Italian Abstract: La riforma del diritto concorsuale attuata con il d.lgs. 12 gennaio 2019, n. 14, o codice della crisi d’impresa e dell’insolvenza, segna, particolarmente per la materia dell’amministrazione e del controllo interno, un riavvicinamento della s.r.l. alla s.p.a., in parziale controtendenza rispetto a quanto era avvenuto con la riforma del diritto societario. Il codice della crisi impone, così, di verificare se i confini del tipo s.r.l. e della sua disciplina, così come a suo tempo ridisegnati dalla riforma del diritto societario, siano stati modificati dalla riforma del diritto concorsuale.
English Abstract: The reform of the insolvency law implemented with the d.lgs. 12 January 2019,no. 14, the so-called Code of the crisis and insolvency (hereinafter the “Code”), seems to mark a rapprochement of the discipline of the limited (s.r.l.) to the discipline of the joint stock company (s.p.a.), in partial contrast with the reform of company law, and thus induces to re-examine the limited company model in the light of the changes introduced by the Code.
Thus the code of the crisis requires us to verify whether the boundaries of the“s.r.l.” and its discipline – as previously restyled by the reform of company law – have been modified by the bankruptcy proceedings reform.
意大利摘要:与d.lgs一起进行的破产改革。2019年1月12日,第14号或代码商业和破产,标志着危机、特别是行政和内部控制的问题,一个和解的s . r . l . s . p . a .,部分与公司法改革的黄金时代。因此，《危机法典》要求确定，在公司法改革中重新界定的有限责任公司及其规章制度的边界，是否已被竞争法改革所改变。破产法律的改革与地方检察官实施。2019年1月12日，没有。14, the so-called of the crisis and insolvency排队(hereinafter the“”),回到排队to mark学科的和解》为题of the limited (s . r . l .) to the of the联合股票公司学科(s . p . a .),在部分contrast with the reform公司法学会,and thus induces re-examine the limited公司模型在the轻of the完全introduced by the排队。我们需要《危机法典》来确定“s.r.l.”的边界。“它的学科——以前被公司法改革所困扰——已经被银行程序改革所改变。
{"title":"La società a responsabilità limitata nella riforma del diritto concorsuale (The Limited Liability Company (S.R.L.) in the Insolvency Proceedings Reform)","authors":"M. Cossu","doi":"10.2139/ssrn.3760036","DOIUrl":"https://doi.org/10.2139/ssrn.3760036","url":null,"abstract":"<b>Italian Abstract:</b> La riforma del diritto concorsuale attuata con il d.lgs. 12 gennaio 2019, n. 14, o codice della crisi d’impresa e dell’insolvenza, segna, particolarmente per la materia dell’amministrazione e del controllo interno, un riavvicinamento della s.r.l. alla s.p.a., in parziale controtendenza rispetto a quanto era avvenuto con la riforma del diritto societario. Il codice della crisi impone, così, di verificare se i confini del tipo s.r.l. e della sua disciplina, così come a suo tempo ridisegnati dalla riforma del diritto societario, siano stati modificati dalla riforma del diritto concorsuale.<br><br><b>English Abstract:</b> The reform of the insolvency law implemented with the d.lgs. 12 January 2019,no. 14, the so-called Code of the crisis and insolvency (hereinafter the “Code”), seems to mark a rapprochement of the discipline of the limited (s.r.l.) to the discipline of the joint stock company (s.p.a.), in partial contrast with the reform of company law, and thus induces to re-examine the limited company model in the light of the changes introduced by the Code.<br><br>Thus the code of the crisis requires us to verify whether the boundaries of the“s.r.l.” and its discipline – as previously restyled by the reform of company law – have been modified by the bankruptcy proceedings reform.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"76 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125444642","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 recent announcement by Mark Zuckerberg and Dr. Priscilla Chan to pledge Facebook stock worth $45 billion to various philanthropic efforts was met with more skepticism than praise. Most of the criticism concerned the couple’s decision to organize the CZI as a for-profit limited liability company (LLC), rather than the more traditional tax-exempt private foundation. Despite the tax benefits of private foundations, Zuckerberg and Chan were attracted to the fact that LLCs may freely engage in political activity, fund any type of entity, and participate in policy debates.This begs the question: why should we care how Zuckerberg and Chan engage in charitable activity? The Facebook stock is, after all, their property, and the general public does not generally have any say in how the wealthy dispose of their property. This Article argues that the criticisms are warranted. The reason the public does (and should) care, is that the decision presents troubling questions about the role of philanthropy in our society and the consequences of philanthropists using for-profit vehicles to engage in charitable work.For more than a century, sociologists have criticized philanthropy as antidemocratic, paternalistic, and amateuristic. However, the regulatory mechanisms governing private foundations ensure that the entities actually engage in publicly-blessed charitable activity, require numerous disclosures to increase accountability, and restrict certain political and lobbying activities. Although these mechanisms do not eliminate the negatives of philanthropy, they do limit their negative effect. As such, there is a convincing argument that philanthropy is worth these costs. The hope is that the mechanisms regulating private foundations result in a palatable balance between philanthropy’s negative and positive aspects.However, the recent trend of conducting charity through for-profit vehicles throws that balance off. The regulatory bulwarks designed to encourage the positive aspects of philanthropy do not exist in the for-profit realm. As such, philanthropy conducted through for-profit vehicles encourages entities to engage in matters of public concern free from meaningful regulation and limitations.This Article discusses each of the traditional critiques of philanthropy and explores how they are exacerbated when philanthropic efforts are conducted through a for-profit vehicles, such as LLCs.
{"title":"The Perils of Philanthrocapitalism","authors":"E. Amarante","doi":"10.2139/ssrn.2885550","DOIUrl":"https://doi.org/10.2139/ssrn.2885550","url":null,"abstract":"The recent announcement by Mark Zuckerberg and Dr. Priscilla Chan to pledge Facebook stock worth $45 billion to various philanthropic efforts was met with more skepticism than praise. Most of the criticism concerned the couple’s decision to organize the CZI as a for-profit limited liability company (LLC), rather than the more traditional tax-exempt private foundation. Despite the tax benefits of private foundations, Zuckerberg and Chan were attracted to the fact that LLCs may freely engage in political activity, fund any type of entity, and participate in policy debates.This begs the question: why should we care how Zuckerberg and Chan engage in charitable activity? The Facebook stock is, after all, their property, and the general public does not generally have any say in how the wealthy dispose of their property. This Article argues that the criticisms are warranted. The reason the public does (and should) care, is that the decision presents troubling questions about the role of philanthropy in our society and the consequences of philanthropists using for-profit vehicles to engage in charitable work.For more than a century, sociologists have criticized philanthropy as antidemocratic, paternalistic, and amateuristic. However, the regulatory mechanisms governing private foundations ensure that the entities actually engage in publicly-blessed charitable activity, require numerous disclosures to increase accountability, and restrict certain political and lobbying activities. Although these mechanisms do not eliminate the negatives of philanthropy, they do limit their negative effect. As such, there is a convincing argument that philanthropy is worth these costs. The hope is that the mechanisms regulating private foundations result in a palatable balance between philanthropy’s negative and positive aspects.However, the recent trend of conducting charity through for-profit vehicles throws that balance off. The regulatory bulwarks designed to encourage the positive aspects of philanthropy do not exist in the for-profit realm. As such, philanthropy conducted through for-profit vehicles encourages entities to engage in matters of public concern free from meaningful regulation and limitations.This Article discusses each of the traditional critiques of philanthropy and explores how they are exacerbated when philanthropic efforts are conducted through a for-profit vehicles, such as LLCs.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"110 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127980144","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}
A review of Christopher M. Bruner, Re-Imagining Offshore Finance: Market-Dominant Small Jurisdictions in a Globalizing Financial World.
布鲁纳:《重新构想离岸金融:全球化金融世界中市场主导的小司法管辖区》。
{"title":"Tax Havens as Producers of Corporate Law","authors":"William J. Moon","doi":"10.36644/mlr.116.6.tax","DOIUrl":"https://doi.org/10.36644/mlr.116.6.tax","url":null,"abstract":"A review of Christopher M. Bruner, Re-Imagining Offshore Finance: Market-Dominant Small Jurisdictions in a Globalizing Financial World.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"396 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133532403","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}
Russian Abstract: Дана классификация коммерческих корпораций на открытые и закрытые; к последним относятся общество с ограниченной ответственностью и все корпорации корпоративного типа: производственные кооперативы, народные предприятия. Приводится сравнительный анализ особенностей ограничения оборота прав участия в различных видах закрытых корпораций. Показаны негативные экономические последствия для корпорации — обязанность выкупать собственные акции, доли в уставном капитале ООО, пай в производственном кооперативе. Приведен сравнительный анализ определения действительной стоимости доли в уставном капитале ООО, условной выкупной цены пая производственного кооператива, «акции» народного предприятия. Выявляются специфические внутрикорпоративные противоречия закрытых корпораций. Показаны негативные экономические последствия права участника на свободный выход из корпорации — прежде всего, из ООО. English Abstract: The paper introduces a classification of commercial corporations for open and closed; The latter include a limited liability company and all corporate corporations: production cooperatives, people's enterprises. A comparative analysis of the specifics of limiting the turnover of participation rights in various types of closed corporations is given. The paper demonstrates the negative economic consequences for the corporation — the obligation to buy out its own shares, stakes in the authorized capital of LLC, a share in the production cooperative. A comparative analysis of the determination of the actual value of a stake in the authorized capital of LLC, the conditional redemption price of a share of a production cooperative, and the "shares" of a national enterprise. Specific intracorporate contradictions of closed corporations are revealed. The negative economic consequences of the participant's right of free exit from the corporation — first of all, from LLC are shown.
{"title":"Сравнительный Анализ Различных Видов Корпораций в Условиях Реформы Корпоративного Законодательства (Comparative Analysis of Various Types of Corporations in the Conditions of Corporate Law Reform)","authors":"Andrei Glushetskiy","doi":"10.2139/SSRN.2968446","DOIUrl":"https://doi.org/10.2139/SSRN.2968446","url":null,"abstract":"Russian Abstract: Дана классификация коммерческих корпораций на открытые и закрытые; к последним относятся общество с ограниченной ответственностью и все корпорации корпоративного типа: производственные кооперативы, народные предприятия. Приводится сравнительный анализ особенностей ограничения оборота прав участия в различных видах закрытых корпораций. Показаны негативные экономические последствия для корпорации — обязанность выкупать собственные акции, доли в уставном капитале ООО, пай в производственном кооперативе. Приведен сравнительный анализ определения действительной стоимости доли в уставном капитале ООО, условной выкупной цены пая производственного кооператива, «акции» народного предприятия. Выявляются специфические внутрикорпоративные противоречия закрытых корпораций. Показаны негативные экономические последствия права участника на свободный выход из корпорации — прежде всего, из ООО. \u0000English Abstract: The paper introduces a classification of commercial corporations for open and closed; The latter include a limited liability company and all corporate corporations: production cooperatives, people's enterprises. A comparative analysis of the specifics of limiting the turnover of participation rights in various types of closed corporations is given. The paper demonstrates the negative economic consequences for the corporation — the obligation to buy out its own shares, stakes in the authorized capital of LLC, a share in the production cooperative. A comparative analysis of the determination of the actual value of a stake in the authorized capital of LLC, the conditional redemption price of a share of a production cooperative, and the \"shares\" of a national enterprise. Specific intracorporate contradictions of closed corporations are revealed. The negative economic consequences of the participant's right of free exit from the corporation — first of all, from LLC are shown.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125624878","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 my experience as an expert witness for a number of excellent litigators, I find that litigators know the Rules of Civil Procedure, the Local Rules, the Rules of Evidence, and the personalities of the judges extremely well. I find that in business issues, litigators tend to use terms like “fiduciary duty” and “limited liability corporation” in a manner not consistent with the use of the terms (as interpreted by business lawyers) in the relevant statutes or case law. There are a number of aspects of business law that, depending on the nature of the case or the issues being addressed, may be important for a litigator to know. This paper addresses the entity records available through the Secretary of State’s office, a recognition that an LLC is not a corporation (except in some cases for tax purposes), agency considerations and other duties arising in the various forms of entity, buy-sell agreements, veil-piercing, securities laws issues in capital formation, UCC articles 2 and 9 (with a little bit of article 8), tax issues, mortgage foreclosures (the paper is important), an hostile work environment, waivers are not everything, don’t forget “its unConstitutional,” the unintentional partnership, electronic signatures, whistleblower protections and various confidentiality requirements, ethics attendant to business lawyers, and other issues. Also this paper gives advice to business owners and the lawyers who counsel them. Perhaps the most significant is with respect to their material agreements and handbooks - don't put them on the shelf and then ignore them. Use these agreements where appropriate, review these agreements, and update these agreements to reflect changing circumstances and changing law.
{"title":"Business Law Litigators Should Know","authors":"Herrick K. Lidstone","doi":"10.2139/SSRN.2925440","DOIUrl":"https://doi.org/10.2139/SSRN.2925440","url":null,"abstract":"In my experience as an expert witness for a number of excellent litigators, I find that litigators know the Rules of Civil Procedure, the Local Rules, the Rules of Evidence, and the personalities of the judges extremely well. I find that in business issues, litigators tend to use terms like “fiduciary duty” and “limited liability corporation” in a manner not consistent with the use of the terms (as interpreted by business lawyers) in the relevant statutes or case law. There are a number of aspects of business law that, depending on the nature of the case or the issues being addressed, may be important for a litigator to know. \u0000 \u0000This paper addresses the entity records available through the Secretary of State’s office, a recognition that an LLC is not a corporation (except in some cases for tax purposes), agency considerations and other duties arising in the various forms of entity, buy-sell agreements, veil-piercing, securities laws issues in capital formation, UCC articles 2 and 9 (with a little bit of article 8), tax issues, mortgage foreclosures (the paper is important), an hostile work environment, waivers are not everything, don’t forget “its unConstitutional,” the unintentional partnership, electronic signatures, whistleblower protections and various confidentiality requirements, ethics attendant to business lawyers, and other issues. \u0000 \u0000Also this paper gives advice to business owners and the lawyers who counsel them. Perhaps the most significant is with respect to their material agreements and handbooks - don't put them on the shelf and then ignore them. Use these agreements where appropriate, review these agreements, and update these agreements to reflect changing circumstances and changing law.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129100508","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 : 2017-02-01DOI: 10.4337/9781784714833.00028
Martin Gelter, G. Helleringer
Fiduciary duties are often today held out as typical instruments of shareholder protection in the common law of both the US and the UK, which are sometimes held out as examples for a consensus model for what is considered good corporate law conducive to good capital market development. However, fiduciary duties in these two jurisdictions often operate in strikingly different ways. This chapter looks at the specific example of corporate opportunities, with which the UK and the US deal in remarkably different ways. Each of them focuses on a starting point: avoiding conflicts of interest in the UK approach versus identifying the correct owner of the opportunity in the US approach. While the US relies on an open-ended standard, the UK corporate opportunities doctrine effectively constitutes a rule. In this chapter, we suggest an explanation for why the two core jurisdictions of the common law world have developed so differently in this respect. We argue that only in the US fiduciary duties are typically enforced by the courts, whereas in the UK, corporate law enforcement is typically left to ex ante monitoring by outside directors and institutional investors. Only courts, in applying an ex post substantive assessment, are capable of implementing a complex “standard” for corporate opportunities. Institutional enforcement, as in the UK, lends itself better to a hard-and-fast rule. We suggest that this distinction is only an example of a larger distinction between the corporate laws of these two jurisdictions, and indicative of a broader difference in how corporate fiduciary duties operate.
{"title":"Corporate Opportunities in the US and in the UK: How Differences in Enforcement Explain Differences in Substantive Fiduciary Duties","authors":"Martin Gelter, G. Helleringer","doi":"10.4337/9781784714833.00028","DOIUrl":"https://doi.org/10.4337/9781784714833.00028","url":null,"abstract":"Fiduciary duties are often today held out as typical instruments of shareholder protection in the common law of both the US and the UK, which are sometimes held out as examples for a consensus model for what is considered good corporate law conducive to good capital market development. However, fiduciary duties in these two jurisdictions often operate in strikingly different ways. This chapter looks at the specific example of corporate opportunities, with which the UK and the US deal in remarkably different ways. Each of them focuses on a starting point: avoiding conflicts of interest in the UK approach versus identifying the correct owner of the opportunity in the US approach. While the US relies on an open-ended standard, the UK corporate opportunities doctrine effectively constitutes a rule. In this chapter, we suggest an explanation for why the two core jurisdictions of the common law world have developed so differently in this respect. We argue that only in the US fiduciary duties are typically enforced by the courts, whereas in the UK, corporate law enforcement is typically left to ex ante monitoring by outside directors and institutional investors. Only courts, in applying an ex post substantive assessment, are capable of implementing a complex “standard” for corporate opportunities. Institutional enforcement, as in the UK, lends itself better to a hard-and-fast rule. We suggest that this distinction is only an example of a larger distinction between the corporate laws of these two jurisdictions, and indicative of a broader difference in how corporate fiduciary duties operate.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"53 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134399970","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}
How can corporations be competitors and partners at the same time? This is the dilemma of the corporate joint venture. I argue that the key legal challenge facing corporate co-venturers is to construct a coherent set of fiduciary duties among the corporate partners. This paper makes three contributions.First, the paper shows that the default fiduciary duties of corporate joint ventures conflict. This fact --- that the law itself creates a conflict --- has not been previously recognized by the literature. The paper then presents a theory of how corporations respond to this fiduciary conflict: Corporations (1) alter the default loyalty duties through a covenant not to compete (CNC) and then (2) avoid conflicts by operating the venture through a separate entity. This theory thus offers a new role for both CNCs and entities.Second, this contractual response is actually quite fragile because states vary considerably to the extent they (1) are willing to enforce covenants not to compete and (2) permit partners to alter their fiduciary duties. The paper offers a policy recommendation in light of these enforcement problems: an internal affairs doctrine for corporate joint ventures.Finally, the paper details the existence of joint venture networks. These networks further compound fiduciary conflicts and require us to update both competition policy and the theory of the firm.
{"title":"A Theory of Corporate Joint Ventures","authors":"Sarath Sanga","doi":"10.2139/SSRN.2646932","DOIUrl":"https://doi.org/10.2139/SSRN.2646932","url":null,"abstract":"How can corporations be competitors and partners at the same time? This is the dilemma of the corporate joint venture. I argue that the key legal challenge facing corporate co-venturers is to construct a coherent set of fiduciary duties among the corporate partners. This paper makes three contributions.First, the paper shows that the default fiduciary duties of corporate joint ventures conflict. This fact --- that the law itself creates a conflict --- has not been previously recognized by the literature. The paper then presents a theory of how corporations respond to this fiduciary conflict: Corporations (1) alter the default loyalty duties through a covenant not to compete (CNC) and then (2) avoid conflicts by operating the venture through a separate entity. This theory thus offers a new role for both CNCs and entities.Second, this contractual response is actually quite fragile because states vary considerably to the extent they (1) are willing to enforce covenants not to compete and (2) permit partners to alter their fiduciary duties. The paper offers a policy recommendation in light of these enforcement problems: an internal affairs doctrine for corporate joint ventures.Finally, the paper details the existence of joint venture networks. These networks further compound fiduciary conflicts and require us to update both competition policy and the theory of the firm.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"57 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125496256","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 table reflects the statutory charging order language of all fifty states. It also classifies the charging order statutes in four separate categories in order to account for language variances. In all cases, all links are live to Westlaw. The table is updated as new legislative activity occurs.
{"title":"Fifty State Series: LLC Charging Order Statute Table","authors":"C. Bishop","doi":"10.2139/SSRN.1542244","DOIUrl":"https://doi.org/10.2139/SSRN.1542244","url":null,"abstract":"This table reflects the statutory charging order language of all fifty states. It also classifies the charging order statutes in four separate categories in order to account for language variances. In all cases, all links are live to Westlaw. The table is updated as new legislative activity occurs.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"18 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121479117","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}
Despite recent legislative and administrative efforts, U.S. corporations continue to engage in a controversial business strategy known as a “corporate inversion.” A U.S corporation performing an inversion must acquire a foreign corporation and then, through a series of complex transactions, restructures in the foreign corporation’s country. In light of the United States’ burdensome corporate tax code, the inversion process allows formally American corporations to become taxable as a foreign entity, generating sizable tax savings.It is seldom noticed, however, that the inversion trend raises a significant corporate law puzzle regarding the misaligned incentives dividing directors and shareholders. From a corporate director’s point of view, inversions are particularly attractive. This is because the process can be structured to reduce a company’s tax rate while also lessening management’s duty to comply with costly regulatory frameworks. For instance, inverted companies often reincorporate in countries with more management-friendly corporate governance statutes. Likewise, since U.S. exchanges subject foreign incorporated companies to less scrutinizing securities regulations, the inversion process can allow publicly traded companies to minimize costly disclosure, auditing, and corporate governance requirements. But, critically, inversions are puzzling from an investor or shareholder’s perspective. Since corporate regulations are generally thought to protect investors, why would an individual invest in a company that has deliberately sought out and reincorporated in a country that provides minimal shareholder protections? In fact, shareholders often vote in favor of, and thus authorize, the very transactions that limit their ability to acquire information and enforce other shareholder rights. So why is the corporate migration trend booming if individuals should disfavor investing in inverted companies and shareholders should refuse to authorize them? Do individuals value the law? Using an original dataset and empirical analysis, this Article explores why individuals appear to ignore something as important — and as valuable — as the law.
{"title":"Irrational Investors and the Corporate Inversion Puzzle","authors":"G. Day","doi":"10.2139/ssrn.2732896","DOIUrl":"https://doi.org/10.2139/ssrn.2732896","url":null,"abstract":"Despite recent legislative and administrative efforts, U.S. corporations continue to engage in a controversial business strategy known as a “corporate inversion.” A U.S corporation performing an inversion must acquire a foreign corporation and then, through a series of complex transactions, restructures in the foreign corporation’s country. In light of the United States’ burdensome corporate tax code, the inversion process allows formally American corporations to become taxable as a foreign entity, generating sizable tax savings.It is seldom noticed, however, that the inversion trend raises a significant corporate law puzzle regarding the misaligned incentives dividing directors and shareholders. From a corporate director’s point of view, inversions are particularly attractive. This is because the process can be structured to reduce a company’s tax rate while also lessening management’s duty to comply with costly regulatory frameworks. For instance, inverted companies often reincorporate in countries with more management-friendly corporate governance statutes. Likewise, since U.S. exchanges subject foreign incorporated companies to less scrutinizing securities regulations, the inversion process can allow publicly traded companies to minimize costly disclosure, auditing, and corporate governance requirements. But, critically, inversions are puzzling from an investor or shareholder’s perspective. Since corporate regulations are generally thought to protect investors, why would an individual invest in a company that has deliberately sought out and reincorporated in a country that provides minimal shareholder protections? In fact, shareholders often vote in favor of, and thus authorize, the very transactions that limit their ability to acquire information and enforce other shareholder rights. So why is the corporate migration trend booming if individuals should disfavor investing in inverted companies and shareholders should refuse to authorize them? Do individuals value the law? Using an original dataset and empirical analysis, this Article explores why individuals appear to ignore something as important — and as valuable — as the law.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125447708","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}
Courts, commentators, and attorneys describe corporations and limited liability companies as limited liability entities, but limited liability is not always the end result. While debts of a separate legal entity ordinarily would not be considered those of the owners even if the statutes applicable to these entities did not contain limitations on the owners of the entities, exceptions exist. For example, courts developed piercing the veil in corporate cases over a century ago as an equitable remedy to prevent perceived misuses of the corporate form. In the corporate context, courts may pierce the veil where a subsidiary corporation is merely an alter ego or agent of the corporate parent, where the corporation is merely the alter ego of the shareholder, or where the corporate shield is being used to defraud creditors. Courts have extended veil piercing to LLCs — sometimes with regard to their differences and sometimes not.An owner of an entity may also incur direct liability for debts of the entity or otherwise become liable on grounds other than veil-piercing or alter ego. These grounds include acting in the name of an unformed entity, acting for an undisclosed principal, liability to return improper distributions, liability for unpaid taxes, direct liability imposed by other federal and state statutes, and liability for one’s own actions and the actions of agents.This Article examines the statutory and case law and other commentary in these areas, makes suggestions and criticism, and offers recommendations.
{"title":"Will Your Veil Be Pierced? How Strong is Your Entity’s Liability Shield? — Piercing the Veil, Alter Ego, and Other Bases for Holding an Owner Liable for Debts of an Entity","authors":"Allen Sparkman","doi":"10.2139/ssrn.2676250","DOIUrl":"https://doi.org/10.2139/ssrn.2676250","url":null,"abstract":"Courts, commentators, and attorneys describe corporations and limited liability companies as limited liability entities, but limited liability is not always the end result. While debts of a separate legal entity ordinarily would not be considered those of the owners even if the statutes applicable to these entities did not contain limitations on the owners of the entities, exceptions exist. For example, courts developed piercing the veil in corporate cases over a century ago as an equitable remedy to prevent perceived misuses of the corporate form. In the corporate context, courts may pierce the veil where a subsidiary corporation is merely an alter ego or agent of the corporate parent, where the corporation is merely the alter ego of the shareholder, or where the corporate shield is being used to defraud creditors. Courts have extended veil piercing to LLCs — sometimes with regard to their differences and sometimes not.An owner of an entity may also incur direct liability for debts of the entity or otherwise become liable on grounds other than veil-piercing or alter ego. These grounds include acting in the name of an unformed entity, acting for an undisclosed principal, liability to return improper distributions, liability for unpaid taxes, direct liability imposed by other federal and state statutes, and liability for one’s own actions and the actions of agents.This Article examines the statutory and case law and other commentary in these areas, makes suggestions and criticism, and offers recommendations.","PeriodicalId":431428,"journal":{"name":"Corporate Law: LLCs","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116788590","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}
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