Fiduciary Duty and the Ex Officio Conundrum in Corporate Governance: The Troublesome Murkiness of the Gubernatorial Trustee's Obligations toward a University

2013 ◽  
Author(s):  
Salar Ghahramani
Keyword(s):  
Corporate Governance ◽  
Fiduciary Duty

Vertical and Horizontal Problems in Financial Regulation and Corporate Governance

2018 ◽  
Author(s):  
Jonathan R. Macey ◽  
Maureen O'Hara
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Insider Trading ◽  
Financial Regulation ◽  
Fiduciary Duty ◽  
Federal Law ◽  
Regulatory Arbitrage ◽  
Holding Companies ◽  
The Third ◽  
And Control

This chapter discusses vertical and horizontal problems in financial regulation and corporate governance. More specifically, it examines three contexts in which efforts to mitigate systemic risk and moral hazard in capital markets and financial institutions clash with long-standing principles of corporate governance. The first issue relates to the so-called “vertical” challenge between financial institutions and the separately incorporated holding companies that own and control them. The second issue relates to the “horizontal” challenge, in which regulatory arbitrage occurs between the banking subsidiaries of complex holding companies and their less-regulated nonbank and shadow bank siblings. The third and final issue deals with the conflict between the conception of fiduciary duty in the federal law of insider trading and the concept of fiduciary duty in state law.

Corporate Governance and Enterprise Governance

2019 ◽  
Author(s):  
Brett McDonnell
Keyword(s):  
Corporate Governance ◽  
Private Equity ◽  
Agency Problem ◽  
The United States ◽  
Fiduciary Duty ◽  
Minority Shareholders ◽  
Potential Conflict ◽  
Unique Problem ◽  
Special Cases ◽  
Enterprise Governance

Corporate governance includes legal, contractual, and market mechanisms that structure decision-making within business corporations. Most attention has focused on corporate governance in large U.S. public corporations with dispersed shareholding. The separation of ownership from control in those corporations creates a unique problem, as shareholders typically have weak individual incentive to monitor managers. Mechanisms that have been developed to address this agency problem include independent directors, fiduciary duty, securities law disclosure, executive compensation, various professional gatekeepers, the market for corporate control, and shareholder activism. In most countries outside the United States, there are few companies with dispersed shareholding. Instead, most companies have a controlling shareholder or group. These companies face a different agency problem, the possibility that controlling shareholders may use their power to gain at the expense of minority shareholders. Enterprise governance refers to mechanisms aimed at related agency problems that occur in closely held companies without publicly traded equity interests. Here too the agency problem typically encountered is the potential conflict between controllers and minority investors, with the added twist that share illiquidity removes an important protection for the minority. Closely held companies have adopted a variety of contractual mechanisms to address these concerns. Other than the important but special cases of venture capital and private equity fund investments, there is less empirical evidence on governance in closely held companies because information is generally much harder to find.

1 Introduction to Private Investment Funds

2018 ◽  
Author(s):  
Spangler Timothy
Keyword(s):  
Corporate Governance ◽  
Hedge Funds ◽  
Financial Services ◽  
Private Equity ◽  
Private Investment ◽  
Fiduciary Duty ◽  
Regulatory Regime ◽  
Investment Funds ◽  
Equity Funds ◽  
Investment Manager

This chapter provides an introduction to private investment funds. It first considers the governance challenge in private investment funds that can be regarded as a need to improve the standard of corporate governance in the legal vehicles that comprise such funds. In particular, it examines the manner in which hedge funds and private equity funds affect the corporate governance of the portfolio companies in which they invest. The chapter proceeds by discussing governance issues arising from the use of partnerships vs. corporations as private fund vehicles, along with the consequences of governance failures and the function of private investment funds. It also analyses legal and regulatory issues surrounding the structuring and operations of private investment funds, the legal and fiduciary duties of the investment manager, and fiduciary duty in the financial services regulatory regime. Finally, it describes alternatives to centralised, top-down regulation of private investment funds.

Economic Policies for Innovative Enterprises: Implementing Multi-Stakeholder Corporate Governance

2021 ◽  
pp. 048661342110266
Author(s):  
Lenore Palladino
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Social Life ◽  
Stakeholder Participation ◽  
The United States ◽  
Jel Classification ◽  
Fiduciary Duty ◽  
Shareholder Primacy ◽  
Innovative Enterprise ◽  
Multi Stakeholder

Large corporations dominate economic and social life in the United States and around the globe. The mainstream corporate governance ideology of “shareholder primacy” claims that the exclusive purpose of a corporation is to generate returns for shareholders, which means that governance decisions should be exclusively in their hands. However, shareholder primacy lacks a theory of how companies innovate, and instead focuses solely on allocation of corporate profits, misunderstanding the relationship of shareholders to the twenty-first-century corporation. The theory of the corporation as an innovative enterprise—engaged in productive innovation by producing higher-quality goods and services for lower unit costs—is an accurate way to understand what makes corporations successful producers. Stakeholder theory from progressive legal scholarship illustrates specific corporate governance institutions that can assist innovation, including fiduciary duty, stakeholder participation in decision making, and equity ownership. This article contributes to the growing literature refuting shareholder primacy by utilizing the theories of the innovative enterprise and multi-stakeholder governance to propose reshaping US corporate governance to better to serve innovation in production and a balance of power in distributional decision making. JEL classification: B50, D21, G30, G35, K22

Effective and Ethical Institutional Investment

1998 ◽  
Vol 4 (5) ◽  
pp. 969-1027 ◽  
Author(s):  
A. Asher
Keyword(s):  
Corporate Governance ◽  
Environmental Impact ◽  
Institutional Investors ◽  
Job Creation ◽  
Fiduciary Duty ◽  
Ethical Standards ◽  
Institutional Investment ◽  
Traditional Scheme ◽  
Conflicting Demands ◽  
Asset Selection

ABSTRACTThose with responsibility for the assets of institutional investors have a fiduciary duty to attempt to earn the best possible risk adjusted returns and to comply with ethical standards. A satisfactory resolution of these, and other, conflicting demands requires a coherent intellectual framework. Such a framework can be based on a traditional scheme that analyses the various components of profit in terms of the requirements of justice. The framework provides a basis for discussing the major challenges facing the institutional investors. These relate to their role in rational asset selection, effective corporate governance, job creation and the minimisation of environmental impact.

Scrutinising the role of members in charitable companies: Lehtimäki and others v Cooper [2020] UKSC 33

2020 ◽  
Author(s):  
Samuel Yee Ching Leung
Keyword(s):  
Corporate Governance ◽  
Fiduciary Duty ◽  
The Law ◽  
Trust Law ◽  
Judicial Treatment

Abstract The law of charities is generally recognised as a branch of the law of trust but, nonetheless, has received special judicial treatment as distinguished from ordinary trust doctrines. In Lehtimäki and others v Cooper [2020] UKSC 33, interesting but difficult questions arose as to how the court should treat the members of charitable companies, and the decision made by the court has significant implications in charity law and trust law. First, the court has recognised the members as fiduciaries to charitable companies, but the boundary of the fiduciary duty needs further judicial clarification. Secondly, the court created an exception to the well-settled “non-intervention principle” in trust law but it calls for scrutiny. Lastly, Lehtimäki has an impact on the corporate governance of charitable companies, since it held that fiduciaries of charitable companies must obey an order made by the court which exercises a discretion of the trustees upon their surrender of discretion.

Directors’ duties in the context of Confucianism

2015 ◽  
Vol 22 (1) ◽  
pp. 37-47
Author(s):  
Charles KN Lam ◽  
S.H. Goo
Keyword(s):  
Corporate Governance ◽  
Common Law ◽  
Fiduciary Duty ◽  
Moral Principle ◽  
Duty Of Care ◽  
Governance System ◽  
Content Type ◽  
The United Kingdom ◽  
Corporate Governance System ◽  
The Law

Purpose – The purpose of this paper is to demonstrate how Confucianism can be applied in the areas that are now governed by company law in the common law system and how it can play a role in improving corporate governance. A gentleman in the context of Confucianism tends to be inclusive and broad-minded in embracing the interest of different stakeholders. In fact, he will balance the interests of shareholders and other stakeholders if there is any inherent conflict and try to achieve a win-win situation. Ultimately, he will run the company not just for profit-making but for social justice and commitment. Design/methodology/approach – The authors examine the leading cases in Hong Kong and the United Kingdom about the law of fiduciary duty and the duty of care and its relationship with Confucianism. In this respect, we review the teachings of the traditional Confucian texts and use Confucianism to fill in the gap where common law rules cannot reach. In addition, we adopt a comparative study approach in examining the law of directors’ duties in Hong Kong, China and the United Kingdom. Findings – It can be seen that the concept of fiduciary duty and duty of care is quite complicated and evolving and always subject to the interpretations of the court from time to time. For fiduciary duty, the term itself is quite conceptual and not immediately available to the general public. But loyalty in the context of Confucianism is a very lively and down-to-earth moral principle. Besides, fiduciary duty is imposed from outside, where directors had no choice but to accept. But loyalty in the context of Confucianism is something inherent and something from within. It is a moral principle that if you deeply understand the meaning of it, you will automatically accept it as a good virtue and your conduct will naturally be guided by such a principle. Confucianism can thereby be used to fill the gap where rules and regulations cannot reach. Confucian business ethics and common law rule should be complementary to each other in the development of a Chinese corporate governance system. Originality/value – This paper is the first of its kind in discussing the relationship between the law of directors’ duties and Confucianism. It argues that Confucianism plays a crucial role in guiding the behavior of the directors and can supplement the abstract principles of directors’ duties in the context of a Chinese corporate governance system.

scholarly journals Corporate Governance and Directors Duty to Act in Good Faith and in the Best Interest of the Company: The Malaysian Experience

2018 ◽  
Vol 7 (4.38) ◽  
pp. 795
Author(s):  
Ahmad Masum ◽  
Shahrul Nizam Salahudin ◽  
Hajah Hanan Haji Abdul Aziz
Keyword(s):  
Corporate Governance ◽  
Good Faith ◽  
Fiduciary Duty ◽  
Effective Management ◽  
Best Interest ◽  
Business Decision ◽  
Modern Corporation ◽  
Corporate Governance Mechanisms ◽  
Legal Term ◽  
Company Directors

Corporate governance is not a legal term. It is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. It has traditionally specified the rules of business decision making that apply to the internal mechanisms of companies. Corporate governance mechanisms have the purpose of monitoring and controlling the management of corporations resulting in more effective management and to enhance shareholder value. The aim of this paper is to examine the duty of company directors to act in good faith and in the best interest of the company by way of making reference to the Malaysian experience. This paper adopts a legal library based research methodology focusing mainly on primary and secondary legal sources. The paper concludes that although directors must exercise their discretion in good faith, the fiduciary duty to act in good faith in the interests of the company is a subjective duty. There is no breach where the directors act in what they honestly believe to be in the interests of the company. The courts are generally reluctant to override the business judgment of directors. The paper recommends that courts should adopt a flexible approach in dealing with directors’ duty to act in good faith and in the best interest of the company. The erosion of a director’s obligation to act in good faith does not bode well for the modern corporation and the economy, and a meaningful interpretation of “not in good faith” is necessary to help halt the erosion.     

Sign in / Sign up

Export Citation Format

Share Document