The Corporate Contract and the Internal Affairs Doctrine

No rule of corporate law may be more foundational than the internal affairs doctrine. The doctrine provides that the internal affairs of a corporation – the “matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders”[1] – are governed by the laws of the state in which the corporation is chartered.

Lurking within this widely accepted principle, however, is an even more foundational question: Is the internal affairs doctrine simply a choice of law rule enabling a corporation and its shareholders to choose which state’s law will govern their private business arrangement? … Read more

The Contested Edges of Internal Affairs

During a four-month span in late 2018, two events occurred at opposite ends of the country that could dramatically reshape the regulation of corporations in America. First, in September 2018, California enacted the nation’s first law mandating board gender diversity for all public corporations that are physically headquartered in California.[1] Second, in December 2018, the Delaware Court of Chancery in Sciabacucchi v. Salzberg ruled that a corporation may not in its governing documents regulate the rights of its shareholders arising under federal securities law.[2] Although seemingly unrelated, I argue in a forthcoming article that both events share at … Read more

Introducing the Totally Unnecessary Benefit LLC

The rapid proliferation of state statutes authorizing so-called “benefit” corporations—starting with Maryland in 2010 and spreading to over 30 states by 2018—has been premised in large part on the assertion that conventional corporate law mandates shareholder primacy. Under this legal mandate, the board of directors of a for-profit corporation must manage the business solely for the benefit of its shareholders. With the aim of maximizing shareholder wealth as a board’s singular focus, concerns for other, non-shareholding stakeholders, the public, and the environment are irrelevant except to the extent such concerns implicate the corporation’s profits.

Citing conventional corporate law’s mandate of … Read more

Nearing 30, Is Revlon Showing Its Age?

The following post comes to us from Mohsen Manesh, Assistant Professor at the University of Oregon School of Law. It is based on his recent paper, “Nearing 30, Is Revlon Showing Its Age?,” which has been published in the Washington and Lee Law Review Online and is available here.

Nearly 30 years ago, in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., the Delaware Supreme Court famously dictated that in certain “sale or change in control” transactions, the fiduciary obligation of a target corporation’s board of directors is simply to “get[] the best price for the stockholders.” Much has … Read more

The Geography of Revlon-Land in Cash and Mixed Consideration Transactions: A Response to Professor Bainbridge

The following comes to us from Mohsen Manesh, an Assistant Professor at the University of Oregon School of Law.

In the recently published The Geography of Revlon-Land,[1] Professor Stephen Bainbridge attempts to crisply delineate the boundaries and contours of the evolving doctrine first articulated by the Delaware Supreme Court in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc.[2]— or Revlon-land, more colloquially. The Revlon doctrine famously dictates that in certain transactions involving the “sale or change in control” of a corporation, the corporation’s board of directors has a duty to “get[] the … Read more

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Editor's Tweet: Prof. Manesh of Oregon Law Respond to Bainbridge on Revlon-Land