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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

Back in 2007, North Dakota passed the North Dakota Publicly Traded Corporations Act (ND Act), which became Chapter 10-35 (Publicly Traded Corporations) of the North Dakota Century Code.  The ND Act provided a shareholder friendly alternative to the state’s Business Corporations Act, Chapter 10-19.1 for companies that were so inclined.  (Find the referenced North Dakota laws here.)

Before the state could pass the law, the state constitution needed be amended, and voters approved the necessary changes in 2006 (for more on the history of the ND Act, see pdf here). A North Dakota-based publicly traded corporation is not subject to the ND Act unless it opts-in, essentially by reincorporating in the state. None of the state’s public corporations existing before the ND Act was passed have done so.  

One of the main provisions of the ND Act gave proxy access for purposes of nominating candidates for election to the board of directors for a “qualified shareholder” of the publicly held corporation subject to the law. N.D. Cent. Code 10-35-08.  A qualified shareholder is a person or group of persons holding 5% of the company’s shares authorized to vote for directors, and each person or member of the group must…

In an interview on NBC’s Today Show this morning, BP CEO Tony Hayward stated that BP has “never in any sense sought to downplay this” disaster. This is hardly accurate, in my opinion. On May 18, Hayward said, “Everything we can see at the moment suggests that the overall environmental impact will be very, very modest.”

Although I doubt it, at the time, he may have even been right. However, this is the essence of “downplaying” the disaster. It sure would have sounded better if he had said something like, “While we expect that the overall environmental impact will be very, very modest, we recognize it could be worse. That is why we’re putting all available resources behind getting this thing under control.”

At least now he is calling it an “environmental catastrophe” and I had been thinking that Hayward finally appears to understand the gravity of the situation. After watching the rest of the Today Show interview, I’m not so sure.

Hawyard went on to say that BP’s response to the ongoing Gulf of Mexico oil spill was to “launch[] the largest response effort . . . this country has ever seen to a natural disaster.”

The thing…

Maryland is now the first state with “benefit corporation” legislation, which requires companies formed under the act to consider stakeholder interests as part of the corporate mission. In addition, the law allows the benefit corporation to set a course to pursue specific public benefit purposes.  Examples include seeking carbon neutrality, giving 50% of profits to charity, and using only local suppliers. 

The law was supported and initially drafted by B Lab, which is “a nonprofit organization dedicated to using the power of business to solve social and environmental problems,” and William H. Clark, Jr., a partner at Drinker Biddle and Reath LLP, in Philadelphia.  Not ironically, Mr. Clark was also the primary drafter of the North Dakota Publicly Traded Corporations Act, a shareholder friendly governance option. Mr. Clark was hired in 2005 by a group of shareholder activists, including Carl Icahn, to draft the North Dakota act. 

I am not sure what think about this benefit corporation legislation.  I can understand how expressly stating such public benefits goals might have value and provide both guidance and cover for a board of directors.  However, I am skeptical it was necessary. 

Not to overstate its binding effects today, but we learned from Dodge v.

Thanks to the Business Law Prof Blog for a chance to share some thoughts.   As noted earlier, I teach at the University of North Dakota School of Law where I teach the Business Associations courses, Energy Law and Labor & Employment Law.  My research focuses on energy law and corporate law ( and both, where possible).  

I had the good fortune to arrive in North Dakota shortly after the state passed the North Dakota Publicly Traded Corporations Act, a shareholder friendly corporate law option supported by several shareholder advocates, including Carl Ichan.  There are many views (including mine) on the North Dakota Act (many of them negative, see, e.g., Prof. Bainbridge), but the Supreme Court’s decision in Citizens United raises some new questions and new opportunities for discussion about the role of state corporations laws (including the North Dakota Act). 

Regardless of one’s view of Citizens United, the case fundamentally changed the relationship between shareholders and the company.  That is, to the extent Citizens United changed corporations’ ability to use corporate funds in a political manner, corporations now have a power (at least arguably) not contemplated by their charters.  (It was not really necessary to consider as part of the corporate…