Unequal Treatment and Shareholders' Welfare Growth: 'Fairness' V. 'Precise Equality'

Abstract

This article argues that a strong or rather mechanical equal treatment rule in share repurchases, distributions in kind, or capital reductions is not efficient. An economic analysis of the law shows that disparate treatment of shareholders may increase shareholders' overall welfare. Disparate treatment, however, should not result in the oppression of minorities Rather, oppression of minorities should be prevented with the fairness standard. Fairness requires one to consider the interests of others, but not to pursue others’ interests to the detriment of one’s own. Unfairness is a disregard for the interests of the minorities which could be taken into consideration at no cost.

Keywords: Delaware, Journal, Corporate, Law, DJCL, disparate treatment, fairness, minorities, comparative, Italy, Germany, France