly disruption without any assurance of corresponding benefit; that Bechuk's case is unsupported by any persuasive empirical data; that Bebchuk's premise that corporate boards cannot be trusted to respect their fiduciary duty finds no resonance in the observed experience of boardroom practitioners (perhaps not surprisingly, as the proposal comes from the height of the ivory tower); and that its obsession with shareholder power is particularly suspect (if not downright dangerous) in light of the palpable practical problems of any shareholder-centric approach.

The New Federalism of the American Corporate Governance System: Preliminary Reflections of Two Residents of One Small State

The year 2002 was a tumultuous one for the American system of corporate governance. High-profile scandals at large firms propelled reform initiatives from both Congress (in the form of the Sarbanes-Oxley Act) and the major stock exchanges (in the form of new listing standards and rules). These reforms - what we call the 2002 Reforms - include provisions that regulate the internal affairs of public corporations. As a result, the Reforms represent a challenge to the existing division of responsibilities among the federal government, the stock exchanges, and the states, in which the states have been given the primary role in articulating and enforcing substantive principles of corporation law governing the internal affairs of corporations and the responsibility of directors to stockholders. In fact, the 2002 Reforms can be viewed as creating a shadow corporation law that has a prescriptive quality at odds with the corporate law system in place in states like Delaware.In this essay, we examine some of the more interesting ways in which the 2002 Reforms will affect state corporation law and the traditional policy domain of states. Although many aspects of the Reforms hold promise as guarantors of greater corporate integrity, other elements are less obviously useful. We discuss some of our initial impressions of the Reforms, both pro and con, and highlight some of the more interesting policy implications of the Reforms for state corporate law.We conclude by counseling state policymakers to be active participants in the process of breathing life into the Reforms and in addressing the crisis in corporate confidence that arose in 2002. If states assume these responsibilities with vigor, we have confidence that the existing division of responsibilities among the federal government, the stock exchanges, and the states will persist. Because that division has, on balance, served investors and the public well, it should not be lightly abandoned.

Corporate Criminal Liability in Australia: An Evolving Corporate Governance Technique?

In the era of international corporate collapses, comparative corporate governance has become increasingly important. Yet, there is an inherent ambiguity in the scope of corporate governance and the relationships encompassed by the term, and it does not necessarily have the same meaning across different jurisdictions. Increasingly, the boundary between corporate governance and other areas of law is becoming blurred. Furthermore, inconsistencies of theoretical approach often exist within a single jurisdiction. The article concerns developments in an area of law generally treated as peripheral to corporate governance - namely, corporate criminal liability. Adopting a comparative law approach, the article analyzes the underlying principles of corporate criminal liability across a number of jurisdictions, specifically focusing on some significant reforms relating to corporate criminal liability in Australia. Although Australian corporate law, including directors' duties, adopts a traditional Anglo-US shareholder-centered model of the corporation, the reforms in the area of corporate criminal liability are underpinned by a fundamentally different, organizational model of the corporation. The reforms constitute a major paradigm shift in corporate criminal liability, and affect a range of important areas, such as competition and consumer law, occupational health and safety, including the concept of corporate manslaughter, and environmental law. The article also discusses a number of other areas, which adopt an organizational model of the corporation for accountability purposes, including the courts' approach to the issue of whether corporations possess the privilege against self-incrimination. The article argues that there appears to be a disjunction between the underlying principles in the area of directors' duties and corporate criminal law in Australia. Under traditional Australian corporate law principles, issues of social responsibility are kept at a distance and directors' duty of oversight in relation to corporate misconduct is limited. In contrast, the Australian corporate criminal liability regime recognizes concepts of organizational due diligence, organizational blameworthiness and corporate culture. The regime is thus designed to cultivate self-regulation, with particular emphasis on compliance programs. This parallels the growth in importance of compliance and ethics programs in the U.S., under the Federal Sentencing Guidelines for organizations. Under the new paradigm, issues relating to corporate criminal liability will inevitably become more closely integrated at an operational level into corporate governance, as corporations introduce compliance programs to ensure that their corporate cultures do not potentially trigger criminal liability. It is possible that these reforms to corporate criminal liability may be more effective than directors' duties in recognizing that directors are ultimately accountable for their corporation's culture, and have a corresponding obligation to monitor diligently.

The New Federalism of the American Corporate Governance System: Preliminary Reflections of Two Residents of One Small State

The year 2002 was a tumultuous one for the American system of corporate governance. High-profile scandals at large firms propelled reform initiatives from both Congress (in the form of the Sarbanes-Oxley Act) and the major stock exchanges (in the form of new listing standards and rules). These reforms - what we call the 2002 Reforms - include provisions that regulate the internal affairs of public corporations. As a result, the Reforms represent a challenge to the existing division of responsibilities among the federal government, the stock exchanges, and the states, in which the states have been given the primary role in articulating and enforcing substantive principles of corporation law governing the internal affairs of corporations and the responsibility of directors to stockholders. In fact, the 2002 Reforms can be viewed as creating a shadow corporation law that has a prescriptive quality at odds with the corporate law system in place in states like Delaware.In this essay, we examine some of the more interesting ways in which the 2002 Reforms will affect state corporation law and the traditional policy domain of states. Although many aspects of the Reforms hold promise as guarantors of greater corporate integrity, other elements are less obviously useful. We discuss some of our initial impressions of the Reforms, both pro and con, and highlight some of the more interesting policy implications of the Reforms for state corporate law.We conclude by counseling state policymakers to be active participants in the process of breathing life into the Reforms and in addressing the crisis in corporate confidence that arose in 2002. If states assume these responsibilities with vigor, we have confidence that the existing division of responsibilities among the federal government, the stock exchanges, and the states will persist. Because that division has, on balance, served investors and the public well, it should not be lightly abandoned.

Bargaining for Security: Lessons for Employees from the World of Corporate Finance

The plight of employees who lose accrued entitlements when their corporate employers collapse is a matter of continuing political and industrial interest. After the National Textiles collapse in January 2000, the Howard government introduced the Employee Entitlements Support Scheme to provide a taxpayer-funded, minimum safety net to cushion employees from the worst effects of employer insolvency. Just prior to the 2001 federal election, a more generous General Employee Entitlement Redundancy Scheme was introduced. These are administrative solutions, susceptible to the fickle winds of political expediency. There have been many calls for longer term legislative solutions— through industry-wide or national insurance or guarantee-fund schemes. This article explores a further alternative: using existing long-standing commercial law principles and practices to bargain for security. If employee representatives were to examine the principles of corporate law, and adopt the practices of corporate financiers, they might bargain more effectively for better protection than may be offered long term by a welfare-based safety net.

Revitalising Group Accounting: Improving Accountability

This article questions conventional consolidation accounting's effectiveness as a governance mechanism. Disclosure of the aggregate financial outcomes of a set of related business entities is of commercial importance. Currently that information is disseminated through financial statements underpinned by assumptions contradicting fundamental principles of corporate law and contestable propositions of commercial fact. Corporate accountability could be improved if the traditional approach to consolidation accounting were supplanted by reporting on an individual company basis, with assets marked to market, augmented with a statistical annexure of assets and liabilities of all related entities and a related companies' cross‐claims matrix. Recent revelations related to Enron's collapse reinforce the need for improved corporate group accountability mechanisms.

Conflicts of Interest and the Constitution

Increasingly, society has recognized the concerns posed by conflicts of interest. Conflicts of interest may compromise audit reports by accounting firms, courtroom decisions by judges, and treatment decisions by physicians. In several areas of the law, rules have been adopted to contain the influence of conflicts of interest. Codes of professional responsibility limit the ability of lawyers to represent both sides of a dispute, principles of corporate law prevent company directors from trading on inside information, and rules of agency law prohibit trustees from mingling their own funds with those of the trust.Conflicts of interest also can play a critical role in shaping constitutional doctrine. However, that role is seriously underappreciated. Courts and scholars mention conflicts concerns on occasion, but there have been few analyses of the role of conflicts of interest in constitutional interpretation. Consequently, legal scholarship has not adequately considered how constitutional law does and should take account of such conflicts.In this article, I offer a fuller discussion of conflicts of interest and constitutional interpretation. In particular, I will show how consideration of conflicts can help us solve three leading puzzles in constitutional theory and doctrine?the lack of a strong theory for separation of powers cases, the tension between judicial supremacy and the political question doctrine, and the question whether the process of constitutional amendment is governed exclusively by Article V. Addressing conflicts of interest can supply the missing theoretical principle for each of these important constitutional problems.In short, from separation of powers concerns to the political question doctrine and the constitutional amendment process, we can bring more coherence to constitutional law if we judge constitutional questions according to the influence that conflicts of interest might have.

Federalism and Corporate Litigation

It is moving on towards half a century now since Mestmacker 's Verwaltung, Konzerngewalt und Rechte der Aktionare appeared. It was among the first significant postwar studies of modern corporation law in a comparative context and one that productively used his comparative mastery of American law in ways that in turn were influential in shaping the terms of reference for the 1965 reform of the Aktiengesetz . Two topics dominated his study: the treatment of conflict-of-interests transactions by managers and controlling shareholders, and the application of appropriate principles of corporation law to the affiliatedenterprise system, the Konzern . On both counts the book repays reading today; at the same time, because of the clarity of its conception and organization, it encourages the reader to reflect on what a Habilitand of today might bring back from a similar intellectual voyage.

There's a Forest in Those Trees: Teaching About the Role of Corporations in Society

This paper was prepared for the University of Georgia School of Law Conference on Teaching Corporate Law, October 16, 1999. The paper argues that the basic corporate law course should focus much more on the questions surrounding the role of the corporation in society. In the typical corporate law course, little attention is given to the broad question of the position of the corporation within society at large or the narrower question of the relationship between the corporation and workers. The lack of consideration of these issues is odd indeed, since corporate law (like all law) is understandable only within a social and political context, and because, by any account, workers provide an essential input to a corporation's productive activities and have much to do with the success or failure of the enterprise. This paper explains why it is essential to focus our students' attention on these issues. Without such coverage, I argue, our courses will fail to address some of the most pressing political and economic matters of our day: the growing rift between the rich an poor, the stagnation of wages, the decrease in living standards for much of the population, and the fact that corporations (and corporate law) must share some of the blame. I suggest that the basic course should encourage our students to ask whether society as a whole would be better off if the law of the corporation or, more fundamentally, the nature of the corporation itself, were significantly if not radically changed. The paper also offers a concrete suggestion, namely a case corporate law professors can add to the basic course that can facilitate the discussions of these issues. This case is Local 1330 vs. US Steel, the Youngstown Steel plant closing case. The case offers an interesting and provocative way to discuss first principles of corporate law, that is, the questions of who owns the corporation and for what purposes the corporation exists.

Judicial Removal of Directors: Denial of Directors' License to Steal or Shareholders' Freedom to Vote?

The article examines a new corporate law remedy: the ability of courts to remove directors of business corporations for misconduct. In recent years, a majority of the states has followed the Model Business Corporations Act in adopting the judicial removal remedy. The disparity in approach of different authorities and the confusion with respect to the remedy are remarkable, as highlighted by recent cases. No theory reconciling the conflicting approaches to the removal remedy has yet been developed by legislators, judges or academics. To develop such a theory, the article examines two opposing fundamental principles of corporate law implicated by the remedy. The first principle, shareholder prerogative to elect and remove directors, precludes judicial removal. However, the second principle, protecting the best interests of the corporation, may validate judicial removal of directors for misconduct in disregard of shareholder prerogative. To reconcile these two principles, the article introduces the concept of impairment to the shareholder vote. The court?s intervention to uphold the interests of the corporation by removing a director should be permitted where the shareholders? exercise of their voting rights is impaired either because removal is unduly blocked by an interested shareholder who controls the voting or because the voting mechanism is procedurally impeded. The article identifies the inadequacies of existing tests employed by courts and proposes a new test that finds a balance between these two principles.

The Principles of Corporation Law

The Principles of Corporation Law

The Principles of Corporation Law

The Principles of Corporation Law

Principles of Corporation Law

Principles of Corporation Law

The Principles of Corporation Law

The Principles of Corporation Law

Principles of Corporation Law

Principles of Corporation Law

Principles of Corporation Law

Principles of Corporation Law

Principles of Corporation Law

Principles of Corporation Law