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Abstract:
Like the US, Australia has in recent times experienced a number of dramatic corporate collapses, such as HIH and One.Tel, in which executive remuneration appears as an interesting subtext. While there has been a tendency to view executive remuneration as a specialized topic, its connection to these corporate collapses emphasizes the fact that executive remuneration presents general corporate governance problems in a highly concentrated form.

This article, which discusses a number of recent scandals and developments relating to executive remuneration in Australia, argues that segregation of executive remuneration from other areas of corporate law may lead to dangerous tunnel vision. Professor Eisenberg has spoken of management's positional conflict of interest, due to management's broad range of discretions and relative autonomy within the public corporation. The article considers some ways in which management's positional conflict of interest, particularly in the area of disclosure, may interact with (and potentially subvert) the goals of contemporary performance-based pay schemes.

Corporate governance, corporate scandals, CEO compensation, executive remuneration, performance-based pay, stock options, managerial positional conflict, disclosure

Abstract:
The problem of executive compensation was an underlying theme in international corporate scandals epitomized by Enron in the US, Parmalat and Vivendi in Europe, and One.Tel in Australia. There has been a wide array of regulatory responses to these scandals across jurisdictions, with varying degrees of attention paid to the issue of executive pay.

This article examines recent international responses regarding executive pay through the lens of regulatory strategy. Specific reforms and developments discussed in the article include: enhanced compensation disclosure; increased shareholder participation; and judicial review of board decisions about executive pay in case law such as the Disney litigation in the US and the Mannesmann trial in Germany.

These regulatory developments concerning executive pay are interesting from the perspective of the convergence/persistence debate in comparative corporate governance. They show that major international scandals of this kind may generate new divergence in laws across jurisdictions.

This article is a revised and updated version of a paper published in early 2006 in European Company Law. This updated version (forthcoming, 2006, ICFAI Journal of Corporate & Securities Law) includes a Postscript, containing a detailed discussion of the 2006 Disney decision, delivered by Jacobs J. on behalf of the Supreme Court of Delaware on June 8, 2006.

executive compensation, remuneration, shareholders, directors, disclosure, directors' duties, comparative corporate governance, corporate scandals, regulation

Abstract:
The problem of executive compensation was an underlying theme in international corporate scandals epitomized by Enron in the US, Parmalat and Vivendi in Europe, and One.Tel in Australia. There has been a wide array of regulatory responses to these scandals across jurisdictions, with varying degrees of attention paid to the issue of executive pay.

This article examines recent international responses regarding executive pay through the lens of regulatory and governance strategies, based on the typology developed in Kraakman et al, The Anatomy of Corporate Law: A Comparative and Functional Approach (2004). Specific reforms and developments discussed in the article include: enhanced compensation disclosure; increased shareholder participation; and judicial review of board decisions about executive pay in cases such as the 2005 Disney decision in the US and the Mannesmann trial in Germany.

These regulatory developments concerning executive pay are also interesting from the perspective of the convergence/persistence debate in comparative corporate governance. They show that major international scandals of this kind may generate new divergence in laws across jurisdictions.

Executive compensation, remuneration, shareholders, directors, disclosure, directors' duties, comparative corporate governance, corporate scandals, regulation, Disney, Mannesmann

Abstract:
The Enron and WorldCom collapses mirrored a global phenomenon, which included scandals in the UK, Europe and Australia, where the collapse of the HIH Insurance group constituted the largest corporate failure in Australian history. These scandals, and the international regulatory responses to them, have important implications for comparative corporate governance debate. At the beginning of this decade, many commentators assumed that international corporate governance practices and regulation were inexorably directed towards convergence in the form of a standardized shareholder-centered Anglo-American model of corporate governance. This assumption needs to be reassessed in light of the global corporate scandals and evolving regulatory responses to them in jurisdictions, such as the US, UK and Australia. The paper discusses a range of post-Enron corporate governance and regulatory developments in these jurisdictions, in relation to: the balance between regulation by norms and laws; the role of the independent director; the role of the board; director and officer liability; and executive remuneration. While the regulatory responses have common themes, they also reflect significant differences in focus and nuance, and their contours are often closely tied to domestic corporate scandals.

comparative corporate governance, corporate scandals, Enron, HIH, One.Tel, regulation, international reforms, norms, independent directors, director and officer liability, executive compensation

Abstract:
In the era of international corporate collapses, comparative corporate governance has become increasingly important. Yet, there is an inherent ambiguity in the scope of corporate governance and the relationships encompassed by the term, and it does not necessarily have the same meaning across different jurisdictions. Increasingly, the boundary between corporate governance and other areas of law is becoming blurred. Furthermore, inconsistencies of theoretical approach often exist within a single jurisdiction.

The article concerns developments in an area of law generally treated as peripheral to corporate governance - namely, corporate criminal liability. Adopting a comparative law approach, the article analyzes the underlying principles of corporate criminal liability across a number of jurisdictions, specifically focusing on some significant reforms relating to corporate criminal liability in Australia. Although Australian corporate law, including directors' duties, adopts a traditional Anglo-US shareholder-centered model of the corporation, the reforms in the area of corporate criminal liability are underpinned by a fundamentally different, organizational model of the corporation. The reforms constitute a major paradigm shift in corporate criminal liability, and affect a range of important areas, such as competition and consumer law, occupational health and safety, including the concept of corporate manslaughter, and environmental law. The article also discusses a number of other areas, which adopt an organizational model of the corporation for accountability purposes, including the courts' approach to the issue of whether corporations possess the privilege against self-incrimination.

The article argues that there appears to be a disjunction between the underlying principles in the area of directors' duties and corporate criminal law in Australia. Under traditional Australian corporate law principles, issues of social responsibility are kept at a distance and directors' duty of oversight in relation to corporate misconduct is limited. In contrast, the Australian corporate criminal liability regime recognizes concepts of organizational due diligence, organizational blameworthiness and corporate culture. The regime is thus designed to cultivate self-regulation, with particular emphasis on compliance programs. This parallels the growth in importance of compliance and ethics programs in the U.S., under the Federal Sentencing Guidelines for organizations.

Under the new paradigm, issues relating to corporate criminal liability will inevitably become more closely integrated at an operational level into corporate governance, as corporations introduce compliance programs to ensure that their corporate cultures do not potentially trigger criminal liability. It is possible that these reforms to corporate criminal liability may be more effective than directors' duties in recognizing that directors are ultimately accountable for their corporation's culture, and have a corresponding obligation to monitor diligently.

Corporate governance, corporate theory, corporate crime, criminal liability, organizational blameworthiness, corporate culture, compliance programs, sentencing guidelines, directors duties, corporate groups, privilege against self-incrimination, competition law, occupational health & safety, env law

Abstract:
The balance of power between shareholders and the board of directors is a contentious issue in current corporate law debate. It also lay at the heart of a controversy concerning the re-incorporation of News Corporation (News Corp) in Delaware. News Corp has recently been the subject of intense media attention due its successful bid to acquire Dow Jones & Company. Nonetheless, News Corp's move to the US, which paved the way for this victory, was neither smooth nor a fait accompli. Rather, the original 2004 re-incorporation proposal prompted a revolt by a number of institutional investors, on the basis that a move to Delaware would strengthen managerial power vis-a-vis shareholder power. The institutional investors were particularly concerned about the effect of the re-incorporation on shareholder participatory rights, and the ability of the board of directors to adopt anti-takeover mechanisms, such as poison pills, which are not permissible under Australian law. It was this latter concern, which ultimately led a group of institutional investors to commence legal proceedings in the Delaware Chancery Court in UniSuper Ltd v News Corporation (2005 WL 3529317 (Del Ch)).

The News Corp re-incorporation saga highlights a number of important differences between US and Australian corporate law rules relating to shareholder rights, and provides a valuable comparative law counterpoint to the recent US shareholder empowerment debate. Other recent Australian commercial developments discussed in the article show a tension between legal rules designed to enhance shareholder power, and commercial practices designed to readjust power in favor of the board of directors. These developments are interesting because they demonstrate how some Australian companies have tried to create a de facto corporate governance regime, which mimics certain aspects of Delaware law.

corporate governance, comparative corporate governance, News Corporation, Liberty Media, Rupert Murdoch, John Malone, institutional investors, shareholders, shareholder empowerment, managers, directors, boards, stakeholders, corporate charters, charter amendments, shareholder meetings, mergers

Abstract:
This paper reviews the book, Convergence and Persistence in Corporate Governance, edited by Jeffrey N. Gordon and Mark J. Roe. The book takes its place against the broad theoretical backdrop of the convergence-divergence debate in contemporary corporate governance, and a range of intersecting themes and insights, including the law matters and legal origins hypotheses and path dependence theory. The book maps out the contours of this debate, and includes contributions from prominent U.S. and European scholars, comparing and contrasting the approaches of different legal regimes.

In spite of the considerable influence and sway in contemporary corporate governance of convergence theory (represented in the book by the contribution of Henry Hansmann and Reinier Kraakman), many of the authors express skepticism about its explanatory power. Rather, these authors focus on differences in legal systems, seeking to explain the origins, and continued resilience of such differences, from a range of perspectives and across a range of jurisdictions. A particularly strong theme in the book is the influence of political factors in legal regulation and their potential to obstruct convergence, on the basis that corporate governance cannot be separated from political governance.

While recognizing economic forces driving convergence, Convergence and Persistence in Corporate Governance provides sophisticated analysis of other constraining forces within a broader regulatory ecosystem. The book's attention to the relevance of political and cultural matters creates a more complex and textured picture of legal regulation.

There are, however, a number of other aspects of comparative corporate governance, which could have received greater attention in the book. For example, the assumption is often made by commentators on both sides of the convergence-divergence divide that a standardized Anglo-US model of corporate governance currently exists - a viewpoint that also seems to underpin the book. My paper discusses the extent to which differences, for example, in takeover law in the U.S., U.K. and Australia may challenge this assumption. It also considers several developments, which cast further doubt on a strong convergence position in comparative corporate governance. These developments include first, the corporate governance transplantation experiment in Russia in the early 1990s and secondly, the impact on comparative corporate governance of the international corporate collapses, epitomized by Enron and WorldCom. The regulatory responses to these collapses across several jurisdictions suggest that such events may generate new divergence in laws. Finally, differences in the post-Enron regulatory responses have also affected the issue of cross-listing. The presumption earlier this decade that the trend towards cross-listing of foreign firms in the U.S. could itself operate as a form of regulatory competition may need to be reassessed in the light of international reaction to the stringency of the Sarbanes-Oxley Act 2002 and its effect on cross-listing.

Comparative corporate governance, convergence, persistence, corporate regulation, takeovers, corporate collapses, regulation

Abstract:
Timing of stock option grants has become a significant corporate governance issue, in the light of the SEC's on-going inquiry into back-dating of stock options.

In this article, we examine the general problem of misalignment of interests arising from managerial discretion as to the timing and content of corporate disclosures in the context of performance-based compensation. We consider, and assess from a legal perspective, several empirical studies, which strongly suggest that CEOs are manipulating disclosure in such a way as to increase their own compensation. We argue that all but the most egregious forms of disclosure manipulation by management are either legally permissible or effectively insulated from legal redress.

The article then examines the underlying rationales for the existence of broad managerial discretion over timing of disclosure under securities laws, and the extent to which possible misalignment of interests in the area of disclosure timing and performance-based pay can be reduced by governance mechanisms, such as improved board monitoring, structural changes to performance-based pay or enhanced enforcement of securities laws. We conclude that although each governance mechanism has a role to play, no single mechanism is likely to be a governance panacea.

Timing, stock options, options, disclosure, CEO compensation, executive remuneration, performance-based pay, insider trading

Abstract:
This article, originally prepared as a Research Paper for Australian institutional investors (Australian Investment Managers' Association Research Paper #1/96), outlines a range of issues in contemporary debate on director and executive compensation, with particular focus on the importance of disclosure. The article discusses policy justifications for using full disclosure as the central regulatory tool in this area.

The purpose of the article was to compares Australia's disclosure regime at that time with regimes in other jurisdictions. The article concluded that Australia's traditional disclosure regime was flawed in a number of respects - that the relevant statutory provisions requiring disclosure were incomplete, piecemeal and unclear in their reach, and that the regime lagged international statements of best practice in this area. The article argued that the Australia's disclosure regime lagged far behind international statements of best practice in this area and was in need of reform.

The recommendations for reform in this article were influential in prompting changes to Australia's laws on disclosure of director and executive remuneration.

Executive compensation, remuneration, shareholders, directors, disclosure, directors' duties, comparative corporate governance, corporate scandals, regulation

Abstract:
Corporate governance has become a commercial mantra, yet there exists a tension between competing visions of its primary goal. While early developments in corporate governance tended to focus on an accountability rationale, during the 1990s there was a significant shift toward an efficiency rationale for corporate governance. The dramatic events at Sunbeam in 1998, involving the removal of CEO, Albert Dunlap, reflected this tension. They also highlighted a number of important issues in contemporary corporate governance debate, including board composition; the role and responsibilities of outside directors; remuneration of executives and directors; and relational investing.

This article, which was written as a case study at the time of these developments at Sunbeam, provides insights into the incentives for accounting manipulation in the contemporary commercial environment, and the benefits and limitations of governance mechanisms in controlling such conduct. The article also argued that the Sunbeam saga should not be treated as an example of one individual's fall from grace and therefore dismissed as an isolated event. Rather, the article contended that a commercial culture stressing short-term profit maximization, together with the rhetoric of contemporary remuneration orthodoxy based on alignment of managerial and shareholder interests, may provide strong incentives for manipulation of accounting records and create systemic problems in the commercial environment. The subsequent fall-out from more recent corporate scandals, such as Enron and WorldCom, seems to have reinforced the dangers and perverse incentives which may be created by a corporate culture, such as existed at Sunbeam.

Comparative corporate governance, Sunbeam, corporate scandals, boards, independent directors, directors' duties, alignment of interests, executive compensation, performance-based pay, relational investing

Abstract:
The convergence/divergence debate at the turn of this decade was often underpinned by the assumption of a unified and cohesive common law governance model, which would (or, for path dependence theorists, would not) form the point of convergence of corporate governance regimes around the world.

The international corporate collapses complicated this debate. Common law jurisdictions, such as the US, UK, Australia and Canada introduced a variety of regulatory responses to the corporate scandals. While similar motivations underpinned these reforms, significant differences emerged in terms of focus, structure and regulatory detail. For example, there is an interesting dichotomy between strengthening of shareholder participatory rights versus protection of shareholder interests evident in the reforms. Strengthening of shareholder participatory rights was a significant theme in the UK and Australian reforms, but not in the US reforms. Another tension emerging within the common law reforms relates to principles-based versus rules-based regulation. The shape of these reforms has also affected subsequent corporate law debates in the US, UK and Australia, which address quite different policy concerns.

Scholars have noted that, even where similar motivations underpin various reforms, it is unlikely that their long-term effects will coincide. Another aspect of this long-term regulatory unpredictability is the impact of backlash, recently exemplified in the US by the Paulson Committee report.

The paper argues that post-scandal regulatory developments challenge any assumption of an orderly progression towards a uniform corporate governance model. Rather, they present a dynamic and fluid regulatory picture, with interesting differences of approach emerging within the common law world itself.

Comparative corporate governance, regulation, corporate scandals, shareholders, shareholder participation, rules, principles

Abstract:
Corporate theory, and the relative balance of power between directors and shareholders, is back on the agenda in relation to U.S. corporate law and law reform. While some scholars have argued for greater shareholder participation in a range of aspects of law, critics of this approach have suggested that such a reform agenda reflects an outmoded, if not illusory, shareholder-centered model of the corporation, and that the board's role is, in fact, to mediate between competing interests of different groups. This rise of comparativism in corporate governance has also presented a wider range of possibilities regarding the role of shareholders. And organizational comparativism, whereby investor-owned firms are viewed not in isolation, but as part of a broader matrix of associations, recognizes a smorgasbord of flexible governance structures, in which the role of participants may differ significantly.

The article provides a backdrop to current debate on shareholder participation rights, by identifying and tracing a number of visions of the role of shareholder, which can be discerned at various times in corporate law and across various jurisdictions. These different visions of the shareholder, which reflect competing theories of the corporation itself, have important consequences for two major issues in contemporary corporate governance - first the appropriate level of shareholder participation in governance, and secondly the status of shareholder interests in the board's decision-making process.

The article examines a range of different images of the shareholder, their theoretical underpinnings, and their doctrinal implications. Particular images of the shareholder examined in the article include:- the shareholder as owner/principal; as beneficiary; as bystander; as participant in a political entity; as investor; as corporate watchdog; and as managerial partner. The article discusses a number of contemporary legal developments against the backdrop of these evolving images of the shareholders, and argues that the adoption of any one-dimensional model of the past, such as "the shareholder as owner", is inadequate today and can result in a disjunction between law and reality.

Comparative corporate governance, corporate theory, shareholders, directors, boards, stakeholders, shareholder participation, institutional investors, shareholder voting, regulation

Abstract:
Employees have traditionally been viewed as "outsiders" to the corporation. Discussion of their role and responsibilities within the enterprise rarely occupies much space, or concern, in US, UK and Australian corporate law texts. This is replicated in modern theories of the corporation, where the dominant paradigm of corporate governance adopts a narrow approach, which is restricted to the relationship between directors and shareholders.

Comparative corporate governance, however, provides a different perspective on the position of employees vis-à-vis the corporation. One of the benefits of comparative corporate governance has been to show us a range of possible governance solutions to different problems. The paper examines ways in which the interests of the employee could be integrated within the enterprise. First, it discusses the position of the employee under both corporate and labor law principles. Secondly, it examines how the position of the employee might be treated differently through the lens of corporate law, by expanding the scope of directors' fiduciary duties, as contemplated by Professor Dodd in the classic Berle-Dodd debate. Finally, the chapter considers several recent legal developments and reform proposals outside corporate law, which affect both the status of employee interests and employee participatory rights in corporate governance. These recent developments target, and attempt to redress, specific areas of employee vulnerability and social concern, which, it can be argued, result directly from employees' "outsider status" under contemporary corporate law principles.

Corporate governance, comparative corporate governance, corporate theory, shareholders, employees, enterprise bargaining, industrial democracy, workers, fiduciary duties, corporate crime

Abstract:
The adequacy of creditor protection is an on-going issue in corporate law. The traditional vulnerability of creditors can be traced to an entity theory of the corporation, coupled with limited liability. Creditor vulnerability is exacerbated by the existence of the corporate group, which has been described as achieving "limited liability within limited liability". Nonetheless, modern corporate law has retreated in a number of significant ways from its former "self-help" attitude to creditors, by shifting risk away from creditors to other parties, such as directors.

The aim of this article is to identify a number of areas of corporate law where the allocation of risk established under limited liability and corporate entity principles has been questioned, and where a variety of devices has been suggested or implemented to shift established patterns of liability and corporate accountability. In tracing these developments, the article considers whether limited liability, particularly with its implications for involuntary creditors, should remain a benchmark in corporate law. In the context of corporate groups, the article discusses theoretical literature suggesting that the entity theory is inadequate to capture the reality of corporate groups, where actions, but not responsibility, may be collectivized. The article then analyses several legal doctrines and specific legislative provisions, which may disrupt traditional allocation of liability.

Cross guarantees lie at the intersection of creditor protection and corporate groups. The article examines the impact of cross guarantees in corporate groups, and the inherent tension between entity and enterprise principles in their operation as a liability shifting device. Focusing on a particular scheme of cross guarantees implemented by the Australian securities regulator, it assesses the ability of cross guarantees to circumvent standard patterns of liability under an entity theory of corporate groups and enhance creditor protection. The article argues that the law in this area needs to be more attuned to commercial reality of contemporary group enterprises and be sufficiently flexible to achieve desired policies.

Creditors, limited liability, corporate groups, corporate theory, separate entity doctrine, shareholders, directors, directors' duties, insolvency, insolvent trading, cross guarantees, cross guaranties, corporate responsibility

Abstract:
Historically, the evolution and growth of American corporate law has occurred with only limited and sporadic attention to international corporate governance regimes. This article considers some possible reasons for the relative lack of attention in the United States to international corporate regimes in the past. It also discusses some interesting differences between the law relating to shareholder rights in the United States and in other jurisdictions, including common law countries such as the United Kingdom and Australia. This article argues that, in an era when there is growing skepticism about the influence of the competition for corporate charters within the United States, it makes sense for the United States to examine and test how international jurisdictions address common problems in corporate regulation.

corporate governance, comparative corporate governance, law matters debate, competition for corporate charters, shareholders, shareholder empowerment, shareholder rights, News Corporation

Abstract:
The collapse of Eastern European socialist economies was a key developments which brought comparative corporate governance issues to the forefront in the early 1990s. It also provided the basis for a unique corporate governance experiment, designed to transform Russia into a US-style market economy. Yet, the transformation did not go according to plan. Russia's privatization process has subsequently been described as "a corporate governance nightmare" and led commentators to search for explanations as to what went wrong.

The paper discusses the Russian privatization experiment through the lens of the convergence-divergence debate in contemporary comparative corporate governance. The "path dependence" strand of this debate, traces differences in corporate governance to divergent historical and social underpinnings of jurisdictions. The Russian privatization experiment demonstrated clearly the dangers identified by Montesquieu - regarded as the father of comparative law - of transplanting legal rules, particularly onto an unwilling recipient. Another important lesson from the saga is that historical, cultural and social norms matter. This paper was written as a contribution to a festschrift in honor of Professor Alice Tay, whose lifelong scholarship on the "complex story" of socialism and the theory of law, emphasized the power and importance of such historical, cultural and social norms.

Comparative corporate governance, Russia, privatization, convergence, divergence

Abstract:
The emergence of institutional investors as shareholders has challenged, and rendered outmoded, many of the traditional assumptions about shareholders and their engagement with the corporation. There has been considerable interest in, and reassessment of, the position of institutional investors and their capacity to monitor corporate management, within the broader debate on managerial accountability and corporate regulation. Corporate theory is, however, still grappling with the implications of these changes for a revised model of corporate governance. It is unclear whether the difference between institutional investors and other shareholders is qualitative or quantitative only, and the extent to institutional investors' distinctive characteristics will affect the nature of their participation in corporate governance.

The purpose of this paper is to examine changes in the role of institutional investors in corporate governance in Australia. By way of background to this issue, the paper briefly outlines the underlying flow of funds and patterns of investment in Australia and discusses important developments concerning collective investment, particularly superannuation. On the question of greater involvement by institutional investors in corporate governance, the paper examines some specific instances of investor activism and discusses the extent to which legal principles present an obstacle to increased institutional investor activity and power in Australia.

corporate governance, comparative corporate governance, institutional investors, shareholders, activism, superannuation, pension funds, collective investment

Abstract:
The emergence of institutional investors as shareholders has rendered obsolete many of the traditional assumptions about shareholders and their behaviour in relation to the affairs of the corporation. Corporate theory is, however, still coming to grips with the implications of these changes for a revised picture of corporate governance. It is unclear to what extent older models of the corporation, in which shareholders were viewed as corporate owners are being reasserted, or whether the distinctive characteristics of institutional investors require a totally new version. In addition, the potential of institutional investors to monitor corporate management is significant within the broad debate on managerial accountability and corporate regulation.

The aim of this chapter is to examine the changes wrought by the rise of institutional investors at both theoretical and empirical levels. The chapter discusses the reconception of the role and behaviour of shareholders which has occurred in corporate law. It then examines the extent to which empirical evidence in Australia supports a new role for institutional investors. Finally, the chapter examines the likelihood of greater institutional investor activism in the future in Australia, and the degree to which legal barriers may hamper the development of a more interventionist role for institutional investors.

Abstract:
It has been said that regulation occurs "in many rooms", and that there is a trend in advanced liberal governments to govern, not directly, but rather through the decisions of autonomous agents. This trend assumes that interconnected and overlapping systems of regulation can be more effective than any single technique.

This article discusses developments in some of the rooms of regulation in contemporary Australian corporate law, providing a snapshot of Australia's overlapping systems of governance. These regulatory developments include the reshaping by the courts of familiar legal duties, such as directors' duty of care and diligence in the landmark AWA litigation and insolvent trading case law, which have increased the risk of liability for directors. The article also discusses legislative backlash to these developments, embodied in a range of reforms, introducing, for example, a US-style business judgment rule into Australian corporate law and giving statutory recognition to directors' rights of delegation.

Other regulatory developments considered in the article include the specter of shareholder liability via shadow directorship; shareholder monitoring and institutional investor activism; the increasingly prominent role played by Stock Exchanges in regulating corporations, and commercial constraints on management in the form of performance-based remuneration and takeovers.

Comparative corporate governance, board of directors, regulation, directors' duties, delegation, institutional investors, shareholder activism, executive compensation, performance-based pay, takeovers

Abstract:
This paper questions the extent to which a model of the corporation based upon pre-eminence of shareholder interests is justified. First, it considers the extent to which such a model accurately reflects commercial reality, through an examination of some contemporary trends in corporate finance and in labor law, which indicate a blurring between, for example, the boundaries of debt and equity, and employees and shareholders. Secondly, the paper discusses the normative issue of whether the privileging of shareholder interests is desirable from a policy perspective. This section of the paper focuses on political models of the corporation, which advocate shared governance by institutional investors and management, and the trend towards "collectivization" of the interests of shareholders and managers, reflected, for example, in the rise of pay for performance in the area of executive compensation.

The paper argues that, in spite of widespread acceptance of corporate models which assume shareholder pre-eminence, there are a number of problems and dangers, both from a commercial and policy perspective, in privileging shareholder interests in this way. The article concludes that at a theoretical level, more regard needs to be paid to the interests of the corporation as an autonomous enterprise, combining a wider range of interests than those merely of its shareholders. This, however, is not to deny shareholders an important position in corporate governance. It is in the interests of all corporate stakeholders to prevent managerial self-interest and shareholders, particularly strong institutional investors, may be in a unique position to constrain such conduct for the benefit of the enterprise as a whole.

Corporate governance, corporate theory, shareholders, stakeholders, equity, debt, employees, shareholder participation, institutional investors, executive compensation

Abstract:
One of the perennial questions in corporate law is how much deference should be given to directors' judgments. The introduction of a statutory business judgment rule in Australia in 2000 was designed to bolster the autonomy and discretion of the board. At the same time, however, an intriguing departure from this policy position emerged in the context of takeovers.

The courts traditionally acted as umpire in determining whether directors had breached their duty to act for proper purposes in the face of a hostile takeover. The problem of how much deference to accord to directors' judgments has always been particularly acute in the takeover arena, where the "omnipresent specter" of self-interest is present. The traditional mode of regulation in this area, therefore, used judicial monitoring to ensure compliance by directors with duty-based rules.

This basic regulatory picture was, however, radically altered by the Corporate Law Economic Reform Program (CLERP) Act 2000, which moved the role of umpire from the court to a specialist commercial body, the Takeovers Panel. This paper discusses the implications of that change, and an interesting paradigm shift emerging in the Panel's decisions. Under this shift, the board's former autonomy and discretion is constrained through use of shareholder consent as a regulatory mechanism for defensive tactics. This constitutes a significant alteration to the balance of power between the board of directors and shareholders under Australian takeover law.

Takeovers, Australia, Takeovers Panel, directors' duties, shareholders, bid conditions, unacceptable circumstances

Abstract:
In the late 1990s, it was announced that Australia would introduce legislation to respond to an OECD Convention for criminalizing bribery of foreign public officials. This was part of a coordinated international OECD initiative. The US had already addressed such issues two decades earlier under the Foreign Corrupt Practices Act of 1977.

This paper discusses the rationales for prohibiting bribery of foreign public officials and the scope of the draft Australian provisions, which were designed to enforce the OECD Convention. The paper specifically focuses on the broader implications of the bribery offence for corporate criminal liability. It discusses when payment of a bribe by an employee or officer to a foreign public official may result in corporate criminal liability, and the mechanisms through which corporations might protect themselves from such liability.

The issues raised in this paper are discussed in more detail in a later companion article, "Corporate Criminal Liability in Australia: An Evolving Governance Technique?", Journal of Business Law, p. 1, 2003 (available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=429220), which analyzes the contours of the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999 against the backdrop of general corporate criminal liability.

Corporate governance, OECD Convention, corporate crime, bribery, criminal liability, organizational blameworthiness, corporate culture, privilege against self-incrimination

Abstract:
In 2000, the basic regulatory structure of Australian takeover law was radically altered, when the role of arbiter of takeover disputes was shifted from the courts to a specialist commercial body, the Takeovers Panel. In an early decision in 2001, Pinnacle No 8 (discussed in Hill and Kriewaldt, "Theory and Practice in Takeover Law - Further Reflections on Pinnacle No 8", available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=942896), the Takeovers Panel held that conduct of the board of directors of a target company, which breached bid conditions in a takeover offer, must be approved by shareholders in general meeting.

Pinnacle No 8 potentially created a paradigm shift, constraining the board's former autonomy and discretion through use of shareholder consent as a regulatory mechanism for defensive tactics. This paper discusses the later decision, In the Matter of Bigshop.com.au Ltd (Bigshop 2), which arguably reveals a deep ambiguity, at both a practical and theoretical level, in the approach to regulation of takeovers in Australia. Whereas traditional fiduciary principles examine the motives of the target board in responding to a hostile bid, a "frustrated intention" analysis diverts attention from the target board's conduct to the effect of that conduct on the bidder's intentions. The paper discusses the implications of the dichotomy between a fiduciary duty analysis and a "frustrated intention" analysis and its implications for the direction of Australian takeover law, the balance of power between shareholders and directors, and the concept of an efficient market in the takeover context.

Takeovers, Australia, Takeovers Panel, directors' duties, shareholders, bid conditions, frustrated intention, unacceptable circumstances

Abstract:
Corporate law and labor law have traditionally been segregated fields, yet recent developments in corporate governance have brought these two areas of law closer together.

There has been an international trend toward decentralization of collective bargaining power in recent years. Mirroring this international trend, a major paradigm shift occurred in Australian labor law during the last decade, with the introduction of an enterprise bargaining regime in the mid-1990s and further major reforms in 2005. These reforms accord virtually no significance to the issue whether an employer is a corporation, continuing the historical segregation between labor law and corporate law.

This article attempts to bring these two legal fields into proximity, by arguing that the corporate status of employees is of vital significance. The article examines a range of ways under contemporary corporate governance principles in which employee interests might be protected from within the enterprise - either through the medium of fiduciary duties or through participating rights in the governing of the corporation itself.

Corporate law, labor law, corporate governance, comparative corporate governance, shareholders, employees, enterprise bargaining, industrial democracy, workers, fiduciary duties, labor representation, labour law.