October 2021

Jehan El-Jourbagy has published Impact of Corporate Response to Controversial Presidential Statements or Policies in 18 DePaul Bus. & Com. L.J. 69. Below is an excerpt from the analysis section that may be of interest to BLPB readers. A version of the paper can be found on SSRN here.

With the possible exception of Tesla and Under Armour responding to the Paris Climate Agreement withdrawal, the data demonstrates that statements, both direct and more nuanced, and silence in regard to Presidential communications have little to no impact on share price. Instead, there are more clear markers, such as when a corporation announces layoffs or a new product, that show a clear dip or rise, but the responses to Presidential communications had a minimal impact.

Diversity and inclusivity are generally universal values for corporations and issuing a statement in opposition to the travel ban could be viewed as consistent with those values. The data, however, does not indicate a correlation between a public statement and share price. Moreover, the data does not reveal any marked difference between companies who issued statements and who remained silent, perhaps suggesting that company leaders may feel free to support or oppose the President without…

As has been widely reported, Third Point/Dan Loeb is arguing that Shell should split its green assets from the brown assets, on the theory that the brown assets are currently undervalued by the market.   According to the Third Point letter:

We believe all stakeholders would benefit from a plan to:

…

Match its business units with unique shareholder constituencies who may be interested in different things (return of capital vs. growth; legacy energy vs. energy transition)

…

This should involve the creation of multiple standalone companies.  For example, a standalone legacy  energy  business  (upstream,  refining  and  chemicals)  could  slow  capex beyond what it has already promised, sell assets, and prioritize return of cash to shareholders (which can be reallocated by the market into low-carbon areas of the economy).  A standalone LNG/Renewables/Marketing business could combine modest cash returns with aggressive investment in renewables and other carbon reduction technologies (and this business would benefit from a much lower cost of capital).  Pursuing a bold strategy like  this  would  likely  lead  to  an  acceleration  of  CO2  reduction  as  well  as  significantly increased returns for shareholders, a win for all stakeholders.

Shell argues – and apparently some of its large investors agree – that…

After serving many years as our amazing leader, Dean Patricia Bennett has announced that she is stepping down as Dean of MC Law at the end of this academic year (May 2021). Dean Bennett has been a great friend and mentor, and she has shepherded our law school with a steady hand through many challenges. She will be leaving the law school in a great position!

MC is beginning its search for our next dean now, and I encourage interested applicants to submit their materials for consideration. The following is a brief description of the desired characteristics of applicants and the responsibilities of the position (and here is a link to more complete information about the position and a how to apply):

The dean must enthusiastically embrace the university’s historic mission and possess the personal qualities to inspire the faculty, students, and alumni to advance the academic program and reputation of MC Law. The dean of MC Law provides the vision to sustain and lead the school to prominence in teaching, scholarship, and service. The dean is responsible for strategic leadership, academic excellence, and administration of MC Law. The successful candidate will be a thoughtful, entrepreneurial, creative, and collaborative leader who sees…

Dear BLPB Readers:

“The Kelley School of Business at Indiana University seeks applications for a full-time, non-tenure-track lecturer position or positions in the Department of Business Law and Ethics, effective fall 2022. The candidate(s) selected will join a well-established department of 28 full-time faculty members who teach a variety of residential and online courses on legal topics, business ethics, and critical thinking at the undergraduate and graduate levels. Lecturers have teaching and service responsibilities but are not expected to engage in research activities. 

To be qualified, a lecturer candidate must have a J.D. degree with an excellent academic record and must demonstrate the potential to be an outstanding teacher, as well as the ability to contribute positively to a multicultural campus. We welcome candidates with all levels of professional experience. We value applicants who have a broad and diverse range of interests and experience and a commitment to teaching classes in both the legal environment of business and practical/applied business ethics. We would be especially pleased to hear from applicants who would contribute to the diversity of our department and help advance the Kelley School’s equity and inclusion initiatives and programs, particularly those whose interests or experiences intersect with issues…

Dear BLPB Readers:

The World Federation of Exchanges (WFE) has published a call for papers for its Clearing and Derivatives Conference 2022:

“The World Federation of Exchanges is organising its 39th Annual Clearing and Derivatives Conference, hosted by the Malta Stock Exchange, to be held in Valetta, Malta on April 27-29, 2022.

We invite the submission of theoretical, empirical, and policy research papers on issues related to the conference topics. Papers accepted will be considered for a special issue of the Journal of Financial Markets Infrastructures (JFMI).” 

The complete call for papers is here: Download WFE 2022 Call for papers

As I have noted previously, LLCs (also known as limited liability companies) are generally required to be represented by counsel in court proceedings.  This is unremarkable, as entities, like corporations and LLCs are deemed, by law, to be separate from their owners. They are often known as “fictional people.” Because they are not natural persons, they cannot (usually) represent themselves pro se and shareholder/member/owners cannot do so for them.

A recent case from the Eastern District of Wisconsin agrees with the well-established principal. Unfortunately, it also follows suit with a less productive prior practice, calling an LLC a limited liability corporation. An LLC, again, is a limited liability company, and it is a separate and distinct entity from a corporation, with its own statute and everything.  Here’s an excerpt:

Leszczynski is representing himself in the case, which he has a statutory right to do. 28 U.S.C. § 1654 (“In all courts of the United States the parties may plead and conduct their own cases personally or by counsel as, by the rules of such courts, respectively, are permitted to manage and conduct causes therein.”). But even though he is president of Rustic Retreats Log Homes, Inc., Leszczynski

…

Last week, I posted about the first of my two published commentaries from the 2020 Business Law Prof Blog Symposium, Connecting the Threads IV.  That earlier post related to my comments on an article written by BLPB co-blogger Stefan Padfield.  The subject?  Public company shareholder proposals–specifically, viewpoint diversity shareholder proposals.

This week, I am posting on the second commentary, History, Hope, and Healthy Skepticism, 22 TRANSACTIONS: TENN. J. BUS. L. 223 (2021).  This commentary offers my observations on co-blogger J. Haskell Murray’s, The History and Hope of Social Enterprise Forms, 22 TRANSACTIONS: TENN. J. BUS. L. 207 (2021).  The main body of the abstract follows.

In this comment, I play the role of the two-year-old in the room. Two-year-old children are well known to ask “why,” and that is what I do here. Specifically, this comment asks “why” in two aspects. First, I ask why we do (or should) care about making modifications to existing social enterprise practices and laws, the subject of Professor Murray’s essay. Second, assuming we do (or should) care, I ask why the changes Professor Murray suggests make sense. My commentary is largely restricted to the benefit corporation form because corporate forms…

Bernard Sharfman has posted an interesting op-ed on Insider (here).  Excerpt:

The idea behind ESG’s impact on climate change is that by moving money away from companies that spew fossil fuels, the funds can effectively make it cheaper for “clean” companies to raise money either through debt or equity offerings and more expensive for “dirty” companies. This sounds good in theory, but does not hold up in reality because the major effects of ESG funds are on the secondary market, where securities are traded but no new money is being raised. As explained by Fancy, investing in ESG funds does not provide new funding for those companies that would help mitigate climate change. “Instead, the money goes to the seller of the shares in the public market.” Basically, ESG products are buying stock in companies from other asset managers, not the underlying businesses, so they aren’t directly funding these firms at all….

If ESG funds do not mitigate climate change, what is the motivation for marketing these funds to investors? The simple answer is that the investment industry, which includes large investment advisers, rating agencies, index providers, and consultants, makes a lot more money when investors purchase shares…

Open Rank – Tenure-Track Professor of Law

The University of New Hampshire Franklin Pierce School of Law (UNH Franklin Pierce), a national leader in legal education with a commitment to inclusion, diversity, and quality engagement for all, is pleased to announce that it is currently seeking applicants for two tenure-track appointments to its full-time faculty starting in August 2022. The law school has a number of curricular needs but is particularly interested in candidates with subject-matter expertise and scholarship in Criminal Law, Criminal Procedure, Evidence, Torts, Business and Commercial Law, Technology Law, and/or Intellectual Property. Both first-time faculty and junior lateral faculty are welcome to apply.

Additional Job Information

Cover letter should be addressed to Professor Courtney Brooks, co-chair of the Faculty Appointments Committee. In your cover letter, please describe your scholarly agenda, why you are interested in this position, and what makes you a strong candidate in light of the required and preferred qualifications described above. In the required Diversity Statement, please address how you have contributed to Diversity, Equity, and Inclusion in your scholarship and work. This position is open until filled. Review of applications will begin immediately. Priority review date: November 19, 2021.

Link to the full

No, not that SPAC.

Actually, I’m thinking about the SPAC I blogged about here, GigCapital3, which merged with Lightning Systems.  It’s the subject of a lawsuit in Delaware Chancery; the allegation is that the de-SPAC transaction was bad for the SPAC investors, and rushed through in order to benefit the sponsor, before the eighteen month deadline passed and the sponsor was forced to liquidate.

There are some claims that the proxy statement was misleading – I’ll get back to that – but one claim is that this was a bad deal, the SPAC shareholders would have been better off if the SPAC had simply liquidated, and it was approved and recommended by the board because they either benefitted personally or had ties to the sponsor. 

Ordinarily, if you claim that a conflicted board approved a bad deal, that claim is reviewed for entire fairness unless it’s cleansed.  And in this case, theoretically any board breaches were cleansed by the shareholder vote in favor of the merger.  To address that, the complaint claims that the SPAC sponsor was actually a controlling shareholder, suggesting that cleansing could only come via MFW protections.

The problem is, it’s really hard to transpose…