The Corporate Contract in Changing TimesIs the Law Keeping Up?

The Corporate Contract in Changing TimesIs the Law Keeping Up?

Steven Davidoff Solomon and Randall Stuart Thomas

Print publication date: 2019

ISBN: 9780226599403

Publisher: University of Chicago Press

Abstract

Enormous changes are occurring in our capital markets as shareholder activists become increasingly prominent, institutional investors gain power, and capital markets intermediaries such as proxy advisory firms play increasingly important roles. Corporations, and their boards of directors, are also increasingly uncertain how to respond to these new dynamics and adhere to predefined fiduciary duties to stockholders. The uncertainty has led to schizophrenic responses,, including the increasing use of dual-class stock and wholesale corporate governance changes of uncertain validity designed to fight off or placate certain shareholder groups. We believe that these enormous changes merit a review of corporate law to examine needed adjustments for these revolutionary times. For example, much of the case law governing corporate conduct was created in another time–the 1980s–and designed to meet another disruptive force–hostile takeovers. Is it time to reexamine this case law and create new laws for possibly different threats? Alternatively, statutory laws such as the rules governing appraisal rights seem ripe for a complete review in the wake of appraisal arbitrage. In this book, we bring together many of the leading scholars of Delaware corporate law to examine these issues. The fourteen chapters, and a judicial overview by Delaware Chief Justice Leo E. String Jr., cast light on the current tensions in Delaware law and how Delaware’s courts and legislature should address them.