Some Thoughts on Control and Liability in Corporate Groups

In the following essay, I will strive to focus on two fundamental questions of contemporary corporate governance. First, the status of corporate groups under corporate law. Second, and relatedly, the question as to the ideal liability regime applicable to corporate groups and the individuals behind them. The discussion is based on my remarks on presentations by Professor Moritz Bälz on ‘The German System of Group Company Control’ and Toshikazu Miyoshi on ‘Shareholder Control over Subsidiaries in Japan’ given as part of the celebration in honour of the 25th anniversary of the University College of London Law Faculty’s Chair of Japanese Law, Professor Hiroshi Oda. Given my status as a non-expert in Japanese law, the reader will forgive me that the observations will be based mostly on Anglo-American law, with any references to Japanese law limited mostly to my knowledge of what Japan does not have: a dedicated law governing corporate groups. But Japan, of course, is not alone in this respect and the governance of corporate groups is a universal question, which is why I hope that this essay will provide some stimulating ideas for lawyers of any background and jurisdiction

Corporate governance that 'works for everyone': promoting public policies through corporate governance mechanisms

Corporate governance mechanisms are traditionally seen as devices for reducing agency costs between shareholders and managers in the context of private ordering. More recently, however, the UK and other governments have embraced regulations in the field of corporate governance as tools through which to impose public responsibilities on corporations. Among others, corporate governance mechanisms have been relied on to equalise wealth distribution, promote equality in the labour force, and pursue environmental goals. This article assesses the justification, utility, and efficacy of using corporate governance to promote public aims. It finds that while it may be appropriate for corporate governance mechanisms to include public goals, it also concludes that the current overreliance on disclosure requirements and on indirect regulation to address societal issues is misguided. Instead, the article suggests that governments should view corporate governance mechanisms with public policy goals as complementary strategies, and not as substitutes, to direct external regulation

Regulatory Analysis in Corporate Law

Drawing from recent experiences in the US, UK, and EU, this article examines regulatory analysis of corporate law policies. It suggests that regulatory analysis, as currently understood and applied in this area, suffers from severe weaknesses. The effects of proposed corporate law policies are often particularly difficult to predict and even more difficult to quantify, which negatively impacts analytical reliability. Moreover, given its nature and interconnections with politics, corporate law is less amenable to purely technocratic assessments than other areas of law. Based on three case studies, the article explores these problems. It outlines a revised ‘procedural’ view, suggesting that regulatory analysis in corporate law should be understood primarily as a process for enhancing information, transparency, and monitoring, independently from specific normative criteria. This leads to several implications. In short, regulatory analysis should combine quantified analysis with leeway for regulatory judgment and focus on increased consultation, critical engagement, review, and transparency as the dominant guiding factors

Executive Compensation in the United Kingdom – Past, Present, and Future

Reviews the development of the UK rules on executive compensation and assesses the current framework. Examines public concerns over the levels of such remuneration, the agency cost approach and key features of the Directors' Remuneration Report Regulations 2002. Details the 2013 reforms, including the three-part directors' remuneration report, evaluates their effectiveness, and considers whether full regulatory intervention is now necessary

Group Company Liability

According to a universal bedrock principle of corporate law, corporations have separate legal personality and limited liability. These principles apply equally to corporate groups. Accordingly, a parent company is normally not liable for legal infractions and unpaid debts of its subsidiaries. In relation to torts and other misconduct committed by corporations, however, the bedrock principles of corporate law are increasingly subject to criticism, in particular where such claims cannot be brought by tort victims due to undercapitalization of subsidiaries, among other problems. While the doctrine of veil piercing may allow for relief in certain scenarios, this practice has fallen out of favour with many courts and the legal requirements for doing so have become increasingly strict. Thus, courts have developed new approaches to holding parent companies liable such as holding the parent directly liable. In view of these significant shifts, this article examines the law and policy considerations governing parent company and – more broadly – group liability. It argues that reform is necessary, which may be found in a model that involves combinations of voting equity ownership-based enterprise liability concepts with modified vicarious liability for corporation

A simple method for the determination of lipid composition of human bile

The Entero-Test, a device for easy sampling of gastrointestinal contents, including bile, has been used for determination of biliary lipid composition. The device consists of a weighted gelatin capsule containing 140 cm of a highly absorbent nylon line. The capsule is swallowed while one end of the string is taped to the face. After 3.5 h, when the line has reached the duodenum, gallbladder contraction is stimulated by intramuscular administration of ceruletide. The line is pulled out, and the last 15 cm are eluted four times in methanol. Total bile acids (by 3 alpha-hydroxysteroid-dehydrogenase assay), individual bile acids (by high performance liquid chromatography), phospholipids (by assay of lipid-soluble phosphorus), and cholesterol (by gas-liquid chromatography) are determined in the eluate. Tests in vitro demonstrated no preferential binding and a good recovery of biliary lipids from the thread. Similar values of biliary cholesterol saturation were obtained by means of duodenal intubation and of the Entero-Test in a series of 12 subjects (r = 0.952). In 5 subjects, individual bile acids were also measured and were found to be similar with both techniques (r = 0.948). When the test was repeated over 3 days in a series of 7 subjects, biliary cholesterol saturation was found to be remarkably reproducible (CV = 7.6%). Thus, the Entero-Test is a convenient technique for the determination of biliary lipid composition, which can be particularly useful in longitudinal studies

Greenbury Report (UK)

The Greenbury Report on Directors Remuneration (1995) (hereafter called the Greenbury Report) was one of the first comprehensive governance codes directly addressing executive and director remuneration. The Greenbury Report was commissioned by the Confederation of British Industry in response to public concerns over recently privatized public utilities and the salaries and bonuses earned by executives, while they implemented job cuts, and service price increases. The Greenbury Report recommended an independent remuneration committee, linking executive pay to corporate financial and operational performance measures, and increased the requirements for disclosure and transparency on directors’ remuneration. However, the credibility of the Greenbury Report was challenged due to the composition of the group; it was not deemed to be independent of the sector it was to investigate, and it was argued that its recommendations did not go far enough. The financial crisis of 2008 highlighted the failure of the Greenbury Report’s recommendations for limiting excessive executive pay. In particular, the Walker Review of the Banking Sector found that performance-based bonus schemes in banking corporations that are supposed to align executive objectives with shareholder objectives increased corporate risk in the period leading up to the financial crisis. In addition, during the crisis, executive pay in large publicly listed corporations (PLCs) continued to increase, while workers’ wages stagnated. Therefore, despite Greenbury’s recommendations, executive pay continued, and still continues, to be a concern for the public and policymakers alike. Nonetheless, improved transparency on remuneration and a greater linking of pay to performance followed from the Greenbury Report and most corporations now include operational measures linked to performance and sustainability

Attitudes and Performance: An Analysis of Russian Workers

This paper investigates the relationship between locus of control and performance among Russian employees, using survey data collected at 28 workplaces in 2002 in Taganrog and at 47 workplaces in 2003 in Ekaterinburg. We develop a measure that allows us to categorize the Russian employees participating in our survey as exhibiting an internal or external locus of control. We then assess the extent to which there are significant differences between “internals” and “externals” in work-related attitudes that may affect performance. In particular, we focus on (1) attitudes about outcomes associated with hard work, (2) level of job satisfaction, (3) expectation of receiving a desired reward, and (4) loyalty to and involvement with one’s organization. In each case we identify where gender and generational differences emerge. Our main objective is to determine whether Russian employees who exhibit an internal locus of control perform better than employees with an external locus of control. Our performance measures include earnings, expected promotions, and assessments of the quantity and quality of work in comparison to others at the same organization doing a similar job. Controlling for a variety of worker characteristics, we find that (1) individuals who exhibit an internal locus of control perform better, but this result is not always statistically significant; (2) even among “internals,” women earn significantly less than men and have a much lower expectation of promotion; (3) even among “internals,” experience with unemployment has a negative influence on performance.http://deepblue.lib.umich.edu/bitstream/2027.42/40144/3/wp758.pd