FELIX P. NIGGEMANN, University of Zurich
Email: felix.niggemann@business.uzh.ch

A widely held assumption is that increasing book-tax conformity reduces earnings management and tax avoidance. This paper provides a more nuanced view. In the model, a manager publicly reports financial earnings to investors and subsequently files taxable income, subject to a strategic tax audit. The paper provides two main results. First, a unique interior level of mandatory book-tax conformity minimizes earnings management. Higher book-tax conformity imposes a tax cost of earnings management but reduces the probability of the manager facing it. Second, higher book-tax conformity decreases tax avoidance because tax auditors can learn more from financial reports about managers' tax avoidance incentives when their correlation is higher. Contrarily, tax avoidance may increase when earnings management is pervasive and distorts this learning process. In sum, allowing some differences between GAAP and tax laws can be useful to balance the economic consequences of earnings management and tax avoidance.

REHANA CASSIM, University of South Africa
Email: rehanacassim1@gmail.com
DELANI MAHHUMANE, affiliation not provided to SSRN

The Companies Amendment Bill, 2018 proposes certain changes to the social and ethics committee established in terms of s 72(4) of the Companies Act 71 of 2008 and reg 43 of the Companies Regulations, 2011. These new provisions are critically discussed in this article. Although some of these provisions are commendable, others give rise to certain concerns examined here: the lack of clarity in the functions of the social and ethics committee, the proposed amendments regarding its appointment and composition, and the ambiguity in the exemptions from the requirement to appoint this committee. This article also suggests further amendments to the current legislative provisions regarding this committee.

MINOR MYERS, University of Connecticut - School of Law

The ascendance of SPACs in U.S. capital markets has attracted intense regulatory scrutiny from federal officials, especially the SEC. This Article examines SPACs through a different lens: Despite all their novelty and complexity, SPACs are organized as standard Delaware corporations. As this Article demonstrates, SPACs have exhibited a striking disregard of corporate law. The standard SPAC adopts a governance structure that, for a public corporation, is highly unusual: All corporate control is vested in the hands of a single shareholder (known as the sponsor), who suffers from a deep conflict of interest with public stockholders but nevertheless acts free of any conventional disinterested constraints. The SPAC industry has kept its collective head in the sand on what this model means for SPAC fiduciaries: under existing Delaware law, the standard SPAC very likely triggers the entire fairness test, and very likely for all the reasons it can be triggered. SPACs have also failed to comply with basic corporate statutory requirements in ways that are positively bizarre for large commercial transactions.

SPACs now face a corporate law reckoning, forcing Delaware to examine the SPAC in light of basic corporate expectations. This Article argues that the normative touchstone in that examination should be to enforce privately-ordered bargains. For a SPAC that elected to organize as a corporation, in Delaware, and sold shares of common stock to the public, the core attributes of the privately-ordered bargain are deceptively simple: (1) the mandatory loyalty obligation for fiduciaries and (2) the limited ways to satisfy that obligation short of a judicial inquiry. In particular, the SPAC redemption right should be irrelevant to the judicial standard of review, as homebrewed remedies cannot abrogate the loyalty demand or excuse the absence of any disinterested decision-makers. Thus, the most searching form of judicial review should apply to the one business decision that a SPAC makes—its business combination.

Delaware and the federal government should act symbiotically in responding to SPACs. Before imposing substantive external regulations on SPACs, the SEC and Congress should wait for a clearer picture from Delaware about the vehicle’s internal regulation. And for the time being, Delaware should resist any legislative calls to fashion a new statutory structure for the SPAC, especially in light of the looming federal response and the still-unfolding picture of sponsor behavior during the 2020-21 boom. Federal officials should fashion SPAC rules that are explicitly cognizant of Delaware’s fiduciary protections, as SPACs that live up to the basic expectations of the Delaware corporate form will give rise to far fewer problems under federal securities laws. Thus, for example, the SEC might allow the registration of SPAC shares only if the entity is incorporated in Delaware or might restrict exchange rules in similar fashion.

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

Considers, with reference to case law, the options available under Singapore's Companies Act if the quorum requirements of a board or shareholder meeting are deliberately breached, or the notice requirements are not met, including seeking court approval for a meeting.

EZRA WASSERMAN MITCHELL, Shanghai University of Political Science and Law (SHUPL)
Email: ezra.mitchell56@gmail.com

China has imported the Anglo-American law of fiduciary duty into its corporate statute. I argue that fiduciary duty confronts a problem. Its transplantation is into the rich cultural soil of guanxi, a soil that is incompatible with the equally richly developed culture of fiduciary duty.

This is the first paper to examine the relationship between fiduciary duty and guanxi. I conclude that, while fiduciary duty may take root in the limited (but important) context of self-dealing transactions, it is likely to fail in its essential function of guiding fiduciary behavior in the presence of a guanxi relationship