Sky Blog
In a recent article, I analyze the function of shareholder ratification in corporate governance and argue that understanding this function is critical to both refining shareholder-based cleansing mechanisms and appreciating their inherent limitations. Although I focus on Corwin cleansing in …
The recently introduced Delaware Senate bill that would amend the Delaware General Corporation Law (DGCL) provision dealing with conflict of interest transactions (SB 21) has blown up the financial news, corporate law blogosphere, and corporate law social media.[1]
Most …
One distinctive feature of the U.S. economy over recent decades has been the rise of the entrepreneur-dominated public company. This development has derived largely from the growth of private funding available through venture capital, so that initial public offerings have …
Controlling shareholders function as a dual-edged sword in corporate governance. They can reduce agency costs by monitoring management but also pose risks of self-dealing that can harm minority shareholders. In recent years, Delaware courts have increasingly focused on the latter …
Vice Chancellor J. Travis Laster dismissed claims two weeks ago against a controller in Clement v. Apollo Global Management, LLC. Plaintiff alleged that a merger was unfair because the controller allegedly extracted “unique benefits” in the merger. The court …
The term “private benefits of control” refers to the privileges and advantages that accrue to controlling shareholders at the exclusion of minority shareholders. These benefits can take a variety of forms, ranging from cash extractions to more intangible manifestations, such …
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 …
On February 20, the Delaware Court of Chancery refused to enjoin the conversion of a Delaware corporation, TripAdvisor, Inc. (“TripAdvisor”), into a Nevada corporation but declined to dismiss claims for monetary damages against the company’s controlling stockholder in connection with …
Corporate governance scholars to date have focused almost exclusively on the economic impact of corporate control – specifically the diversion and creation of wealth by controlling shareholders (commonly referred to as “tunneling” and “idiosyncratic vision,” respectively). Analysis of the distinctive …
Though no longer surprising, corporate scandals can still involve the unexpected. Take the recent Carlos Ghosn and Nissan saga, for example. Aside from its sensational aspects, what is striking about the scandal was Ghosn’s alleged value-diverting related party transactions (“RPTs”) …
Over the past two decades, delisting from an exchange has become a popular choice for many public companies. Several studies attribute this trend to a number of factors, including the increased concentration of U.S. markets, which made many small and …
It has long been a policy of corporate law1 that the informed business decisions of independent and disinterested directors are protected by the presumption of the business judgment rule.2 Courts are reluctant to second-guess decisions that are made …
The Delaware Court of Chancery this week held that the use of both an independent special committee and a majority-of-the-minority vote condition in a go-private merger between a controlled company and its controlling stockholder will result in application of the …
In our paper, The Evolution of Shareholder Voting Rights: Separation of Ownership and Consumption, which was recently made publicly available on SSRN, we show how the ownership patterns of early business corporations shaped their peculiar governance structure. While the …