Photo of Joan Heminway

Joan Heminway

Subscribe to Joan Heminway's Posts

Professor Heminway brought nearly 15 years of corporate practice experience to the University of Tennessee College of Law when she joined the faculty in 2000. She practiced transactional business law (working in the areas of public offerings, private placements, mergers, acquisitions, dispositions, and restructurings) in the Boston office of Skadden, Arps, Slate, Meagher & Flom LLP from 1985 through 2000.

She has served as an expert witness and consultant on business entity and finance and federal and state securities law matters and is a frequent academic and continuing legal education presenter on business law issues. Professor Heminway also has represented pro bono clients on political asylum applications, landlord/tenant appeals, social security/disability cases, and not-for-profit incorporations and related business law issues. Read More

Oh boy. A 2010 case just came through on my “limited liability corporation” WESTLAW alert (that I get every day).  This one is a mess. Recall that LLCs are limited liability companies, which are a separate entity from partnership and corporations, despite often having some similar characteristics to each of those. 

CBOE, along with the six other exchanges, has an interest in OPRA but OPRA was not incorporated as a separate legal entity until January 1, 2010, when it incorporated as a limited liability corporation. Id. (describing the restructuring of OPRA following its incorporation). At the time this lawsuit was filed, however, there remains a question as to whether there were any formalities in place to separate OPRA from CBOE operations. In short, the parties dispute whether, at the time the suit was filed, OPRA operated independently or was operated jointly with CBOE.
*2 To this end, Realtime asserts that the lack of any corporate governance at OPRA [an LLC], such as Articles of Association or a partnership agreement, renders OPRA “simply a label with no formal business structure.” RESPONSE at 2, 4 (citing SEC RELEASE at 2) (“OPRA was not organized as an association pursuant to Articles of

…

I often use my space here to complain about courts and lawmakers being imprecise with regard to limited liability companies (LLCs).  Today, I will focus on my home state of West Virginia, which recently passed a bill to support (and provide loans for cooperatives designed to provide) much-needed broadband development in the state. I applaud the effort, but the execution was not great.  

Here’s an example from the West Virginia Code: 

12-6C-11. Legislative findings; loans for industrial development; availability of funds and interest rates.

. . . .

(f) The directors of the board shall bear no fiduciary responsibility with regard to any of the loans contemplated in this section.

This applies to a cooperative board that takes on loans for broadband projects.  But it doesn’t make sense. I think they used “fiduciary” when they meant “financial,” as I assume they meant to say that the board members of the organization would not have “financial liability.”  I am pretty sure they did not mean to remove fiduciary duties.  Then again, who knows. Maybe they are fine with the directors using loans for personal vacations.  (Just kidding. I am pretty sure they’d care.)  I know that in finance, the term fiduciary…

In recent weeks, the Tennessee General Assembly has been wrestling with a bill (house and senate versions here and here) that changes the governing board of The University of Tennessee (UT), where I teach.  Non-controversially, the UT FOCUS Act, as it is commonly called (Focusing on Campus and University Success at UT), decreases the size of UT’s board of trustees.  Currently, the board of trustees comprises 27 members–five ex officio members and 22 appointed members.  Tenn. Code Ann. § 49-9-202.  Most would agree that 27–or even 22–is a relatively unmanageable number of board members, without good cause, for most governing boards.  But the composition requirements for the board (with this newly reduced number of trustees) are where the rubber hits the road.

The Bill Summary for the measure, as reported on the Tennessee General Assembly website, succinctly describes the current board composition, which is established by statute.  I include the relevant text from the Bill Summary here.

The ex officio members are: the governor, the commissioner of education, the commissioner of agriculture, and the president of the university, who are voting members; and the executive director of the Tennessee higher education commission (THEC), who is a nonvoting member. Of the 22 additional members: one must be appointed from each congressional district (presently there are nine congressional districts); two additional members each must reside in Knox and Shelby counties; one additional member each must reside in Weakley, Hamilton, and Davidson counties; one additional member must reside in Anderson, Bedford, Coffee, Franklin, Lincoln, Moore or Warren County; one additional member is a non-Tennessee resident; two additional members, one voting and one non-voting, must be members of the faculty of the University of Tennessee who served as faculty senate president, or the equivalent, at a University of Tennessee institution during the academic year immediately preceding appointment as a trustee, appointed according to a sequence detailed in present law; and two additional members who are students at a UT institution, one voting and one nonvoting, appointed from the various institutions on a rotating basis pursuant to present law.

Present law requires that at least one third of the appointive members be members of the principal minority political party in the state and that at least one third of the appointive members must be alumni of the University of Tennessee. All appointive members are appointed by the governor subject to confirmation by the senate, but appointments are effective until adversely acted upon by the senate. In making appointments to the board of trustees, the governor must strive to ensure that at least one person appointed to serve on the board is 60 years of age or older, and that at least one person appointed to serve on the board is a member of a racial minority. Present law requires that the membership of the board reflect the percentage of females in the population generally. Appointive members serve terms of six years beginning June 1 of the year of appointment, and members are eligible to succeed themselves.

(emphasis added)  Of particular importance for purposes of this post are the italicized portions of the description.  The UT FOCUS Act calls for no faculty or students–no state employees altogether–on the board as voting or non-voting members.  I am concerned about this aspect of the bill because of its effect on the expertise of UT’s board.  No amount of board orientation can imbue board members with the knowledge that faculty and students have.

The apparent tension here is between the value of that expertise–boots-on-the-ground knowledge of shared governance, curriculum design and execution, the role of co-curricular and extra-curricular programming, faculty/staff/student relations, and other matters unique to current participation in the university’s campus communities–and a perceived conflict of interest (since faculty and students would be effectively governing themselves).

The Association of Governing Boards of Universities and Colleges (AGB) and the American Association of University Professors (AAUP) agree that university governing boards generally lack knowledge of faculty affairs.  A 2017 publication of the AGB notes in this regard:

Participants in all three categories in our listening sessions (board members, presidents, and faculty) acknowledged—and indeed emphasized—that there is a huge information gap between boards and faculty. They noted that board members often have very little— if any—understanding of the nature of faculty work, of the nature of academic culture, of the real meaning of academic freedom, and of the history and importance of faculty self-governance and the faculty role in shared governance. . . .

The AAUP website features a report on a 2012 Cornell University study of faculty trustees that includes a related observation.

Discussions of “best practices” for governing boards consistently cite improved relationships with the faculty as one of the characteristics of highly effective boards. We are in an era of increasingly “activist” boards, leading to significant mutual distrust between boards and faculty members and creating an impetus for improving faculty-board relations.

As a former faculty senate president at UT Knoxville, I understand and appreciate all of this.

I am committed to introducing my business law students to business law doctrine and policy both domestically and internationally.  The Business Associations text that I coauthored has comparative legal observations in most chapters.  I have taught Cross-Border Mergers & Acquisitions with a group of colleagues and will soon be publishing a book we have coauthored.  And I taught comparative business law courses for four years in study abroad programs in Brazil and the UK.  

In the study abroad programs, I struggled in finding suitable texts, cobbling together several relatively small paperbacks and adding some web-available materials.  The result was suboptimal.  I yearned for a single suitable text.  In my view, texts for study abroad courses should be paperback and cover all of the basics in the field in a succinct fashion, allowing for easy portability and both healthy discussion to fill gaps and customization, as needed, to suit the instructor’s teaching and learning objectives.

And so it was with some excitement–but also some healthy natural skepticism–that I requested a review copy of Corporations: A Comparative Perspective (International Edition), coauthored by my long-time friend Marco Ventoruzzo (Bocconi and Penn State) and five others (all scholars from outside…

As you may recall, I posted back in January on Emory Law’s upcoming biennial conference on transactional law and skills, “To Teach is to Learn Twice:  Fostering Excellence in Transactional Law and Skills Education.” The conference is scheduled for Friday, June 1, 2018 and Saturday, June 2, 2018. 

I learned earlier today that the conference organizers are offering one last chance for interested transactional law and skills instructors to submit a proposal and have extended the proposal deadline through Friday, March 30, 2018.  They do ask that folks submit proposals as soon as possible.  Even if you do not submit a proposal, you can register for the conference now.   

Our friends at Emory Law desire to reach far and wide to embrace the whole community of transactional law and skills educators, so please pass this on and encourage your colleagues–including new teachers and adjunct professors (both able to participate at reduced registration fees)–to attend.  I plan to be there again, although I can only attend the first day of the conference this year.  I always learn something at these conferences.  They attract a great, thoughtful community of teachers and scholars.

…

…