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Joan Heminway

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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

Regular readers know that I have blogged repeatedly about my opposition to the US Dodd-Frank conflict minerals rule, which aims to stop the flow of funds to rebels in the Democratic Republic of Congo. Briefly, the US law does not prohibit the use of conflict minerals, but instead requires certain companies to obtain an independent private sector third-party audit of reports of the facilities used to process the conflict minerals; conduct a reasonable country of origin inquiry; and describe the steps the company used to mitigate the risk, in order to improve its due diligence process. The business world and SEC are awaiting a First Amendment ruling from the DC Circuit Court of Appeals on the “name and shame” portion of the law, which requires companies to indicate whether their products are DRC Conflict Free.” I have argued that it is a well-intentioned but likely ineffective corporate governance disclosure that depends on consumers to pressure corporations to change their behavior.

The proposed EU regulation establishes a voluntary process through which importers of certain minerals into the EU self-certify that they do not contribute to financing in “conflict-affected” or “high risk areas.” Unlike Dodd-Frank, it is not limited to Congo.

“Laws, like sausages, cease to inspire respect in proportion as we know how they are made.” — John Godfrey Saxe

This is a brief legislative update on the progress of Tennessee’s current bills, introduced in the house (HB0767–amendment not yet filed) and senate (SB0972), to institute the benefit corporation as a distinct for-profit business corporation in the State of Tennessee.  The links provided are to the current versions of the bill, which reflect a significant amendment, as described below.

As you may know from my prior posts (including here and here), I am a benefit corporation skeptic.  Please read those posts for details.  And within the Tennessee Bar Association (TBA) Business Law Section Executive Council and Business Entity Study Committee (our state bar committee that vets changes to Tennessee business associations and other business laws), I am not alone.  We have rejected bills of this kind several times over the past few years when the matter has been put to us for review by the TBA.  This year was no different.  We opposed the benefit corporation bills that were introduced in Tennessee this year, too.

What was different this time around, was that the folks at B Lab had gotten the attention of the Chamber of Commerce and Industry in Tennessee, who appear(ed) to have some misunderstandings about the current state of Tennessee corporate governance law and came to push for adoption of the bill in committee in both houses of the legislature. Given that we were late to the party and that the members of our TBA Council and Committee are very busy lawyers, our efforts to re-educate members of the relevant committees were not as effective as we would have liked.  But we ultimately were afforded two weeks to attempt to write an amended bill–one that better reflected Tennessee law and norms.

Now, any of you who have worked on a project like this before know that two weeks is not enough time to do a professionally responsible job in spotting and tracking down all of the issues that the introduction of a new business form routinely and naturally raises.  Heck.  We couldn’t even get all the constituents around the table that we would want around the table to debate and review the legislation in two weeks!  [It seems hardest to find a plaintiff’s bar lawyer to sit in with us, but we found a great one for our recent work on the Tennessee Business Corporation Act (TBCA).]  Our requests for more time to work on the proposed legislation were, however, rejected.

So, we set out to make a better sausage . . . .

It’s that time of year again where I have my business associations students pretend to be shareholders and draft proposals. I blogged about this topic last semester here. Most of this semester’s proposals related to environmental, social and governance factors. In the real world, a record 433 ESG proposals have been filed this year, and the breakdown as of mid-February was as follows according to As You Sow:

Environment/Climate Change- 27%

Political Activity- 26%

Human Rights/Labor-15%

Sustainability-12%

Diversity-9%

Animals-2%

Summaries of some of the student proposals are below (my apologies if my truncated descriptions make their proposals less clear): 

1) Netflix-follow the UN Guiding Principles on Business and Human Rights and the core standards of the International Labour Organization

2) Luxottica- separate Chair and CEO

3) DineEquity- issue quarterly reports on efforts to combat childhood obesity and the links to financial risks to the company

4) Starbucks- provide additional disclosure of risks related to declines in consumer spending and decreases in wages

5) Chipotle- issue executive compensation/pay disparity report

6) Citrix Systems-add board diversity

7) Dunkin Donuts- eliminate the use of Styrofoam cups

8) Campbell Soup- issue sustainability report

9) Shake Shack- issue sustainability report

10) Starbucks- separate…

In connection with the current legislative debate on benefit corporations in Tennessee (which has been gathering momentum since I last wrote on the topic), I have repeatedly asked about the impetus for the bill.  Of course, there is the obvious “push” for benefit corporation legislation by the B Lab folks, who have gotten the ear of folks at the Chamber, convincing them that the legislation is needed in Tennessee to protect social enterprise entities from the application of a narrow version of the shareholder wealth maximization norm (a conclusion that I dispute in my earlier post).  But what else?  What real parties in interest in Tennessee, if any, have expressed a desire that Tennessee adopt this form of business entity?

There is anecdotal information from one venture attorney that some Tennessee entrepreneurs have indicated a preference for the benefit corporation form and have specifically requested that their business be organized as a Delaware benefit corporation.  Leaving aside the Delaware versus Tennessee question, why are these entrepreneurs looking to organize their businesses as benefit corporations?  Where does this idea come from?

Earlier this week I went to a really useful workshop conducted by the Venture Law Project and David Salmon entitled “Key Legal Docs Every Entrepreneur Needs.” I decided to attend because I wanted to make sure that I’m on target with what I am teaching in Business Associations, and because I am on the pro bono list to assist small businesses. I am sure that the entrepreneurs learned quite a bit because I surely did, especially from the questions that the audience members asked. My best moment, though was when a speaker asked who knew the term “right of first refusal” and the only two people who raised their hands were yours truly and my former law student, who turned to me and gave me the thumbs up.

Their list of the “key” documents is below:

1)   Operating Agreement (for an LLC)– the checklist included identity, economics, capital structure, management, transfer restrictions, consent for approval of amendments, and miscellaneous.

2)   NDA– Salmon advised that asking for an NDA was often considered a “rookie mistake” and that venture capitalists will often refuse to sign them. I have heard this from a number of legal advisors over the past few…

Today, part of the assignment for my Securities Regulation students was to read a chapter in our casebook and, as assigned by me, come to class prepared to teach in  a three-to-five-minute segment a part of the assigned reading.  The casebook is Securities Regulation: Cases and Materials by Jim Cox, Bob Hillman, and Don Langevoort.  The chapter (Chapter 7, entitled “Recapitalization, Reorganizations, and Acquisitions”) covers the way in which various typical corporate finance transactions are, are not, or may be offers or sales of securities that trigger registration under Section 5 of the Securities Act of 1933, as amended (the “1933 Act”).  I have used this technique for teaching this material before (and also use a student teaching method for part of my Corporate Finance course), and I really enjoy the class each time.

I find that the students understand the assigned material well (having already been through a lot of registration and exemption material in the preceding weeks) and embrace the responsibility of teaching me and each other.  I am convinced that they learn the material better and are more engaged with it because they have had to read it with a different intent driven by a distinct…

Greetings from Lyon, France, where I am presenting a work-in-process at an international conference on microfinance and crowdfunding organized by the Groupe ESC Dijon Borgogne (Burgundy School of Business) Chaire Banque Populaire en Microfinance.  As the only legal scholar, the only U.S. researcher, and the only presenter with an orange-casted arm (!), I stand out in the crowd.  So what is a one-armed U.S. law professor like me, with limited French language skills, doing in a place like this on my spring break?  Among other things, I am:

  • Broadening my academic and practical view of the world of business finance;
  • Making new connections, personally and substantively;
  • Getting different, pointed feedback on my ongoing crowdfunding work; 
  • Offering assistance and new perspectives (U.S.-centric, legal, regulatory, etc.) to scholars and industry participants from a spectrum of countries; and
  • Securing potential partners and resources for future projects.

Although most of the participants speak English, I am still living at the edge of my socio-lingual comfort zone.  It helps that I am an off-the-charts extrovert.  Regardless, however, the benefits of attendance have been immediate and meaningful.

Questions for our readers:

Do you participate in interdisciplinary research conferences?  

If not, why not?  

If so…

As someone who likes to write from time to time on women on corporate boards, I sometimes feel like I am writing about last year’s “news.”  In other words, not much seems to sound new.  So, I am always in search of a novel problem to explore or a different vantage point through which fresh insights can be obtained.

My most recent contribution in this regard is a symposium piece that looks at women on boards through the lens of the literature on crowds–whether they be mad or wise.  Boards can be crowds (albeit small ones), based on prevailing definitions.  Moreover, crowd behaviors can be gendered.  So, it seemed like a reasonable idea.

The fruit of this labor is my most recent article, Women in the Crowd of Corporate Directors: Following, Walking Alone, and Meaningfully Contributing.  The substantive portion of the abstract is as follows:

With the thought that new perspectives often can be helpful in addressing long-standing unresolved questions, this article approaches an analysis of women’s roles on corporate boards of directors from the standpoint of crowd theory. Crowd theory — in reality, a group of theories — explains the behavior of people in crowds. Specifically, this article…

In response to my earlier post entitled “So . . . You Think You Want a Business Law Job . . . .,” a reader commented as follows:

I have also seen the shift of students in my college going from other areas of law into corporate law. . . . What advice in general would you offer up? Is it a good, secure job market to want to get into in this economy?

My initial response was that, ” . . . in general I would not suggest that anyone become a lawyer of any kind merely because it is a good job in this or any other economy. You should want to be a lawyer before venturing off to law school.”  

Bottom line: the market for business law or any other legal jobs is not a uniformly good, secure job market.  Law school is not and never has been a “job ticket” in any case.  But those who have a desire to be business lawyers and work intelligently and diligently at finding a job in business law typically will be business lawyers.  I undertook to post further this week.

So, what else shall I say to pre-law students and law students interested in business law?  I will be relatively brief here and in my posts for a number of weeks since I am typing with one hand (my left, non-dominant hand) due to a broken right wrist–an extra-articular distal radius, or Colles’, fracture.  But I invite further observations in the comments.

This just in from Steven Davidoff Solomon:

Berkeley is looking to fill a one-year (possibly w/renewal) research fellowship position at the Berkeley Center for Law, Business, and the Economy.  Looks like  great opportunity for some of our readers.  Early applications are encouraged, so get right on it!