The Next Big Thing: Flexible Purpose Corporations

DANA BRAKMAN REISER

Over the past few years, jurisdictions across the country have enacted specialized organizational forms to house social enterprises. Social enterprises are entities dedicated to a blended mission of earning profits for owners and promoting social good. They are neither typical businesses, concentrated on the bottom line of profit, nor traditional charities, geared toward achieving some mission of good for society. Their founders instead see value in blending both goals.

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Putting New Sheets On A Procrustean Bed: How Benefit Corporations Address Fiduciary Duties, The Dangers Created, And Suggestions For Change

J. WILLIAM CALLISON

In Greek myth, Procrustes, a bandit son of Poseidon, had a one-size-fits-all iron bed on which he invited passers-by to spend the night. Once his guests were asleep, he used his ironsmith’s hammer to stretch them to fit the bed. If a guest proved too tall, Procrustes would use shears to amputate the excess in order that the body would fit the bed. Ultimately, Theseus, who killed the Minotaur and escaped the Maze using Ariadne’s thread, killed Procrustes by compelling him to fit his own body to his bed.

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Choose Your Own Master: Social Enterprise, Certifications, And Benefit Corporation Statutes

J. HASKELL MURRAY

In the wake of the most recent financial crisis, interest in social enterprise has increased exponentially. Disillusioned with the perceived shareholder wealth focus of corporate law, entrepreneurs, investors, customers, and governments have become more receptive to new paradigms. In the past four years, nineteen states have passed at least one of five different types of social enterprise statutes and many additional states are considering similar legislation. Focusing primarily on the benefit corporation form, this Article examines three main issues: (1) whether social enterprise statutes are potentially useful; (2) how social enterprise law can be improved; and (3) whether the social enterprise movement will be sustainable.

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D&O Insurance: A Primer

LAWRENCE J. TRAUTMAN

KARA ALTENBAUMER-PRICE

It is unquestioned in today’s business and litigation climate that corporate officers and directors face significant exposure based simply on their roles and titles, no matter how effectively, carefully, or in good faith their decisions are made.  Director and officer insurance, often called D&O, is designed to protect executives, outside directors, as well as the companies they serve against liability arising from actions taken in the course of doing business.

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The Chinese Independent Director Mechanism Under Changing Macro Political-Economic Settings

CHIEN-CHUNG LIN

Observing the Chinese independent director mechanism—which was imported into corporate architecture in China beginning in 2001—always incurs confusion as well as conflicting opinions. In a legal context, how this newly-introduced mechanism can work within the dual-board structure as an effective addition to Chinese corporate governance has been at the center of debates among academics.  At the macro level, whether the general political and economic conditions in China are ripe enough to accept and utilize the idea of an independent director has also inspired much discussion.

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Who Captures the Rents from Unionization? Insights From Multiemployer Pension Plans

D. BRUCE JOHNSEN

From 1945 to 2010 the proportion of private-sector workers covered by collective bargaining agreements declined from 36% to a once unthinkable 6.9%.  This decline raises the question of how well labor unions serve their rank and file.  This study addresses the economics of labor unions in an attempt to determine who captures the rents from unionization.  Among other things, it examines the generosity of multiemployer defined benefit pension plans for rank-and-file union members and the officer and staff plans for the union that administers them.  For a given wage, it finds that union officers and staff enjoy pensions and related benefits that are lavish by comparison.  Although this could be the outcome of efficient implicit contracting, given the high agency costs workers and employers face monitoring union administration, it is impossible to reject the hypothesis that union officers and staff are the primary beneficiaries of unionization in the multiemployer setting.  Multiemployer plans now appear obsolete and should be replaced by 401(k) defined contribution plans despite resistance from union officials anxious to preserve their private benefits of control.

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Transparency Is The New Opacity

CAROLINE BRADLEY

Many of the main actors constructing financial regulation in the wake of the global financial crisis era have a stated commitment to transparency. However, transparency in financial regulation is undermined because the information disclosed is simultaneously limited and excessive. On one hand, the communications are limited: transnational standard-setters publish their documents in a small number of languages (or only in English). Some institutions publish the full text of responses to consultations whereas others collate and condense responses (sometimes in ways that the responders regard as inaccurate). The characteristics of the bodies which respond to consultations, and their relationships with those whose interests they claim to represent may be visible or hidden.

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Financial Reform and the Causes of the Financial Crisis

BROOKSLEY BORN

Trillions of taxpayer dollars have been spent to rescue large financial institutions and to support the financial system. Millions of Americans are out of work, cannot find full-time work or have given up looking for work. About 4 million families have lost their homes to foreclosure, and another 4.5 million are in the foreclosure process or are seriously behind on their mortgage payments. Nearly $11 trillion in household wealth has vanished, with retirement accounts and life savings swept away.

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