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Back in June of 2024, in connection with the legislative debate in Delaware over the approval of § 122(18) of the General Corporation Law of the State of Delaware (DGCL § 122(18)), I authored a blog post in which I raised concerns about whether there was adequate understanding of the public policy impacts of the proposal to adopt DGCL § 122(18).  I then wrote:

I have one large and important question as Senate Bill 313 continues to move through the Delaware legislative process: do members of the Delaware General Assembly voting on this bill fully understand the large shift in public policy represented by the introduction of DGCL § 122(18)?  If so, then they act on an informed basis and live with the consequences, as they do with any legislation they pass that is signed into law.  If not, we all must work harder to enable that understanding.

Later that month, I authored and published a second blog post that cross-referenced the earlier blog post and offered several policy-related values relevant to the proposal.

Two-and-a-half weeks ago, I found myself affected by similar concerns about the need for serious, thoughtful policy engagement in Delaware.  The occasion was the Gala Celebration…

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I am please to be able to publish this post authored by our former BLPB editor/co-blogger Stefan Padfield.  We miss his voice here, but he is doing good work in his current role, as this post shows!  Thanks for contributing this, Stefan.

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On November 14, 2023, the National Center for Public Policy Research (NCPPR) – where I work – submitted a shareholder proposal to Johnson & Johnson that sought disclosures related to overboarding. (For the uninitiated, overboarding refers to the issue of corporate directors sitting on too many boards but can also be extended, as it is here, to other commitments.) On March 1, 2024, the SEC staff informed J&J that no action would be recommended against the company by the staff if J&J excluded NCPPR’s proposal. This no-action relief arguably represents a change in the long-standing SEC practice of supporting proposals related to overboarding and is thus worthy of further examination. (The underlying documents can be accessed here; the SEC staff also granted no-action relief to Verizon and Lowe’s on the same proposal.)

By way of background, the SEC staff is on record as saying that an overboarding proposal “relates to director qualifications.” Accordingly, the SEC…

Like so many others, I have wanted to say a word about West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 311 A.3d 809 (Del. Ch. 2024).  My angle is a bit different from that of many others.  It derives from my 15-year practice background, my 24-year law teaching background, and my 39-year bar service background.  It focuses on a doctrinal analysis undertaken through a policy lens.  But I want to note here the value of Ann Lipton’s existing posts on Moelis and the related proposed addition of a new § 122(18) to the General Corporation Law of the State of Delaware (DGCL).  Her posts can be found here, here, here, and here.  (Sorry if I missed one, Ann!)  Ben Edwards also published a related post here.  They (and others offering commentary that I have read) raise and touch on some of the matters I address here, but not with the same legislative policy focus.

I apologize at the outset for the length of this post.  As habitual readers know, long posts are “not my style” as a blogger.  This matter is one of relatively urgent legislative importance, however, and I am eager…

It always is a great pleasure to pass along and promote the work of a colleague.  And today, I get to post about the work of a UT Law colleague!  Many of you know Tomer Stein, who came to join us at UT Law back in the summer.  He is such an ideal colleague and, like many of us, has broad interests across business finance and governance.

This post supports a recent draft governance piece, the title of which is the same as this post–Of Directorships: Reconfiguring the Theory of the Firm.  You can find the draft here.  The abstract is included below.

This Article develops a novel account of directorships and then uses it to reconfigure the theory of the firm. This widely accepted theory holds that firms emerge to satisfy the economic need for carrying out vertically integrated business activities under a fiduciary contract that substitutes for the owners’ multiple agreements with contractors and suppliers. As per this theory, the fiduciary contract is inherently incomplete, yet often preferable: while it cannot address all future contingencies in the firm, it will effectively direct all unaccounted-for firm events by placing them under the owners’ purview as a…

It’s been little while since I posted here, but long-time readers of theis blog will not be surprised by the topic.  I am happy to say that, after a lot of work with an exceptional co-author who shares my concerns, Professor Samantha Prince from Penn State Dickinson Law, we have an article documenting the problems with mislabeling LLCs and providing a variety of solutions.  I have been writing on this for nearly 15 years, and unfortunately, not a lot has changed. 

The article, An LLC By Any Other Name Is Still Not A Corporation, is now available on SSRN, here, and has been submitted for publication. In the meantime, we welcome thoughts and comments.  

Here is the abstract: 

Business entities have their own unique characteristics. Entrepreneurs and lawyers who represent them select an entity structure based on the business’s current and projected needs. The differing needs of each business span across myriad topics such as capital requirements, taxation, employee benefits, and personal liability protection. These choices present advantages and disadvantages many of which are built into the type of entity chosen.

It is critically important that people, especially lawyers, recognize the difference between entities such as corporations…

As some of you may have heard, following on the success of the Yada Yada Law School, administered by friend-of-the-BLPB Greg Shill, a group of law faculty are getting together to teach classes in the waystar/ROYCO School of Law this semester.  Classes start this week.  Class meetings will be held weekly, on prescribed days, at 6pm-7pm Pacific/8pm-9pm Central/9pm-10pm Eastern.  The first two sessions are as follows:

Tuesday, January 24:
Professor Diane Kemker
Introduction: Using “Succession” (And Scripted Entertainment) to Teach Law: How and Why
[Assignment: Required: any/all of “Succession,” Seasons 1-3; Optional/recommended: any/all of “Yellowstone,” Seasons 1-5]

Wednesday, February 1:
Professor Megan McDermott
Greg Needs a Lawyer. Is He Getting an Ethical One?
[Assignment: Season 3, Ep. 2]

I will be presenting on February 16 on What the Roys Should Learn from the Demoulas Family (But Probably Won’t), a lesson on corporate law fiduciary duties.

General information is provided in the syllabus included below.  A full schedule of class sessions will be available soon.  I will publish that, too.  I hope many of you will plan on attending.

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WaystarROYCOlogo

SYLLABUS
“Succession and the Law”
Spring 2023

About the course

This is a completely unofficial course for lawyers…

An ambitious question, yes, but it was the title of the presentation I gave at the Society for Socio-Economists Annual Meeting, which closed yesterday. Thanks to Stefan Padfield for inviting me.

In addition to teaching Business Associations to 1Ls this semester and running our Transactional Skills program, I’m also teaching Business and Human Rights. I had originally planned the class for 25 students, but now have 60 students enrolled, which is a testament to the interest in the topic. My pre-course surveys show that the students fall into two distinct camps. Most are interested in corporate law but didn’t know even know there was a connection to human rights. The minority are human rights die hards who haven’t even taken business associations (and may only learn about it for bar prep), but are curious about the combination of the two topics. I fell in love with this relatively new legal  field twelve years ago and it’s my mission to ensure that future transactional lawyers have some exposure to it.

It’s not just a feel-good way of looking at the world. Whether you love or hate ESG, business and human rights shows up in every factor and many firms have built…

I’m doing what may seem crazy to some- teaching Business Associations to 1Ls. I have a group of 65 motivated students who have an interest in business and voluntarily chose to take the hardest possible elective with one of the hardest possible professors. But wait, there’s more. I’m cramming a 4-credit class into 3 credits. These students, some of whom are  learning the rule against perpetuities in Property and the battle of the forms in Contracts while learning the business judgment rule, are clearly masochists. 

If you’re a professor or a student, you’re coming close to the end of the semester and you’re trying to cram everything in. Enter Elon Musk. 

I told them to just skim Basic v. Levenson and instead we used Rasella v. Musk, the case brought by investors claiming fraud on the market. Coincidentally, my students were already reading In Re Tesla Motors, Inc. Stockholder Litigation because it was in their textbook to illustrate the concept of a controlling shareholder. Elon’s pursuit of Twitter allowed me to use that company’s 2022 proxy statement and ask them why Twitter would choose to be “for” a proposal to declassify its board, given all that’s going on. Perhaps…

In my Corporate Finance class this morning, as a capstone experience, I asked my students to read and be prepared to comment on an article I wrote a bit over a decade ago.  The article, Federal Interventions in Private Enterprise in the United States: Their Genesis in and Effects on Corporate Finance Instruments and Transactions, 40 Seton Hall L. Rev 1487 (2010), offers information and observations about the U.S. government’s engagements as an investor, bankruptcy transformer, and M&A gadfly/matchmaker in responding to the global financial crisis.  A discussion of the article typically leads to a nice review of several things we have covered over the course of the semester.  I have a number of topics I want to ensure we engage with, but I allow some free rein.

Today, one of our interesting bits of discussion centered around the possibility that the U.S. government became a controlling shareholder for a time due to the nature of its high percentage ownership interest in, for example, AIG.  This was not directly addressed in my article.  Nevertheless, we set into a discussion of the substance, citing to Sinclair Oil Corp. v. Levien, one of Josh Fershee’s favorite cases.  We also…