{"title":"Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda","authors":"M. Siri, Shanshan Zhu","doi":"10.3390/su11226292","DOIUrl":"https://doi.org/10.3390/su11226292","url":null,"abstract":"Building a common EU framework for sustainable finance undoubtedly implies the integration of sound and sustainable processes and skills across the whole structure and governance of financial institutions. Consequently, a new financial paradigm is going to be needed, which will require the strengthening of investor care and protection, so contributing to the restoration of trust in the financial sector. In particular, on 18 December 2018, the European Securities and Markets Authority (ESMA) launched two public consultations on draft technical advice for the integration of sustainability risks and factors into the Directive on Markets in Financial Instruments (MiFID), the Alternative Investment Fund Managers Directive (AIFMD), and the Undertakings for Collective Investment in Transferable Securities Directive (UCITS) regimes, with the aim to clarify the so-called fiduciary duties and to increase transparency in the financial services industry. However, the success of the EU initiatives on investor protection regulation may be seriously endangered by the existence of many challenges, weaknesses, and contradictions raised by economists and stakeholders in relation to the definition of sustainability, ESG data availability and reliability, the development of an EU taxonomy, conflicts of interest, product governance, and suitability assessment. This paper starts by briefly analyzing the recent developments of the regulation of sustainable finance at the global level, then offers a more detailed view on the establishment of a common regime on sustainable finance in the EU, with particular reference to the action plan ‘Financing Sustainable Growth’. Then, it examines the recent proposals for regulation on sustainable finance, specifically considering the barriers to the integration of sustainability risks and factors in the EU investor protection regulation—with particular reference to investment services—with respect to its four main dimensions: (1) disclosure of product information, (2) conduct of business (COB) rules, (3) product governance and intervention, and (4) financial education. The paper concludes that the EU reforming proposals, though admirable, risk oversimplifying a complex issue that cannot be easily solved without considering its practical implications on each category of financial operators in the performance of different financial services.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125887799","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Harmonizing Private Securities Offering Exemptions","authors":"Andrew N. Vollmer","doi":"10.2139/ssrn.3524391","DOIUrl":"https://doi.org/10.2139/ssrn.3524391","url":null,"abstract":"The Securities and Exchange Commission requested public comment on ways to simplify, improve, or harmonize exemptions from the requirement to register securities offerings. The SEC acknowledged that the current array of exempt offerings is complex and might be difficult for issuers to navigate. See Concept Release on Harmonization of Securities Offering Exemptions, 84 Fed. Reg. 30,460 (June 26, 2019).<br><br>My comment proposed a new exemption from the registration requirements to replace several of the current exemptions and simplify access to capital for startup companies and small to mid-sized companies. It would combine features from Rules 506(b) and (c) of Regulation D and eliminate costly and cumbersome limitations and restrictions that are part of current exemptions for smaller companies, particularly Regulation A, Regulation CF, and Rule 504 of Regulation D. The approach also would broaden the base for sources of capital by eliminating the accredited investor restriction in Rule 506, but it would preserve fundamental investor protection by requiring a set of mandatory disclosures in each sale. <br><br>The central element of the proposed exemption is a solid disclosure document. An important qualification is that the disclosures must not be as extensive as those mandated by Regulation S-K, Form S-1, Rule 506(b) for nonaccredited investors, or Regulation A. The disclosure obligations of the new exemption should provide essential company and security information to buyers but avoid the high costs associated with longer disclosures. <br>","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126644196","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Bankruptcy Laws: A Comparative Study of India and USA","authors":"Md Rashid Shamim","doi":"10.34218/jom.6.2.2019.028","DOIUrl":"https://doi.org/10.34218/jom.6.2.2019.028","url":null,"abstract":"This study examines a comparative relationship of United States and Indian insolvency and bankruptcy laws from individual and corporate prospective and analysis of the legislative framework. This study shows significant amendments and replacement made in previous related Acts for implementing the all new bankruptcy code with insolvency resolution and liquidation process with brief history of bankruptcy.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"68 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129011857","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Balance of Power between Creditors and the Firm: Evidence from German Insolvency Law","authors":"F. Closset, Daniel Urban","doi":"10.2139/ssrn.3186114","DOIUrl":"https://doi.org/10.2139/ssrn.3186114","url":null,"abstract":"In late 2011, German legislators passed the latest reform to German Insolvency Law (ESUG). ESUG mandates that creditors of larger firms can exert more influence on the appointment of the insolvency administrator, resulting in a shift of power from shareholders to creditors. Based on difference-in-differences estimation, we find that larger firms reduced financial leverage around this event, while firms below the size threshold of the law increased debt levels. Furthermore, after the enactment of ESUG, larger firms spend less money on investment, while smaller firms invest more and benefit from lower cost of debt. Overall, the evidence is consistent with the view that, in an environment where creditors are already well protected, even stronger creditor protection does not necessarily foster borrowing.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"34 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116133735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Strengthening Trust in Israeli Financial Markets: The Case of the Demutualisation of the Tel Aviv Stock Exchange","authors":"Leon Anidjar","doi":"10.2139/ssrn.3161171","DOIUrl":"https://doi.org/10.2139/ssrn.3161171","url":null,"abstract":"The Israeli stock market is in turmoil. In recent years, the Israel Securities Authority has initiated significant legislative changes intended to tighten the regulation applying to public companies in Israel. These legislative changes drew their inspiration from Anglo-American law. However, it became apparent that these changes significantly impeded the operations of public companies in Israel, leading to the deletion of such companies from trading and their registration in countries with more lenient regulation. The fall in the scope of trading on the Tel Aviv Stock Exchange led to mutual recriminations between the chairperson of the Israel Securities Authority and the chairperson of the Tel Aviv Stock Exchange concerning the reasons for the current situation. The steep decline in the scope of trading on the Tel Aviv Stock Exchange exposed a crisis of trust in Israeli financial markets. I shall argue that to encourage trust in Israeli financial market, we should adopt a general reform regarding the implementation of internal corporate governance mechanisms in the working process of the Israel Securities Authority and Tel Aviv Stock Exchange. In this framework, I will discuss the implication of several insights derived from the Organizational Management theory on special processes which could enhance cooperation between financial authorities and self-regulatory organizations in Israel. I believe that adopting such processes in Israel may contribute significantly to improving trust in the financial markets.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"85 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114809841","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Fiduciary Obligations in Business and Investment: Implications of Climate Change","authors":"Janis Sarra","doi":"10.2139/SSRN.3356024","DOIUrl":"https://doi.org/10.2139/SSRN.3356024","url":null,"abstract":"Fiduciary obligation, under both corporate law and the common law, requires directors and officers to identify and address climate-related financial and other risks. In fulfilling their obligations to act in the best interests of the company, directors and officers must directly engage with developments in knowledge regarding physical and transition risks related to climate change and how these risks may impact their corporation. Depending on the firm’s economic activities, the risk may be minor or highly significant, but directors and officers have an obligation to make the inquiries, to devise strategies to address risks, and to have an ongoing monitoring to ensure the strategies continue to be responsive to the risk. Directors’ fiduciary duty requires that they have overseen and monitored the actions of the individuals charged with mitigation and adaptation; and have mechanisms in place to respond rapidly to changes in the company’s risk profile. In addition to fiduciary obligations, this study examines the statutory duty of care under corporate law, which requires directors and officers to exercise the care, diligence and skills that a reasonably prudent person would exercise in the circumstances. This duty requires directors and officers to supervise and manage the transition that will address the specific risks, as well as the new opportunities, posed by climate change. \u0000 \u0000The study also examines pension plan trustees and other investment fiduciaries in respect of their fiduciary obligations related to climate change. Pension fund trustees have a fiduciary obligation to pension beneficiaries to act prudently in their best interests in making investment decisions regarding fund portfolios. In fulfilling their obligations to beneficiaries, pension trustees and their investment managers have an obligation to identify and address climate-related financial risk. Trustees can take climate change into account as a legitimate investment issue over the short or long term or both. If trustees fail to act to address material climate change risk, they may be personally liable for breach of their fiduciary obligation. Inaction is no longer acceptable, given all the evidence that climate change risk is material across the entire economy. Trustees can also take climate change into account because they have duties as public fiduciaries additional to their financial duty to beneficiaries. Fiduciaries have a duty to act even where the potential costs and benefits of climate change cannot be fully quantified immediately. Fiduciary obligation also requires considering the benefits of investment in green adaption and mitigation technologies and other products and services that are likely to have upside financial potential for return on investment.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127136729","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Disasters and Disclosures","authors":"Donald C. Langevoort","doi":"10.2139/SSRN.3105532","DOIUrl":"https://doi.org/10.2139/SSRN.3105532","url":null,"abstract":"Many securities fraud lawsuits follow corporate disasters of some sort or another, claiming that known risks were concealed prior to the crisis. Yet for a host of doctrinal, pragmatic and political reasons, there is no clear-cut duty to disclose these risks. The SEC has imposed a set of requirements that sometimes forces risk disclosure, but does so neither consistently nor adequately. Courts in 10b-5 fraud-on-the-market cases, in turn, have made duty mainly a matter of active rather than passive concealment and thus, literally, wordplay: there is no fraud-based duty to disclose risks unless and until the issuer has said enough to put the particular kind of risk “in play.” But when that is, and why, flummoxes them. This incoherence could be rationalized by a more thoughtful assessment of how words matter to investors and better appreciation of the variable role that managerial credibility plays in the process of disclosure and interpretation, which is the main focus of this article. Disasters are an ideal, if disturbing, setting for thinking through the micro-structure of corporate discourse — the implicit rules of interpretation for how marketplace actors interpret what issuers say and don’t say, whether in formal SEC disclosures, conference calls, press conferences and even executive tweets. But even if there is more thoughtfulness to the endeavor, it is fair to ask why wordplay should make so much of a difference as to duty in the first place, or whether instead our impoverished conception of duty and its links to scienter, reliance and causation deserve a more thorough makeover. The study of disasters and disclosures also offers a distinctive reference point for thinking about contemporary controversies associated with bringing matters of social responsibility (e.g., law abidingness) and sustainability (environmental compliance, cybersecurity, product safety, etc.) into the realm of securities law.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"86 1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-01-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127989582","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Corporate Purpose and Governance Failures – A Tale of Two Corporates in India","authors":"Darshan Ramasubramanian","doi":"10.2139/SSRN.3065586","DOIUrl":"https://doi.org/10.2139/SSRN.3065586","url":null,"abstract":"In the year 2016 and the mid of 2017, key words that were being discussed in many corporate circles in India was Corporate Governance, Role Executive Chairman & CEO, conflict of interest and company performance. These were the times when two large corporate houses had issues related to company performance, corporate governance, Board independence and Promoter shareholders rights. \u0000This article attempts to find reasons and analyses the events. \u0000From inception to date, a debate rages, on the purpose of a Company, on whether maximizing shareholder value is the ultimate goal of corporate activity or whether the goal is some other broader societal “good.” \u0000To understand the vital balance between these interests it is very relevant to understand how a Company is regulated through Companies Act, and other relevant legislation and securities regulation through SEBI, Stock Exchanges. It is also important to know the role and responsibilities of and limits on shareholders, including promoter shareholders, independent directors and other directors with respect to corporate decisions. \u0000Various regulations and legislation have indicated that Investor protection is a primary goal. As a regulatory goal, investor protection has value in that it provides positive value to capital formation and the long-term contributions of viable corporations to the economy. More intentional deliberation about the role of the corporation and its relationship to society is necessary in the dialogue over expanding shareholder influence, and also with respect to rebuilding societal trust in the corporation. \u0000With more emphasis on performance, a closely related issue that has emerged now is the balance in governance roles and responsibilities between shareholders and boards.","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"17 6 Suppl 9 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131148678","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Assessing the Performance of Takeover Panels: A Comparative Study","authors":"E. Armson","doi":"10.1017/9781108163965.006","DOIUrl":"https://doi.org/10.1017/9781108163965.006","url":null,"abstract":"Takeover regulatory regimes around the world seek to balance the conflicting interests of the parties involved in takeovers. The clearest conflict arises from the opposing aims of the shareholders of the company being taken over (target) and the acquirer (bidder) in regard to the price paid for the target shares and the amount of information provided. Another involves the target company’s directors, who are in the best position to advise target shareholders on the merits of the takeover bid and yet are likely to be concerned not to lose their position as a result of the takeover. Different takeover regimes adopt varying approaches to deal with these conflicts. This chapter focuses on regulatory systems that use a Panel or like body to make decisions in relation to takeover matters. Of all of the Panel bodies, the Panel on Takeovers and Mergers in the United Kingdom (UK Panel) is the most well-known. This is principally because it was the first of its kind, and has subsequently provided a model for a number of other like bodies around the world. In Asia, these bodies are the Takeovers and Mergers Panel in Hong Kong (HK Panel) and Securities Industry Council in Singapore (Singapore Council). Both of these jurisdictions have adopted a Takeover Code that is modelled to varying extents on The City Code on Take-overs and Mergers (UK Code). In contrast, the Takeovers Panel in Australia (Australian Panel) operates on a different basis from the takeover bodies in Hong Kong (HK), Singapore and the UK (Code jurisdictions). That is, rather than having a proactive role in enforcing a Takeover Code, the Australian Panel only decides applications made before it based on the Australian takeover legislation. As a result, the Australian Panel’s role focuses on resolving disputes between the parties involved in a takeover. Notwithstanding the differences in their names and functions, each of the above takeover bodies is responsible for ensuring that parties to a takeover act appropriately. Importantly, the bodies make their decisions based on similar aims and regulatory principles underpinning the respective regimes. First, each of the four jurisdictions is concerned to ensure that the target shareholders are given equal treatment. The Code jurisdictions achieve this by requiring a mandatory offer once an acquirer and associated persons have obtained control or reached a threshold of 30 percent of voting rights. In Australia, a general offer to shareholders is one of the key exceptions to a prohibition on acquisitions above a 20 percent threshold. Secondly, each jurisdiction requires shareholders to be given sufficient time and information to reach a properly informed decision. Thirdly, the systems operate on the basis that a target board requires shareholder approval for action that would frustrate a bona fide offer. This is consistent with general principles setting out that the target board must act in the interests of the company as a whole. Fourthly, the juris","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127070927","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Convergence and Persistence in Corporate Law and Governance","authors":"Jeffrey N. Gordon","doi":"10.2139/ssrn.3037113","DOIUrl":"https://doi.org/10.2139/ssrn.3037113","url":null,"abstract":"This paper, which will be the basis for a chapter in the forthcoming Oxford Handbook of Corporate Law and Governance (Jeffrey Gordon and Georg Ringe, eds.), surveys the extent of convergence in corporate law and governance over the past 15 years. The paper assesses the efforts to measure convergence through the coding of national legal regimes and other comparative measures, finding “divergence in convergence.” Among its conclusions: The decline in cross-listings on US stock markets reflects a “leveling up” of corporate governance standards in emerging market economies and financial globalization’s development of credible substitutes for the US’s disclosure regime. Much of convergence has resulted from the work of global governance institutions reacting to an assessment that poor corporate governance played a major role in the East Asian Financial Crisis and is otherwise implicated in financial stability. The relative lack of convergence within the EU is less because of the efficiencies of local regimes and more because of the desire of Member States to throw sand-in-the-gears of economic and political integration by impeding the growth of trans-EU firms. Finally, the latest turn in the “End of History” debate is less about the primacy of “shareholder value” and more about “which shareholders.” The combination of long-standing family ownership and the reconcentration of public equity ownership in institutional investors has created a significant shareholder constituency that includes “stability” in its maximizing function, not just “efficiency.”","PeriodicalId":309706,"journal":{"name":"CGN: Governance Law & Arrangements by Subject Matter (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-09-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129002429","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}