On March 28, 2024, the Council of the Corporation Law Section of the Delaware State Bar Association (DSBA) approved proposed amendments to the Delaware General Corporation Law (DGCL) in order to align the DGCL’s provisions with current market practices following
Corporate Governance
Do Investors Care Who Led the Audit?
Following a lengthy and contentious standard setting process, the Public Company Accounting Oversight Board (PCAOB), the U.S. regulator overseeing the auditors of publicly traded companies, implemented Rule 3211 in 2017. This rule requires audit firms to disclose the name of …
How Delegated Corporate Voting Advances Corporate Democracy
Starting in the 1930s with the earliest version of its proxy rules, the Securities and Exchange Commission gradually increased the proportion of instructed votes on a shareholder’s proxy card until, for the first time in 2022, it required a fully-instructed …
Kirkland Discusses Proposed Regulations for Excise Tax on Share Repurchases
On April 12, 2024, the U.S. Department of Treasury and the Internal Revenue Service published proposed regulations regarding the 1% excise tax on certain stock redemptions and economically similar transactions (corporate “repurchases”) by publicly traded U.S. corporations (“Covered Corporations”) on …
Does Being Ethical Pay for Firms?
Most businesses follow an explicit or implicit code of conduct that guides their operations, their relations with the public, and their treatment of customers, employees, and other stakeholders. These rules often go beyond what is legally required, and businesses often …
Europe Needs a Business Law. What Would It Look Like?
Globalization, whatever its problems, has created international flows of goods and other items that in value far exceed the GDP of the largest states (or combinations of them like the EU). and so it may lay claim to its own …
Sullivan & Cromwell Discusses Delaware Supreme Court Ruling on MFW’s Application to Controller Transactions
In the important 2014 case of Kahn v. M & F Worldwide Corp., the Delaware Supreme Court held that freeze-out mergers, in which a controlling stockholder takes a company private, are subject to Delaware’s heightened “entire fairness” standard of …
We Need to Move Beyond Profit Maximization to Plural Business Purposes
For many business economists and legal academics, the purpose of any business organization is simply stated: to maximize profits. And it is true that many practical advantages may follow from this statement of purpose. Focusing only on profit-making allows leaders …
The Proposed 2024 Amendments to the Delaware General Corporation Law
Legislation proposing to amend the General Corporation Law of the State of Delaware (the “DGCL”) has been approved by the Council of the Corporation Law Section of the Delaware State Bar Association and is expected to be introduced to the …
How Dual-Class Shares Can Promote Low-Carbon Innovation
To reduce CO2 emissions, the world needs alternatives to fossil fuels. According to the latest estimates by the International Energy Agency, 35 percent of the green energy required to reach net zero by 2050 depends on technologies not yet …
Governance Implications of the Latest DOJ Corporate Fraud Enforcement Policies
Corporate boards will be called upon to renew their oversight of corporate compliance following the recent announcement of several new corporate fraud enforcement initiatives by the U.S. Department of Justice (DOJ). Most notably, these include a new whistleblower program and …
Biased Boards
How do directors add value to corporations, and what are their incentives? They add value through monitoring and advising management – although monitoring seems to have taken precedence in the wake of high-profile financial scandals. As for directors’ incentives, the …
How Directors’ Liability Protection Can Affect the Quality of Company Projects
Corporate executives are responsible for seeking and acting on business opportunities and investment initiatives (often called company “projects”). However, there is a danger that they will take on too many projects, which diminishes the overall quality of projects presented for …
The Millennial Corporation: Strong Stakeholders, Weak Managers
After several years of dramatic growth, ESG investing seems to have entered a period of retrenchment. While it is impossible to predict the future trajectory of ESG, the movement has revealed important structural features of our financial system and the …
Why Should Corporate Executives Care About International Law?
What relevance does international law have for corporate governance? Why should corporate executives pay attention to it? The short answer is because their stakeholders do. In two separate articles, I explore the ways in which corporate stakeholders – including consumers, …
How Corporate Insiders Perceive CEO Inside Debt
The media often highlights hefty CEO compensation packages featuring lucrative stock grants, restricted shares, and stock options. The rationale for offering such equity-type compensation to top executives is to align the interests of managers and shareholders to mitigate agency conflicts …
Davis Polk Analyzes Comment Letters to FDIC Corporate Governance Proposal
In October 2023, the FDIC proposed enforceable guidelines on corporate governance and risk management that would apply to all state non-member banks with $10 billion or more in assets.
Key Facts:
- The comment period closed on February 9, 2024
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Classical Liberalism and Corporate Law
In a new book chapter I evaluate contemporary corporate law, especially Delaware corporate law, from a classical liberal perspective—i.e., the view of politics and economics that derives from the English and Scottish Enlightenment, underlies the American founding, and has been …
Getting Serious About Stakeholders
For whom should the corporation be run? The Business Roundtable proclaims the answer to be “for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.” Asset managers, both private and public, use their voting power to pressure …
Wachtell Lipton Discusses AI in the 2024 Proxy Season: Managing Investor and Regulatory Scrutiny
Corporate disclosures concerning artificial intelligence have increased dramatically in the past year, with Bloomberg reporting that nearly half of S&P 500 companies referenced AI in their most recent annual reports. And some investors are clamoring for even more, using shareholder …