Corporate group

About: Corporate group is a research topic. Over the lifetime, 1747 publications have been published within this topic receiving 46868 citations.

Book Review: The Comparative Anatomy of Corporate Law

Abstract: The Anatomy of Corporate law (REINIER KRAAKMAN ET AL., THE ANATOMY OF CORPORATE LAW. A COMPARATIVE AND FUNCTIONAL APPROACH (Oxford University Press 2004)) provides the first global and comprehensive comparative and functional analysis of corporate law. The book makes four main claims: (1) Business corporations are characterized by "an underlying commonality of structures that transcends national boundaries:" they display everywhere five key features (legal personality, limited liability, transferable shares, delegated management with a board structure, and investor ownership). (2) The problems that corporate law must universally address stem from the web of agency relationships underlying the corporate form (shareholders-managers; majority-minority shareholders; shareholders-other stakeholders, mainly creditors and employees); in addressing them, "the law turns repeatedly to a basic set of legal strategies." (3) More analytically, corporate laws in major jurisdictions invariably resort to one or more of ten legal strategies to address such agency problems, as shown by the book's illustration of laws relating to basic governance, creditor protection, related-party transactions, significant corporate actions, control transactions, and issuers and investor protection. (4) Finally, "[major] jurisdictions pick from among the same handful of legal strategies ... when addressing a specific agency issue or regulating a particular transaction," "corporate law ha[ving] converged significantly across [them]." After describing claims (1) and (2) and putting them in the context of recent studies in the law and economics of corporations, this review concentrates on the claims (3) and (4), first with a criticism of the book's conceptual framework for failing to consider enforcement issues and the interaction between legal strategies and enforcement techniques. This failure reduces the analytical strength of the book's comparative analysis of corporate laws in major jurisdictions. Finally, the review focuses on the strongest and most controversial claim, the fourth one, first analyzing the authors' explanations for the persisting divergences among major jurisdictions and then questioning its very substance.

Groundwork Of The Metaphysics OfCorporate Law

Abstract: The practitioners of law and economics have done an enormous favor for all of us who are concerned with corporate law. This favor comes in two parts. On the one hand, they have sharpened, indeed radicalized, the paradigm of the stockholder-centric corporation on which corporate law has been built since the middle of this century, revealing as they have done so the startling weaknesses and unreality of that paradigm.(1) On the other hand, these scholars have deconstructed the traditional fiction of the corporation to reveal the reality of competing interests within the corporation that have nonetheless been excluded from the legal model of the corporate form. This, of course, is the contractual model of the corporation.(2) In doing so, they have exposed for attention the interests of a variety of constituents that corporate law has heretofore ignored. Although these scholars have built a new, if highly disputed, model of the corporation as contract to provide an infrastructure to replace the old entity, they have done so with zealous regard for the traditional paradigm that centers on the stockholders.As a result of these scholars' efforts, the central underlying issues in corporate law have been exposed as never before. What is the nature and the purpose of the corporation in modern American society? Their clear answer is to maximize the wealth of stockholders, as a consequence of which overall social wealth will be maximized by virtue of market mechanisms.(3) In order for this to be accomplished, the markets that revolve around the corporation, including markets for capital, labor, supplies, and outputs, must be kept as efficient as possible, with only the first and, possibly, the second,(4) coming within the province of corporate law. These scholars have identified the costs and barriers which can impede market efficiency, and have suggested some of the gains to be realized from removing those costs and barriers.They have accomplished all of this by reducing the prevailing corporate paradigm to its most elemental level--the pursuit of self-interest by all concerned.(5) Although my use of the collective pronoun suggests unity among legal economists, there are in fact deep divisions among them. But on one aspect of the corporate paradigm they are unanimous: Corporations exist for their stockholders. Only when the corporation is thus focused can the self-interest of corporate actors be used to maximize their own wealth in a way that will lead to increased societal wealth.(6)Professor Ronald Green recognizes this when he talks about the metaphors of corporate law,(7) metaphors that have been turned into normative principles by law and economics scholars.(8) He writes about the need to abandon these metaphors, in order to enable us both to see and understand that the modern corporation profoundly affects the well-being of a number of constituent groups in addition to the corporation's stockholders, and that in fact corporate directors and managers recognize this. But Professor Green relies too comfortably on metaphor as the problem. The problem is not simply one of metaphor. In fact the problem is far deeper in corporate doctrine and theory and, ultimately, policy. Only when we address social and moral issues in corporate law that appear at this depth can we begin to resolve them. The fact that legal economists have pushed the traditional paradigm to the extreme, exposing its root assumptions, permits us to address the issues at just this level.We know the way to efficiency. We also have begun to explore the costs of efficiency. Professor Green's paper identifies, as does this Symposium, some of the values that get left behind when the efficiency model becomes paradigm. Essentially it all boils down to the realization that a single-minded focus on efficiency, on the corporation as a narrowly defined economic institution, sacrifices the human values of those who play a part in its functioning. The efficiency model does this by legally cabining the actions of corporate actors within confining, distinctly nonhuman roles. …

Corporate Law Reform in Australia: An Analysis of the Influence of Ownership Structures and Corporate Failure

Abstract: Recent studies that have measured the levels of shareholder protection in Australia and compared them internationally have highlighted the relative strength of Australian shareholder protection. However, the question as to why this is so remains unanswered. Theories suggest that the development of corporate law is influenced by corporate ownership structures. Several scholars argue that this can occur when corporate ownership structures provide the means for interest groups to exercise political power and thereby influence law reform or when inefficiencies arising from corporate ownership structures result in changes to corporate law. This study seeks to determine whether there is any evidence of corporate ownership structures contributing to the development of Australian corporate law. The factors that have led to changes in Australian corporate law over time are examined, first by drawing from the leximetric data that measures changes in the strength of shareholder protection in Australia from 1970 to 2010, and secondly by examining three significant reforms occurring over a period of two decades. These reforms are the strengthening of the regulation of related party transactions in 1992 (the reforms prohibited the giving of financial benefits to directors of public companies and their immediate families unless the transaction was exempt or approved by disinterested shareholders), the auditor independence reforms in 2004 and the introduction of the "two strikes" rules relating to remuneration in 2011. The results of this study provide little support for the proposition that corporate ownership structures have influenced the development of Australian corporate law. Several possible alternative explanations for the shape corporate law in Australia are suggested.

Appropriate Treatment of Corporate Groups in Insolvency: A Universal View

Abstract: This paper proposes a conceptual framework according to which a suitable approach for treating corporate groups in insolvency, under domestic law, can be devised. Currently, the event of insolvency within a corporate group is often poorly dealt with under both domestic and international regimes. However, the matter demands special consideration, especially as ‘linking’ between affiliated group companies in their separate insolvencies may be necessary. This paper examines how ‘linking’ tools might be incorporated into domestic laws and ultimately harmonised, so that a level playing field for insolvencies within corporate groups (wherever they may take place) is established. It suggests three main features which are required for any workable solution. First, the system should be prudent and recommend linking tools only when these are needed. Second, clear and objective tests should be used to decide on any proposed mechanism, promoting certainty and clarity in judicial outcomes. Finally, the international scenario should be taken into account as well, in order to prevent possible manipulation by the debtors and use the benefits of treating the corporate group globally. Using these three concepts, the paper examines the various linking tools available, from procedural consolidation to contribution orders. It concludes by asserting that using the proposed concepts to construct the required linking mechanisms will help to achieve effective tools that are broadly accepted and provide an appropriate platform for dealing with corporate groups in their insolvencies.