Delaware is America’s venue of choice for business incorporation. This popularity means most corporate directors are subject to the whims of Delaware’s powerful, but little known, non-jury trial court: The Court of Chancery. This is good for most directors. The Chancery is known for making quick work of frivolous suits; it normally insulates directors from…
Tag: Governance
California-Mandated Diversity Measures – An Invalid or Necessary Regulation of Corporate Affairs?
Diversity, equity and inclusion has gained substantial traction as a major business and social initiative in the past decade. Organizations committed to the goal of creating more diverse and inclusive workspaces range from private businesses to institutes of higher education to non-profit foundations and engage in a wide array of business activities such as technology,…
Insurance! What Is It Good For? Misplaced Liability for California’s Wildfires
It is no secret that California has consistently suffered some of the worst wildfires in United States history.1 Blazes in 2017 caused more than $10 billion in damages, the most in the state’s history.2 The fires, which exist everywhere from Santa Barbara and Malibu to Napa and, most recently, the City of Paradise, destroy houses,…
Revised Tax Treatment for Net Operating Losses and Potential Effects
When Congress passed the Tax Cuts and Jobs Act in late 2017, the Internal Revenue Code (“Code”) experienced a major adjustment. In addition to numerous, noteworthy changes in the Code, the treatment of “net operating losses” is now subject to different parameters. A net operating loss (“NOL”) is a loss taken by a business where…
A Changing of the Guard at Wells Fargo—But What Has Changed?
In the wake of its consumer abuses, including the creation of millions of unauthorized accounts, Wells Fargo is desperately attempting to clean up its image and instate a series of protocols to avoid such issues in the future.1 Recently, the Federal Reserve (“Fed”) ordered the San Francisco-based bank to cap its growth and improve its…
Both Valuable and Troubling: Virtual Annual Shareholder Meetings
When thinking of annual shareholder meetings, one may be tempted to think of lavish, fun-filled annual get-togethers like the type Berkshire Hathaway puts together.1 But in reality, most annual meetings are not nearly as exciting or glamorous.2 That is not to say, though, that they are not important. Annual shareholder meetings are valuable for a…
Wells Fargo’s Punishment: A New Approach to Corporate Governance or Just a Mirage?
Wells Fargo Co., one of the largest banks in the United States, has been punished by multiple government actors for its allegedly deceptive banking practices dating back to 2011.1 From 2011 to 2015, the bank’s employees opened roughly 1.5 million new bank accounts and applied for 565,000 credit card accounts that may not have been…
Corruption Scandal in College Basketball
In the sportswear industry, Nike is the main player, but well-known competitors Adidas, Under Armour, and others are constantly attempting to improve their position in the market. One way an apparel company can gain an edge is to sign superstar athletes to wear their gear and advertise their brand. Famously, professional basketball players LeBron James,…
Co-determination in Germany: A Model for the U.S.?
The American conception of the duty of loyalty requires that directors act solely in the best interest of the corporation.1 In Germany, however, corporations are perceived to serve a broad social function rather than simply aiming to serve shareholder interests, and there is significant freedom under German law for company directors to factor in considerations unrelated to profit…
Navigating the Quasi-California Corporations Statute
It has long been safe to assume that a corporation will be governed by the laws of the state in which it is incorporated. However, businesses and corporate practitioners should be aware that this is not universally true. Section 2115 of California’s Corporations Code (hereinafter “Code”) subjects foreign corporations to California corporate law if they…