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Notes American Corporate LawIntroduction
Amerikaans recht (common law (jurisprudentie gebaseerd))
1. Recht van afzonderlijke staten = statenrecht (vennootschapsrecht)
2. Federaal recht = voor alle staten (effectenrecht, beursgenoteerde vennootschappen voornamelijk)
à Registratierecht, handel op de beurs, jaarlijkse rapportageplicht.
Agency law = recht van vertegenwoordiging
à Accent op of degene die vertegenwoordigd handelt in het belang van de principaal (conflict of
interest). Bestuurder wordt gezien als de agent en de vennootschap en aandeelhouders als de principaal,
dus bestuurder moet handelen in het belang van de vennootschap of aandeelhouders.
à Fiduciaire verplichtingen = wordt gehandeld in het belang van de principaal. Naar
Amerikaans recht hebben de 1) the board, 2) the officers (managementteam), 3)
grootaandeelhouder jegens de minderheidsaandeelhouder.
1. Duty of care (werk serieus genomen, voldoende aandacht en zorg tijdens de
handelingen)
2. Duty of loyalty (verplichtingen goed nagekomen)
a. Zelfbediening (conflict of interest);
b. Corporate opportunity.
à In feite zijn de verplichtingen jegens de corporation in het geding, dus
vaak dan richting de aandeelhouders.
• Board of directors. Houdt voornamelijk toezicht op de officers, even een soort “oversight” taak op het
management. Hierbij een onderscheid tussen ‘inside’ (werken in de onderneming) en ‘outside’ (alleen
bijeen in een vergadering, zo tussen de 6-8 keer per jaar) board directors.
• (Executive) officers. Het management, de dagelijkse leiding van de onderneming. De CEO benoemd en
ontslaat de officers in principe. CEO en CFO zitten vaak ook in de board. Voorheen CEO veel invloed,
maar tegenwoordig CEO minder en veelal de board nu een onafhankelijk karakter.
• Aandeelhouders. Alleen specifieke bevoegdheden die aan hen zijn toegekend; benoeming en ontslag
van de directors, bylaws kunnen worden aangepast, fundamentele wijzigingen onderneming (meer dan
2:107a BW) à Aandeelhoudersvergadering vaak meerderheid uitstaande aandelen moet zijn
vertegenwoordigd in de vergadering. Vaak is er een quorumeis. Veelal ten aanzien van stemmen
volmachten afgegeven.
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, Lecture 1 – Trends and challenges
Challenges for the global economy are i.e. climate change, sustainability goals, social and ecological aspect.
à In the US there is a corporate purpose debate: In principal the goal is shareholder wealth
maximizing, but nowadays a shift to also show how to make a positive contribution to society, not only
the financial aspect. Companies must benefit all of their stakeholders, including shareholders,
employees, customers, and the communities in which they operate. Examples of the shift/trends are:
o High-level organizations of CEOs and business elites have issued statements supporting
“stakeholder capitalism; This approach to company responsibilities suggests that companies
should be run for the benefit of all of their stakeholders, including customers, employees,
suppliers, communities, and shareholders:
§ Business Roundtable: Business Roundtable Redefines the Purpose of a Corporation to
Promote ‘An Economy That Serves All Americans.’
§ The British Academy: “The purpose of business is to solve the problems of people
and planet profitably, and not profit from causing problems.”
§ The World Economic Foundation: “The purpose of a company is to engage all its
stakeholders in shared and sustained value creation. In creating such value, a
company serves not only its shareholders, but all its stakeholders – employees,
customers, suppliers, local communities and society at large. The best way to
understand and harmonize the divergent interests of all stakeholders is through a
shared commitment to policies and decisions that strengthen the long-term prosperity
of a company.”
o Putting pressure on managements and boards to pay attention to environmental and social
“sustainability.” The term sustainability, much bandied about, generally means acting with
some recognition of global environmental limits, the importance of healthy social foundations
for thriving economies, and some concern for future generations; These investors buy 2 to 3 %
of the shares of a public company, which can require billions of dollars of investment, and then
put pressure on those companies to prioritize short-term strategies or transactions (while the
management has a long-term perspective).
o Digital transformation. The technologies that are expected to have a significant impact on
corporate governance are blockchains and distributed ledgers (see literature p. 1.3 for how
technology can improve certain things).
à Reasons why this is happening that shareholders are being more engaged and
incorporation of ESG matters in their voting, agenda etc. is:
1) Intangibles: more of a company’s value today is through intangibles and no longer hard assets,
these are more effected by ESG matters;
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, 2) Many large investors see ESG matters as financial risks and that there are no systems to
integrate these risks, they are not priced-in;
3) At least clients are asking to incorporate ESG matters and sustainable data.;
4) A dramatic reconsideration during the hostile takeover era of the 1980s;
5) Modern business developments – the globalization of the economy and the increasing
importance of digital currencies, artificial intelligence, venture capital, franchising, supply
chains and cross-border governance structures;
6) There has been an explosion in situations involving agency law, as fundamental principles of
the common law are adapted to the modern regulatory state, to global supply chains, to
franchising arrangements, and to global enterprises using hundreds of independently
established companies, called subsidiaries, in each country in which the firm does business.
à SEC responding to all of this:
§ Enforcement actions on greenwashing
§ Request for public input for more climate disclosure; SEC brought out 500-page rule
new climate disclosure, and published on March 6, 2024, the rule was published (this
is now in litigation, i) has the SEC the authority, ii) regulation economic effect then it
has new authority of congress.
à The SEC rules are based on soft law:
1. Recommended Climate-Related Financial Disclosures (TCFD):
framework for climate disclosure. The rules are about i) governance, the
organization’s governance around climate-related risks and opportunities,
ii) strategy, the actual and potential impacts of climate-related risks and
opportunities on the organization’s business, strategy and financial
planning, iii) risk management, the processes used by the organization to
identify, assess, and manage climate-related risks, iv) metrics and targets,
the metrics and targets used to assess and manage relevant climate-
related risks and opportunities.
2. Greenhouse Gas Protocol: framework to create standards that identifies
three kinds of greenhouse gas emissions that can be related to company’s
actions: scope 1) emissions from the company’s own operations, directly
under the corporations control; scope 2) emissions that are caused by the
energy that the company purchases, energy and transportation; and scope
3) emissions from the company’s supply chains, includes the value chain
that it’s distribution network and it’s sales of its products and consumers
use of its product (final rule if it survives litigation have scope 1 and 2,
scope 3 is out).
à All the foregoing has led to an anti-ESG pushback: large investment funds and investors had been talking a
lot about integration of ESG data into their portfolios and voting, they recognize that this data is significant to
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, their financial outcome/financeable valuable information. A lot of these investors ask for a net-zero transition
plan. The other side leads the anti-ESG pushback, its mostly the republican state and federal officials led by
Texas and West Virginia (a lot of gas and oil), it has some of effect because the votes on resolution have been
down by using legal arguments such as greenwashing/misleading disclosures or misstatement.
Problem 1-4 (Y): What, if anything, do these simple facts indicate about the strengths of the shareholder v. stakeholder view of
directors’ fiduciary duties? What policy issues do these facts suggest, and how do you evaluate them?
à The issue of promoting a more stakeholder view of directors’ duties has emerged as a complex and contentious
topic within corporate governance in recent years. The stakeholder view advocates that companies should be run for the benefit
of all of their stakeholders, encompassing customers, employees, suppliers, communities, and shareholders. In contrast, the
shareholder view, which is most of the time the dominant view in the United States, posits that companies should be run for the
benefit of solely their shareholders. Consequently, proposals that promote a more stakeholder view have been met with
arguments by critics.
i) The first addressed argument is the risk of undermining accountability. Skeptics contend that advancing
stakeholders’ interests might lead to obscured self-interested actions by directors, resulting in conflicts of interest, a lack of
transparency, and reduced trust in decision-making processes. While acknowledging this risk, it is important to note that
adopting a stakeholder view does not inevitably undermine accountability. One can ensure that directors remain accountable
through proper governance mechanisms, transparent reporting, and strong oversight. An existing rule that could serve as an
effective safeguard against potential self-interested actions by directors is the right of shareholders to vote on fundamental
transactions, such as mergers. DGCL §251(c). In this way, shareholders can prevent directors from acting in their own self-
interests when these actions involve fundamental transactions. Another resource available to shareholders is the right to elect
or remove directors from the board. Model Act §8.03(c) and §8.08(a); DGCL §141(d), §211(b) and §216 and §141(k). Through
this mechanism, shareholders possess the ability to ensure that the board comprises directors who do not act in their own self-
interests and the ability to exert pressure on current directors, urging them to refrain from acting in their own self-interests.
ii) The second addressed argument by critics is the legal impermissibility and the breach of fiduciary duty associated
with acting in stakeholders’ interests. Traditionally, the United States corporate law has emphasized shareholder primacy, as
evidenced by directors owing fiduciary duties to the corporation and its shareholders. Critics argue that broadening the focus
to encompass a wider range of stakeholders could be seen as conflicting with these established legal duties. However, the legal
landscape is evolving, with courts increasingly acknowledging the legitimacy of stakeholder interests in certain situations,
especially when it aligns with long- term value creation. In Unocal Corp. v. Mesa Petroleum Co. for example, the court referred
to the directors’ “fundamental duty and obligation to protect the corporate enterprise, which includes stockholders”. This
observation affirmed that a corporation is something more than a mere aggregation of its shareholders. Additionally, many
companies have embraced Environmental, Social, and Governance (ESG) principles voluntarily. These principles acknowledge
that sustainable and responsible practices can contribute to a company’s success, ultimately benefiting shareholders as well.
In this context, one could argue that adopting a more stakeholder view does not essentially entail a breach of fiduciary duties
owed to shareholders. So, while there may be legal challenges, it is not inherently impermissible or a breach of fiduciary duty
for directors to consider stakeholders’ interests. The stakeholder view is even being more frequently applied in contemporary
corporate governance practices. Instead, it requires a balanced and judicious evaluation of how those interests can be
integrated to enhance the company’s overall performance.
iii) Subsequently, as for my view on how directors’ duties should be defined, I believe a balanced approach is
necessary. We should embrace a more nuanced and holistic perspective that considers both perspectives as interconnected and
mutually reinforcing. Incorporating stakeholders’ interests while still being mindful of shareholders is crucial. Directors should
aim to create long-term sustainable value for the company and its constituents. They can achieve this by adopting responsible
business practices, considering environmental and social impacts, and engaging with stakeholders to understand their
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