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The Politics of Regulatory Compliance and Enforcement

By Jodi L. Short October 15, 2020 by renholding

In a recent article, I compile a comprehensive toolkit for researchers investigating political influences on enforcement, compliance, and corporate governance outcomes. I review different conceptualizations of politics in regulatory theory. I collect both qualitative and quantitative empirical studies that …

Ernst Freund as Precursor of the Rational Study of Corporate Law

By David Gindis October 12, 2020 by renholding

It is now widely recognized that legal entity status fulfills important economic functions by separating a firm’s business assets and the personal assets of its founders, directors, or shareholders, and that this separation is stronger in corporations than in partnerships …

Corporate Governance in the Presence of Active and Passive Delegated Investment

By Adrian Aycan Corum, Andrey Malenko and Nadya Malenko October 9, 2020 by renholding

Institutional ownership has grown tremendously over recent decades, rising to more than 70 percent of U.S. public firms. The composition of institutional ownership has also changed, with a remarkable growth in passive funds: The fraction of equity mutual fund assets …

Davis Polk Discusses FTC’s Proposed Rules for Hart-Scott-Rodino Filings

By Arthur Burke, Ronan Harty, Howard Shelanski, Jesse Solomon and Mary Marks October 6, 2020 by Nisha Chandra

On September 21, 2020, the Federal Trade Commission published a Notice of Proposed Rulemaking (“NPRM”) pertaining to pre-merger notification rules under the Hart-Scott-Rodino Act that was supported by the Department of Justice. The FTC proposes changing the definition of “person” …

Jones Day Discusses Shareholder Lawsuits Concerning Diversity

By Nina Yadava, John C. Tang, Robert M. Tiefenbrun and Glenn R. McGillivray October 5, 2020 by Nisha Chandra

The Situation: A number of shareholder derivative lawsuits in federal court have been filed seeking to hold directors and officers of major companies accountable for alleged failures to uphold their commitment to diversity. To date, the lawsuits have been filed …

Arnold & Porter Discusses California Law Requiring “Underrepresented Community” Members on Boards

By Teresa L. Johnson and Amy Endicott October 2, 2020 by renholding

On September 30, 2020, California Governor Gavin Newsom signed into law a landmark bill (AB 979) requiring boards of directors of California-based public reporting corporations to have a minimum number of directors from underrepresented communities on their boards.

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The Department of Labor Carpet Bombs Investor Protection

By Kurt N. Schacht and Karina Karakulova September 29, 2020 by renholding

The Department of Labor (DOL) has launched a major attack on investor protection and shareholder rights in the last three months. In three successive strikes against long-standing practices of ERISA fiduciaries, the DOL has created disorder and confusion. Its actions …

The Conflict Between BlackRock’s Shareholder Activism and ERISA’s Fiduciary Duties

By Bernard S. Sharfman September 29, 2020 by renholding

BlackRock, an investment adviser that primarily markets and manages index funds to millions of passive investors around the globe, has become a leading shareholder activist. Based on the extremely large amount of assets it has under management ($7.3 trillion), its …

Quinn Emanuel Discusses the Duty of Loyalty for Designated Directors

By Julia Beskin, Molly Stephens, R. Brian Timmons and Jonathan Bunge September 28, 2020 by Nisha Chandra

For the partners and managing directors of private equity firms who have also been designated to serve as directors of one of the firm’s portfolio companies (“designated directors”), navigating potential conflicts of interest is a fact of life. As businesses …

Does Limited Liability Matter?

By Yrjö Koskinen, Nga Nguyen, and J. Ari Pandes September 23, 2020 by renholding

In 1911, Nicholas Murray Butler (president of Columbia University and winner of the Nobel Peace Prize) wrote that the limited liability corporation is the greatest single discovery of modern times. It has since become one of the most common organizational …

Director Overlap: Groupthink versus Teamwork

By Jeffrey L. Coles, Naveen D. Daniel and Lalitha Naveen September 21, 2020 by renholding

Corporate boards are charged with the critical tasks of assessing top management performance and making compensation and dismissal decisions. Moreover, boards serve as a valuable source of advice and counsel to top management. While board members tend to be highly …

Milton Friedman’s Essay and the True Purpose of the Business Corporation

By Martin Lipton September 18, 2020 by renholding

From a practical standpoint, the most significant part of the 1970 Milton Friedman essay in the New York Times was the headline: “The Social Responsibility Of Business Is to Increase its Profits.” For a half-century, that phrase has …

What Blockchain and Artificial Intelligence Won’t Do for Corporate Lawyers

By Jeffrey M. Lipshaw September 15, 2020 by renholding

There have been a number of scholarly paeans to blockchain as a corporate governance tool. It creates a permanent and irreversible chain of custody that can be used for shareholder record keeping and voting, insider trading, corporate disclosures, and trade …

ESG, Common Ownership, and Systematic Risk: How They Intersect

By John C. Coffee, Jr. September 14, 2020 by renholding

This brief column will assert that three developments that seem unrelated are in fact closely related and may soon impact U.S. corporate governance with the force of a freight train. This column summarizes a longer article just posted by this …

Recent Delaware Cases on Managing Conflicts: Board- and Stockholder-Level Measures from MFW Case Law

By Nate Emeritz, Brian Currie and Jason Schoenberg September 11, 2020 by renholding

Delaware courts have recently had opportunities to address the dual conditions for management of controlling stockholder conflict transactions under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”) and its progeny. That MFW structure provides …

Recent Delaware Cases on Managing Conflicts: Stockholder-Level Measures

By Nate Emeritz, Brian Currie and Jason Schoenberg September 8, 2020 by renholding

Delaware courts have recently had the opportunity to evaluate and discuss management of potential conflicts. That guidance may be particularly salient in the context of insider transactions and down-rounds, which may animate potential conflicts and lead to difficult litigation for …

Recent Delaware Cases on Managing Conflicts: Board-Level Measures

By Nate Emeritz, Brian Currie and Jason Schoenberg September 4, 2020 by renholding

Recent Delaware case law offers useful guidance regarding options for management of potential conflicts. Those cases demonstrate that conflicts can be mitigated by board or stockholder actions and that such measures for managing conflicts should be thoughtfully tailored to the …

SEC Commissioner Peirce Speaks on Corporate Governance

By Hester M. Peirce August 28, 2020 by renholding

We are here today to talk about excellence in corporate governance. Before I begin, I have to remind you that the views I represent are my own and not necessarily those of the Securities and Exchange Commission or my fellow

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Delaware Law and the “End of History” in Creditor Protection

By Jared A. Ellias and Robert J. Stark August 27, 2020 by renholding

What should a judge do when creditors claim that they were harmed by management and a board’s carelessness or disloyalty? If the creditors were shareholders, the judge would apply fiduciary duty doctrines to determine liability. Yet it’s unclear what legal …

Does Environmental and Social Disclosure Affect Innovation at Companies?

By Brian Gibbons August 26, 2020 by renholding

Companies are typically not compelled to disclose environmental and social (E&S) information because this information does not meet the materiality standard used in many jurisdictions. However, some shareholders have an explicit mandate to screen potential investments based on E&S criteria. …

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