Municipal Corporate Law
Posted: 11 Aug 2016
Date Written: 2016
Corporate law has long been a creature of the state legislatures, implemented largely by statutes and interpreted by courts. Only recently has the federal government entered the game via substantive governance requirements enacted in Sarbanes Oxley and Dodd-Frank. There is a significant complication to this conventional wisdom, however, which has been almost completely overlooked. Cities’ role as significant creators of corporate law is increasing, largely in the form of command-and-control mandates imposed on corporations active within a city’s limits. Cities have become involved in determining the internal composition of organizations, as city agencies have prescribed board diversity quotas in nonprofit grant conditions or diverse ownership in contract bidding requirements. Cities have also raised expectations for corporations’ community engagement through proposed community benefits ordinances and enacted percent-for-art laws that require corporations to be contributing community members. This rise of what I term “municipal corporate law” has a number of significant implications for policymakers and longstanding corporate law debates. Does the race to the bottom (or top) change once cities are in the running? Are the differing legal styles characteristic of Delaware and cities on a collision course? I consider a number of such questions and offer a preliminary evaluation of municipal corporate law.
Keywords: Corporate Law, Local Government
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