Pub Date : 2019-04-18DOI: 10.1093/OXFORDHB/9780190634100.013.4
Julian Velasco
This chapter examines fiduciary duty in corporate law. Fiduciary duty is pervasive as well as all encompassing in corporate law. One common misconception about fiduciary duty in corporate law is that it is merely aspirational. Fiduciary duties are not simply moral requirements, they are legal ones. They are not merely suggestions, they represent the demands of the law. Although corporate law has often compromised rather than insisting upon strict enforcement of fiduciary law principles, these compromises are due to practical considerations that are entirely consistent with the goals of fiduciary law. In corporate law, general fiduciary law principles are balanced with practical considerations concerning the profit motive in order to achieve the best overall result for the shareholders. Understanding this tension between ambition and practicality is key to understanding fiduciary duty in corporate law. This chapter first considers the triggers for fiduciary duty in corporate law before discussing the role that the duty of loyalty plays in corporate law. It then explores the duty of care in corporate law, along with other fiduciary duties such as good faith, takeover situations and contests for control, shareholder voting rights, and the duty to monitor and the duty to disclose. The chapter proceeds by analyzing mandatory and default rules regarding the extent to which fiduciary duties can be waived in corporate law and concludes with an overview of remedies for breach of fiduciary duty.
{"title":"Fiduciary Principles in Corporate Law","authors":"Julian Velasco","doi":"10.1093/OXFORDHB/9780190634100.013.4","DOIUrl":"https://doi.org/10.1093/OXFORDHB/9780190634100.013.4","url":null,"abstract":"This chapter examines fiduciary duty in corporate law. Fiduciary duty is pervasive as well as all encompassing in corporate law. One common misconception about fiduciary duty in corporate law is that it is merely aspirational. Fiduciary duties are not simply moral requirements, they are legal ones. They are not merely suggestions, they represent the demands of the law. Although corporate law has often compromised rather than insisting upon strict enforcement of fiduciary law principles, these compromises are due to practical considerations that are entirely consistent with the goals of fiduciary law. In corporate law, general fiduciary law principles are balanced with practical considerations concerning the profit motive in order to achieve the best overall result for the shareholders. Understanding this tension between ambition and practicality is key to understanding fiduciary duty in corporate law. This chapter first considers the triggers for fiduciary duty in corporate law before discussing the role that the duty of loyalty plays in corporate law. It then explores the duty of care in corporate law, along with other fiduciary duties such as good faith, takeover situations and contests for control, shareholder voting rights, and the duty to monitor and the duty to disclose. The chapter proceeds by analyzing mandatory and default rules regarding the extent to which fiduciary duties can be waived in corporate law and concludes with an overview of remedies for breach of fiduciary duty.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128719329","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
An important issue is whether s 191 of the Australian Corporations Act 2001 (Cth) – which requires directors to disclose material personal interests – includes conflicting duties. In other words, where a director faces a conflict between duties to different entities or persons (rather than a conflict of interest) is the director obliged to disclose this in accordance with s 191? This issue has not been the subject of detailed research and has not been resolved. In this research note the authors argue that conflicting duties do need to be disclosed under s 191. This is for three reasons. First, a close review of the Parliamentary materials surrounding s 191 indicates no intention to exclude conflicting duties from the disclosure requirements. Second, there is evidence that those involved in reform of the statutory disclosure provisions were of the view that conflicts of interest include conflicting duties and therefore there was no need to explicitly mention conflicting duties in the statutory provisions dealing with disclosure of interests. Third, in policy terms, conflicting duties have the potential to inhibit a director’s exercise of their duties and powers in good faith in the interests of the company and therefore should be disclosed under s 191.
{"title":"Does Section 191 of the Corporations Act Include Conflicting Duties?","authors":"R. Langford, I. Ramsay","doi":"10.2139/SSRN.3350837","DOIUrl":"https://doi.org/10.2139/SSRN.3350837","url":null,"abstract":"An important issue is whether s 191 of the Australian Corporations Act 2001 (Cth) – which requires directors to disclose material personal interests – includes conflicting duties. In other words, where a director faces a conflict between duties to different entities or persons (rather than a conflict of interest) is the director obliged to disclose this in accordance with s 191? This issue has not been the subject of detailed research and has not been resolved. In this research note the authors argue that conflicting duties do need to be disclosed under s 191. This is for three reasons. First, a close review of the Parliamentary materials surrounding s 191 indicates no intention to exclude conflicting duties from the disclosure requirements. Second, there is evidence that those involved in reform of the statutory disclosure provisions were of the view that conflicts of interest include conflicting duties and therefore there was no need to explicitly mention conflicting duties in the statutory provisions dealing with disclosure of interests. Third, in policy terms, conflicting duties have the potential to inhibit a director’s exercise of their duties and powers in good faith in the interests of the company and therefore should be disclosed under s 191.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"58 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126291704","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This submission is in response to Chairman Clayton’s July 30 press release announcing a staff roundtable on the proxy process and calling for submissions from interested parties. It refers in particular to proxy advisory firms and is distinguished from my October 8, 2018 comment letter that focused on additional disclosures by investment advisers to mutual funds. Given the potential for a proxy advisor’s voting recommendations to have a significant impact on voting outcomes, it is critical that these recommendations be targeted toward enhancing long-term shareholder value. However, many critics of proxy advisors argue that a significant number of their voting recommendations incorporate various types of data, analytic, and methodological errors. If implemented, such voting recommendations will lead to sub-optimal corporate decision-making and a reduction in shareholder value. Such imprecision cannot be tolerated in a proxy advisor’s recommendations. Specifically, this submission requests the Securities and Exchange Commission (“SEC” or “Commission”) to modify its rules, policies and guidelines to the extent that: When making a voting recommendation, the proxy advisor should be held to the standard of an information trader. If a proxy advisor cannot attest to the use of that standard when generating a voting recommendation, then the proxy advisor must abstain from making that recommendation to its clients. Making a recommendation that does not meet this standard would be a breach of a proxy advisor’s fiduciary duty under the Advisers Act; The SEC, as well as the Department of Labor (“DOL”), should clarify that an institutional investor, as an alternative to using the voting recommendations of a proxy advisor, can meet its fiduciary voting duties by utilizing the voting recommendations provided by the board of directors; and Consistent with the prior recommendation and assuming that technical issues can be overcome, retail investors who invest in voting stock indirectly through the use of investment advisers and beneficiaries of public pension funds should have the option of transmitting voting instructions to their institutional investor informing it that their pro rata investment in voting stock must be voted in conformity with the voting recommendations of the board of directors of each company held in portfolio.
{"title":"Comment Letter to the SEC: Responding to the Imprecision in a Proxy Advisor's Voting Recommendations","authors":"Bernard S. Sharfman","doi":"10.2139/SSRN.3265740","DOIUrl":"https://doi.org/10.2139/SSRN.3265740","url":null,"abstract":"This submission is in response to Chairman Clayton’s July 30 press release announcing a staff roundtable on the proxy process and calling for submissions from interested parties. It refers in particular to proxy advisory firms and is distinguished from my October 8, 2018 comment letter that focused on additional disclosures by investment advisers to mutual funds. Given the potential for a proxy advisor’s voting recommendations to have a significant impact on voting outcomes, it is critical that these recommendations be targeted toward enhancing long-term shareholder value. However, many critics of proxy advisors argue that a significant number of their voting recommendations incorporate various types of data, analytic, and methodological errors. If implemented, such voting recommendations will lead to sub-optimal corporate decision-making and a reduction in shareholder value. Such imprecision cannot be tolerated in a proxy advisor’s recommendations. Specifically, this submission requests the Securities and Exchange Commission (“SEC” or “Commission”) to modify its rules, policies and guidelines to the extent that: When making a voting recommendation, the proxy advisor should be held to the standard of an information trader. If a proxy advisor cannot attest to the use of that standard when generating a voting recommendation, then the proxy advisor must abstain from making that recommendation to its clients. Making a recommendation that does not meet this standard would be a breach of a proxy advisor’s fiduciary duty under the Advisers Act; The SEC, as well as the Department of Labor (“DOL”), should clarify that an institutional investor, as an alternative to using the voting recommendations of a proxy advisor, can meet its fiduciary voting duties by utilizing the voting recommendations provided by the board of directors; and Consistent with the prior recommendation and assuming that technical issues can be overcome, retail investors who invest in voting stock indirectly through the use of investment advisers and beneficiaries of public pension funds should have the option of transmitting voting instructions to their institutional investor informing it that their pro rata investment in voting stock must be voted in conformity with the voting recommendations of the board of directors of each company held in portfolio.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134497563","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The law that defines and regulates fiduciary relationships appears in many legal areas, such as family law, surrogate decision-making, international law, agency law, employment law, pension law, remedies rules, banking law, financial institutions' regulation, corporate law, charities law not for profit organizations law, and the law concerning medical services. Fiduciary relationships, and the concepts on which they are grounded, appear not only in the law. They appear in other areas of knowledge: economics, psychology; moral norms and pluralism. Fiduciary law has a very long history. It was recognized in Roman law and the British common law and appeared decades ago in religious laws, such as Jewish law, Christian law, and Islamic law. Internationally, fiduciary law has a place in European legal system in Chinese law, Japanese law and Indian law. This article offers an explanation to the evolution and expansion of fiduciary principles and a prediction of their future. Part One opens with a short description of fiduciary relationships, and the conditions under which they arise. Part Two describes the evolution of specialization of living being–from genetic to chosen cooperative specialization. Part Three notes the positive and negative social impact of fiduciary relations and the response of the law designed to encourage the relationships while discouraging the abuse they might lead to. Part four of the article highlights the criticism of fiduciary law and alternative solutions to the issues raised by fiduciary relationships. Part Five offers a prediction about the future of fiduciary law.
{"title":"The Rise of Fiduciary Law","authors":"Tamar Frankel","doi":"10.2139/SSRN.3237023","DOIUrl":"https://doi.org/10.2139/SSRN.3237023","url":null,"abstract":"The law that defines and regulates fiduciary relationships appears in many legal areas, such as family law, surrogate decision-making, international law, agency law, employment law, pension law, remedies rules, banking law, financial institutions' regulation, corporate law, charities law not for profit organizations law, and the law concerning medical services. \u0000Fiduciary relationships, and the concepts on which they are grounded, appear not only in the law. They appear in other areas of knowledge: economics, psychology; moral norms and pluralism. Fiduciary law has a very long history. It was recognized in Roman law and the British common law and appeared decades ago in religious laws, such as Jewish law, Christian law, and Islamic law. Internationally, fiduciary law has a place in European legal system in Chinese law, Japanese law and Indian law. \u0000This article offers an explanation to the evolution and expansion of fiduciary principles and a prediction of their future. Part One opens with a short description of fiduciary relationships, and the conditions under which they arise. Part Two describes the evolution of specialization of living being–from genetic to chosen cooperative specialization. Part Three notes the positive and negative social impact of fiduciary relations and the response of the law designed to encourage the relationships while discouraging the abuse they might lead to. Part four of the article highlights the criticism of fiduciary law and alternative solutions to the issues raised by fiduciary relationships. Part Five offers a prediction about the future of fiduciary law.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"409 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116242431","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-02-15DOI: 10.1093/OXFORDHB/9780190634100.013.2
Deborah A. DeMott
This chapter identifies the fiduciary principles that are integral to agency relationships as defined by the common law and explores their implications. In contrast to relationships in which a fact-specific assessment of a relationship and its circumstances trigger the application of fiduciary duties, agency relationships are categorically treated as fiduciary. When a relationship of common-law agency links two persons, one person’s actions can directly carry legal significance for the other. Agency doctrine defines and imposes formal structure on consensual relationships in which one actor has legally consequential power to represent the other, encompassing externally oriented consequences for the principal, the agent, and third parties, as well as internally oriented rights and duties between agent and principal. An agent functions not as a substitute for the principal but as an extension of the principal’s legal personality in dealings with third parties and other externally oriented conduct within the scope of the agency relationship, including knowledge of facts acquired by the agent when material to the agent’s duties. The potentially grave impact for the principal, plus the implications for personal autonomy when one person represents another, underlie the requisites that define an agency relationship, including its fiduciary character.
{"title":"Fiduciary Principles in Agency Law","authors":"Deborah A. DeMott","doi":"10.1093/OXFORDHB/9780190634100.013.2","DOIUrl":"https://doi.org/10.1093/OXFORDHB/9780190634100.013.2","url":null,"abstract":"This chapter identifies the fiduciary principles that are integral to agency relationships as defined by the common law and explores their implications. In contrast to relationships in which a fact-specific assessment of a relationship and its circumstances trigger the application of fiduciary duties, agency relationships are categorically treated as fiduciary. When a relationship of common-law agency links two persons, one person’s actions can directly carry legal significance for the other. Agency doctrine defines and imposes formal structure on consensual relationships in which one actor has legally consequential power to represent the other, encompassing externally oriented consequences for the principal, the agent, and third parties, as well as internally oriented rights and duties between agent and principal. An agent functions not as a substitute for the principal but as an extension of the principal’s legal personality in dealings with third parties and other externally oriented conduct within the scope of the agency relationship, including knowledge of facts acquired by the agent when material to the agent’s duties. The potentially grave impact for the principal, plus the implications for personal autonomy when one person represents another, underlie the requisites that define an agency relationship, including its fiduciary character.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122167942","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The prudent investor rule, enacted in every state over the last 30 years, is the centerpiece of trust investment law. Repudiating the prior law’s emphasis on avoiding risk, the rule reorients trust investment toward risk management in accordance with modern portfolio theory. The rule directs a trustee to implement an overall investment strategy having risk and return objectives reasonably suited to the trust. Using data from reports of bank trust holdings and fiduciary income tax returns, we examine asset allocation and management of market risk before and after the reform. First, we find that the reform increased stockholdings, but not among banks with average trust account sizes below the 25th percentile. This result is consistent with sensitivity in asset allocation to trust risk tolerance. Second, we present evidence consistent with increased portfolio rebalancing after the reform. We conclude that the move toward additional stockholdings was correlated with trust risk tolerance, and that the increased market risk exposure from additional stockholdings was more actively managed.
{"title":"The Prudent Investor Rule and Market Risk: An Empirical Analysis","authors":"Max M. Schanzenbach, Robert H. Sitkoff","doi":"10.2139/ssrn.2583775","DOIUrl":"https://doi.org/10.2139/ssrn.2583775","url":null,"abstract":"The prudent investor rule, enacted in every state over the last 30 years, is the centerpiece of trust investment law. Repudiating the prior law’s emphasis on avoiding risk, the rule reorients trust investment toward risk management in accordance with modern portfolio theory. The rule directs a trustee to implement an overall investment strategy having risk and return objectives reasonably suited to the trust. Using data from reports of bank trust holdings and fiduciary income tax returns, we examine asset allocation and management of market risk before and after the reform. First, we find that the reform increased stockholdings, but not among banks with average trust account sizes below the 25th percentile. This result is consistent with sensitivity in asset allocation to trust risk tolerance. Second, we present evidence consistent with increased portfolio rebalancing after the reform. We conclude that the move toward additional stockholdings was correlated with trust risk tolerance, and that the increased market risk exposure from additional stockholdings was more actively managed.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121230284","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-08-10DOI: 10.5040/9781509907328.ch-011
Deborah A. DeMott
Culpable participation in a fiduciary's breach of duty is independently wrongful. Much about this contingent form of liability is open to dispute. In the United States, well-established general doctrine defines the elements requisite to establishing accessory liability, which is categorized as a tort and often referred to as "aiding-and abetting" liability. What's controversial is how the tort applies to particular categories of actors, most recently investment banks that advise boards of target companies in M&A transactions. In the United Kingdom, in contrast, accessory liability in connection with a breach of trust or fiduciary duty is controversial because the law is less clear, at least in part due to significant shifts in doctrine within a relatively short period of time. And equity houses the wrong, not tort (and the requisites for aiding-and-abetting liability in connection with a tort are significantly different). This essay, written as a contribution to a forthcoming book, uses contrasts between law in the US and the UK to deepen its examination of this distinctive form of wrongdoing. The essay's central claim is that how the law categorizes a wrong matters for the elements of accessory liability. That is, breaching a fiduciary duty and culpably assisting in the fiduciary's breach are both instances of wrongful conduct. Characterizing both as tortious, as does US law, has consequences for the elements of accessory liability. The comparative account also illustrates the independent character of accessory liability, underscored by outcomes in both jurisdictions in which the accessory's culpability differs from that of the fiduciary as primary wrongdoer.
{"title":"Accessory Disloyalty: Comparative Perspectives on Substantial Assistance to Fiduciary Breach","authors":"Deborah A. DeMott","doi":"10.5040/9781509907328.ch-011","DOIUrl":"https://doi.org/10.5040/9781509907328.ch-011","url":null,"abstract":"Culpable participation in a fiduciary's breach of duty is independently wrongful. Much about this contingent form of liability is open to dispute. In the United States, well-established general doctrine defines the elements requisite to establishing accessory liability, which is categorized as a tort and often referred to as \"aiding-and abetting\" liability. What's controversial is how the tort applies to particular categories of actors, most recently investment banks that advise boards of target companies in M&A transactions. In the United Kingdom, in contrast, accessory liability in connection with a breach of trust or fiduciary duty is controversial because the law is less clear, at least in part due to significant shifts in doctrine within a relatively short period of time. And equity houses the wrong, not tort (and the requisites for aiding-and-abetting liability in connection with a tort are significantly different). This essay, written as a contribution to a forthcoming book, uses contrasts between law in the US and the UK to deepen its examination of this distinctive form of wrongdoing. The essay's central claim is that how the law categorizes a wrong matters for the elements of accessory liability. That is, breaching a fiduciary duty and culpably assisting in the fiduciary's breach are both instances of wrongful conduct. Characterizing both as tortious, as does US law, has consequences for the elements of accessory liability. The comparative account also illustrates the independent character of accessory liability, underscored by outcomes in both jurisdictions in which the accessory's culpability differs from that of the fiduciary as primary wrongdoer.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130804993","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2016-06-29DOI: 10.4337/9781784714833.00012
Julian Velasco
A familiar problem to scholars of fiduciary law is that of definition. Fiduciary law has been called “messy,” “elusive,” and “unusually vexing.” In part, this is because fiduciary law principles appear in many areas of law, but are applied differently in each. This has made the development of a unified theory difficult. Some scholars have doubted whether it is even possible; others have insisted that it is not possible. Nevertheless, scholars continue to try to bring order to the perceived chaos. My goal in this short paper will be to sketch out the contours of a reasonably coherent theory that covers enough phenomena to have a plausible claim to descriptive accuracy while also providing objective criteria for the exclusion of marginal cases. While a simple definition would be nice, some complexity may be necessary in order to achieve this goal.
{"title":"Delimiting Fiduciary Status","authors":"Julian Velasco","doi":"10.4337/9781784714833.00012","DOIUrl":"https://doi.org/10.4337/9781784714833.00012","url":null,"abstract":"A familiar problem to scholars of fiduciary law is that of definition. Fiduciary law has been called “messy,” “elusive,” and “unusually vexing.” In part, this is because fiduciary law principles appear in many areas of law, but are applied differently in each. This has made the development of a unified theory difficult. Some scholars have doubted whether it is even possible; others have insisted that it is not possible. Nevertheless, scholars continue to try to bring order to the perceived chaos. My goal in this short paper will be to sketch out the contours of a reasonably coherent theory that covers enough phenomena to have a plausible claim to descriptive accuracy while also providing objective criteria for the exclusion of marginal cases. While a simple definition would be nice, some complexity may be necessary in order to achieve this goal.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"114 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124537354","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the United States, the treatment of mandatory arbitration provisions in trust agreements remains murky. This uncertainty may discourage estate planners from suggesting arbitration, even in cases where it would effectuate the settlor’s goals. A number of US state legislatures have already reformed their trust codes to make this area of law more predictable. Although it is impossible to predict the future, it seems likely that other US states will adopt similar provisions in the coming years and may thereby improve the way in which arbitration is used to resolve internal trust disputes. Therefore, this chapter explores the variety, validity, and viability of various legislative attempts to resolve the uncertainty surrounding mandatory arbitration of internal trust disputes. In so doing, the chapter provides a descriptive and normative analysis of various state legislative approaches regarding arbitration of trust disputes and critiques these efforts so as to help legislators going forward.
{"title":"Legislative Approaches to Trust Arbitration in the United States","authors":"Lee-ford Tritt","doi":"10.2139/SSRN.2703989","DOIUrl":"https://doi.org/10.2139/SSRN.2703989","url":null,"abstract":"In the United States, the treatment of mandatory arbitration provisions in trust agreements remains murky. This uncertainty may discourage estate planners from suggesting arbitration, even in cases where it would effectuate the settlor’s goals. A number of US state legislatures have already reformed their trust codes to make this area of law more predictable. Although it is impossible to predict the future, it seems likely that other US states will adopt similar provisions in the coming years and may thereby improve the way in which arbitration is used to resolve internal trust disputes. Therefore, this chapter explores the variety, validity, and viability of various legislative attempts to resolve the uncertainty surrounding mandatory arbitration of internal trust disputes. In so doing, the chapter provides a descriptive and normative analysis of various state legislative approaches regarding arbitration of trust disputes and critiques these efforts so as to help legislators going forward.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"200 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-12-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123613705","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper clarifies why optimal corporate governance generally excludes monetary liability for breach of directors' and managers' fiduciary duty of care. In principle, payments predicated on judicial evaluations of directors' and managers' business decisions could usefully supplement payments predicated on stock prices or accounting figures in the provision of performance incentives. In particular, the optimally adjusted combination of standard performance pay and tailored partial liability could impose less risk on directors and managers, and provide better risk-taking incentives, than standard performance pay alone. This paper shows this in a formal model summarizing well-known results.Consequently, the reason not to use liability incentives is not absolute but a cost-benefit trade-off. Litigation is expensive, while the benefits from refining incentives are limited, at least in public firms. Equity pay already provides fairly good incentives, courts have difficulties evaluating business decisions, and the agency conflict in standard business decisions is limited. The analysis rationalizes many existing exceptions from non-liability but also leads to novel recommendations, particularly for entities other than public corporations.
{"title":"Monetary Liability for Breach of the Duty of Care?","authors":"Holger Spamann","doi":"10.1093/JLA/LAW009","DOIUrl":"https://doi.org/10.1093/JLA/LAW009","url":null,"abstract":"This paper clarifies why optimal corporate governance generally excludes monetary liability for breach of directors' and managers' fiduciary duty of care. In principle, payments predicated on judicial evaluations of directors' and managers' business decisions could usefully supplement payments predicated on stock prices or accounting figures in the provision of performance incentives. In particular, the optimally adjusted combination of standard performance pay and tailored partial liability could impose less risk on directors and managers, and provide better risk-taking incentives, than standard performance pay alone. This paper shows this in a formal model summarizing well-known results.Consequently, the reason not to use liability incentives is not absolute but a cost-benefit trade-off. Litigation is expensive, while the benefits from refining incentives are limited, at least in public firms. Equity pay already provides fairly good incentives, courts have difficulties evaluating business decisions, and the agency conflict in standard business decisions is limited. The analysis rationalizes many existing exceptions from non-liability but also leads to novel recommendations, particularly for entities other than public corporations.","PeriodicalId":376950,"journal":{"name":"Fiduciary Law eJournal","volume":"168 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124684341","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：