JILL E. FISCH, University of Pennsylvania Carey Law School, University of Pennsylvania Carey Law School, European Corporate Governance Institute (ECGI)
Email: jfisch@law.upenn.edu

Repurposing the corporation is the hot issue in corporate governance. Commentators, investors and increasingly issuers, maintain that corporations should shift their focus from maximizing profits for shareholders to generating value for a more expansive group of stakeholders. Corporations are also being called upon to address societal concerns – from climate change and voting rights to racial justice and wealth inequality.

The shareholder proposal rule, Rule 14a–8, offers one potential tool for repurposing the corporation. This Article describes the introduction of innovative proposals seeking to formalize corporate commitments to stakeholder governance. These “purpose proposals” reflect a new dynamic in the debate over stakeholder governance by enabling shareholders to communicate their views about corporate purpose to their fellow shareholders and management. At the same time, purpose proposals highlight the potential problems with a shareholder voting process dominated by a handful of institutional intermediaries whose interests, particularly with respect to corporate purpose, may not be aligned with those of their beneficiaries.

This Article provides the first analysis of purpose proposals. It presents data on the introduction of these proposals and the extent to which they have commanded shareholder support. It interrogates the justifications for the proposals offered by their proponents. Finally, it considers the role of the shareholder proposal rule in offering a mechanism for shareholder debate over corporate purpose.

BEN CHESTER CHEONG, Singapore University of Social Sciences
Email: benchestercheong@suss.edu.sg

The Singapore Court of Appeal’s decision in Beyonics Asia Pacific v Goh Chan Peng [2021] SGCA(I) 2 (‘2021 CA’) arose after a quintet of cases between a company and its former director for breach of his fiduciary duties. In a paper (co-written with Muhammad Bin K M A Jahabar Sathik), which was recently published in the Singapore Academy of Law Journal, we explore the Court of Appeal’s decision in greater detail.

SERGIO J. CAMPOS, University of Miami School of Law
Email: scampos@law.miami.edu
SAMIR D. PARIKH, Lewis & Clark Law School, Fulbright Schuman Scholar, Bloomberg Law, Fulbright Commission
Email: sparikh@lclark.edu

Mass tort defendants have recently begun exiting multi-district litigation (MDL) by filing for bankruptcy. This new strategy ushers defendants into a far more hospitable forum that offers accelerated resolution of all state and federal claims held by both current and future victims. Bankruptcy’s structural, procedural, and substantive benefits also provide defendants unique optionality.

Bankruptcy’s resolution promise is alluring, but the process relies on a very large assumption: future claimants can be compelled to relinquish property rights – their cause of action against the corporate defendant and others – without consent or notice. Bankruptcy builds an entire resolution structure on the premise that the Bankruptcy Code’s untested interest representation scheme satisfies Due Process strictures. This Article questions that assumption, and identifies two compromised pillars that could render bankruptcy’s mass tort framework unconstitutional. Primarily, the process for selecting the fiduciary that represents future victims’ interests and irrevocably binds them to the agreed settlement is fundamentally broken. Further, the process by which bankruptcy courts estimate the value of thousands of mass tort claims places too much pressure on a jurist unfamiliar with personal injury claims. These compromised pillars raise the risk that the victims’ settlement trust will be underfunded and fail prematurely. In this outcome, future victims would have no recourse but to argue that the restructuring process did not satisfy Due Process, and the entire settlement should be unwound.

This Article proposes that the risk of a prematurely insolvent victims’ trust can be reduced considerably by bolstering these two pillars. Our proposal seeks to (i) rebuild the FCR construct in order to ensure that future victims’ interests are effectively represented and (ii) recalibrate the claim estimation process by facilitating coordination between the bankruptcy court and the federal district court.

FÉLIX E. MEZZANOTTE, Trinity College Dublin
Email: Felix.Mezzanotte@tcd.ie

Responding to increasingly degrading environmental and social conditions, the European Commission has undertaken important legal and regulatory reforms to promote sustainable finance policy in Europe. However, these reforms have been numerous, complex, and fast-paced. They have proved difficult to grasp and contextualize, while exacerbating the intricacies of an already highly sophisticated EU legal and regulatory regime. This article outlines and examines such reforms with the purpose of providing necessary insights into the current state of EU law and policy in the area of sustainable finance. The first part of the article conceptualizes the meaning of sustainability risk and of sustainable investments. Understanding these two concepts is crucial as they underlie the entire reform process, from climate risk management to the development of sustainable markets and products. The second part of this article provides an overview and analysis of key sustainability-related reforms. Changes to the non-financial information disclosure regime are outlined covering the Corporate Sustainability Reporting Directive, the Sustainable Finance Disclosure Regulation, and the EU Taxonomy Regulation. Emphasis is placed on the ‘double materiality’ principle in sustainability reporting. Modifications to EU financial services law are also examined with focus on changes made to the Markets in Financial Instruments Directive (MiFID II), which is the central legislation governing securities regulation in Europe. Finally, a brief overview of the evolving prudent person rule contained in the Institutions for Occupational Retirement Provision Directive is offered. The article concludes by shedding light on key challenges afflicting reform implementation.