Director Independence Reconceived

By Claire A. Hill and Yaron Nili May 28, 2024 by renholding

Independent directors were originally conceived as guardians of shareholder interests who could safeguard a corporate board’s ability to check management’s power. They have since become a marquee feature of modern corporate governance. What, though, makes a director independent? Scholars, regulators, …

Autonomy Defaults in Contract Law

By Hanoch Dagan and Michael Heller May 20, 2024 by renholding

You can scribble an agreement on a napkin or hire lawyers to negotiate a contract that is hundreds of pages long. Either way, most of your contractual obligations won’t be in your agreement. They will be in the background rules …

Do Board Observers Improve Corporate Governance?

By Nizan Geslevich Packin and Anat Alon-Beck May 15, 2024 by renholding

In the complex world of corporate governance, a novel mechanism has reemerged: board observers. Operating without the conventional voting rights of board members, these individuals have become pivotal in bridging the gap between ambitious startups and their venture capital (VC) …

Faculty Governance Requires Faculty Accountability: A Response to David Pozen

By Joshua Mitts May 9, 2024 by renholding

In a recent Balkinization post, my colleague and friend Professor David Pozen critiques the power held by the office of Columbia University President Minouche Shafik and argues for a more “democratic model of internal governance.” Alongside his …

Stakeholder Governance and the Eclipse of Shareholder Primacy

By Martin Lipton and Kevin S. Schwartz May 8, 2024 by renholding

For decades, advocates of “shareholder primacy” as the North Star of corporate governance have steered our leading corporations and our Nation’s economic engine perilously off-course. Since the 1970s, when the work of Milton Friedman, Michael Jensen, and Frank …

The Governance Implications of DOJ’s New Voluntary Self-Disclosure Program for Individuals

By Michael W. Peregrine and Ashley C. Hoff May 3, 2024 by renholding

The Department of Justice recently announced a new policy on voluntary self-disclosure for individuals (the Pilot Program) that is likely to create significant challenges for a board of director’s audit and compliance committees, as well as tension among employees — …

Skadden Discusses Proposed DGCL Amendments’ Impact on Stockholder Agreements, M&A Practices

By Allison L. Land, Edward B. Micheletti and Lauren N. Rosenello April 24, 2024 by renholding

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

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Do Investors Care Who Led the Audit?

By Daniel Aobdia, Vincent Castellani and Paul Richardson April 23, 2024 by renholding

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

By Sarah C. Haan April 22, 2024 by renholding

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

By Mike Carew, P.C., Sara B. Zablotney, P.C., Adam Kool, P.C., JoAnne Mulder Nagjee, Joseph Tootle and Michael P. Alcan April 22, 2024 by renholding

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?

By Saurabh Ahluwalia, Linda Ferrell, O.C. Ferrell and Priyank Gandhi April 19, 2024 by renholding

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?

By Jan H. Dalhuisen April 12, 2024 by renholding

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

By Eric M. Krautheimer, Melissa Sawyer, Matthew A. Schwartz, Matthew L. Strand and Mimi Wu April 12, 2024 by renholding

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

By Eric W. Orts April 8, 2024 by renholding

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

By Richards, Layton & Finger April 3, 2024 by renholding

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

By Alessio M. Pacces April 1, 2024 by renholding

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

By Michael W. Peregrine and Ashley C. Hoff March 29, 2024 by renholding

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

By Tim Baldenius, Xiaojing Meng and Lin Qiu March 28, 2024 by renholding

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

By Martin Gregor and Beatrice Michaeli March 22, 2024 by renholding

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

By Michal Barzuza, Quinn Curtis and David H. Webber March 20, 2024 by renholding

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 …

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