Structures juridiques | Page 2

Le blog de l’Université d’Oxford relaie ce papier de Deborah A. DeMott : « Fiduciary Contours: Perspectives on Mutual Funds and Private Funds » du 22 août 2016. Excellente étude sur les devoirs fiduciaires des gestionnaires et la protection des investisseurs-consommateurs !

My paper,  written for a forthcoming book focused on research concerning mutual funds, examines the content, scope, and function of the fiduciary duties owed by investment managers, drawing in particular on contrasts between mutual (or public) funds and private funds (principally hedge funds and private equity funds). The paper surveys the relevant regulatory architectures as well as private-law duties of loyalty. The paper also develops more specific contrasts between mutual funds and private funds concerning principal transactions, fees, fund governance, and regulatory frameworks for internal compliance. The thesis of the paper is that in the mutual-fund context, the specifics of fiduciary duty reflect distinctive and hybrid qualities of this form of investment in securities, conventionally understood to involve an investment company that issues shares to public investors as well as a highly prescriptive regulatory structure, embodied in the United States in the Investment Company Act of 1940. The Investment Company Act, an exemplar of a ‘rules-based’ regulatory regime, addresses many potential breaches of fiduciary duties through prescription, for example, by prohibiting principal transactions, those between the fund itself and its manager or between the fund and the manager’s affiliates.

In contrast, fiduciary duties in the private-fund context exemplify a ‘principles-based’ regime, embodied in the not-so-prescriptive structure of the Investment Advisers Act of 1940, which applies to fund managers required to register with the SEC as investment advisers. In this less prescriptive realm, fiduciary duties are harder to assess, at least in part because many private-fund managers until recently operated behind a thick veil of opacity.

À la prochaine…

Ivan Tchotourian

Bel article synthétique d’Ian Jeffrey sur la question suivante (question que se posent les jeunes entrepreneurs de start up) : « To vest or not to vest cofounder shares ».

It’s common knowledge that employees must vest their stock options over time.

When I first got started in the startup world over 10 years ago, vesting schedules were typically 48 months on a 12 month cliff. A cliff is a stipulation dictating that if someone leaves the company before a pre-determined length of time (in this example 12 months), the leaving person loses 100 per cent of their equity. (For those of you who don’t know the mechanics of vesting, I wrote about it here a year ago.)

More recently, 36 month vesting  on a six-month cliff seems to be more and more common. That’s no doubt a good thing for employees.

Employee stock options and vesting are topics that come up all the time when I meet with founders, but they’re always surprised when I ask them about their founder shares’ vesting schedule.

À la prochaine…

Ivan Tchotourian

Le séminaire DRT-7022 donné à l’automne 2016 apportera aux étudiants une réflexion originale sur les liens entre la sphère économico-juridique, la gouvernance des entreprises et les enjeux sociétaux actuels. Le séminaire s’interrogera sur le contenu des normes de gouvernance et leur pertinence dans un contexte de profonds questionnements des modèles économique et financier.

En partenariat avec les éditions Yvon Blais, un prix (en dotation de livres) sera remis aux meilleurs travaux de recherche.

Pour faciliter la diffusion des travaux réalisés par les étudiants, le séminaire DRT-7022 fera appel à deux moyens. D’une part, le séminaire comprendra un colloque-étudiant. Les étudiants participeront comme conférenciers à un colloque organisé par le CÉDÉ. Cette tribune publique leur permettra de présenter le résultat de leurs recherches effectuées durant la session d’hiver. D’autre part, le séminaire bénéficiera du soutien de trois blogues : le blogue Droit de l’entreprise : gouvernance comparée et responsabilité sociétale (ici), le blogue de Jacques Grisé – Gouvernance (ici) et le blogue Gouvernance & services financiers du Centre d’Études en Droit Économique (CÉDÉ) (ici). Ces blogues seront des partenaires privilégiés en proposant aux étudiants de diffuser certains de leurs travaux afin de leur donner une audience provinciale et nationale, et ce, au travers d’un format original.

À la prochaine…

Ivan Tchotourian

Excellent Law Working Paper de l’ECGI (No. 316/2016) de John Armour, Dan Awrey, Paul L. Davies, Luca Enriques, Jeffrey N. Gordon, Colin Mayer et Jennifer Payne consacré à la gouvernance d’entreprise des banques : « Bank Governance ».

Voici le résumé :

According to a common narrative, in addition to inadequate capital and liquidity, the failure of banks in the financial crisis also reflected their poor governance. By governance we mean broadly the oversight that comes from banks’ own shareholders and other stakeholders of the way in which they are run.

The problem of bank governance stems from the way in which banks are financed and regulated, from the externalities bank failures produce, and from the nature of their assets. In the period leading up to the financial crisis, it was believed that regulation would cause banks to internalize the costs of their activities, meaning that what maximized bank shareholders’ returns would also be in the interests of society.

Consequently large banks used the same governance tools as non-financial companies to minimize shareholder-management agency costs, namely independent boards, shareholder rights, the shareholder primacy norm, the threat of takeovers, and equity-based executive compensation. Unfortunately, such tools had the adverse effect of encouraging bank managers to take excessive risks: as we describe in this chapter, banks that had the most ‘pro-shareholder’ boards and the closest alignment between executive returns and the stock price were those which took the most risks prior to, and suffered the greatest losses during, the crisis.

Consequently, a significant rethink about the way in which banks are governed is required. The structure and function of bank boards, the compensation of bank executives and the function of risk management within organizations needs careful crafting if governance reforms are to address not exacerbate bank failures.

À la prochaine…

Ivan Tchotourian

Alors que le colloque du SASE va bientôt avoir lieu à Berkeley aux Etats-Unis, je reviens aujourd’hui sur ce que j’avais présenté au colloque qui s’était tenu en 2014 à Chicago : “Enterprise” and Lawyer’s view: By by Irresponsibility and Welcome in a New Area ».

Accédez au diaporama : PPT SASE 2014 version anglaise

Voici le résumé de cette intervention :

As institutions corporations and enterprises are the basis of capitalism and the subject of great interest for legal studies. Beyond regulation, the inherent nature of corporations raises sensitive legal questions, indeed, since its first appearance in the 18^th century. Inspired by economic and financial sciences, legal theories incorporate corporations to contracts (referred to as “aggregate theory”), a private government (referred to as “artificial theory”) and an autonomous entity (“entity theory” or “doctrine de l’entreprise” in Continental Europe). It is indeed argued that incorporating corporations to a simple nexus of contracts has been the subject of great attention since the 1970s, provided that none of the above theories have definitely won unanimity in law, as seen by a comparative reading of the Canadian, American and European jurisprudence. Corporate governance rules clearly demonstrate such incorporation. In its essence, however, the contractual analysis regards the corporation as a means to serving private interests whereby the liability schemes are limited to protecting the supplier of capital. The contractual analysis’s vision is indeed restricted, and it summarizes its goals, to the sought-after maximization of the corporation’s shareholders value. At the heart of the corporation’s issues lies the financial aspect. Within this framework, non-financial concerns appear far away and are dealt with as simple externality that poses management problems. Nonetheless, the corporation’s activities are bearing an economic power that is today seen as ever increasingly significant and its financial and non-financial consequences should be the basis of further thinking. Yet, Canadian law has engaged into this pathway. On the one hand, Canadian corporate law has experienced a profound re-assessment through the Supreme Court of Canada’s decisions in Peoples (2004) and BCE (2008). Far from being a strict contractual reading of the corporation, these decisions have shed light on the importance of different paradigms such as corporate social responsibility and the stakeholders’ theory. Indeed, new incorporated corporate concepts have reshaped the way the corporation is perceived and its relationship with the environment. On the other hand, Canadian competition law attempts at integrating social concerns into its political sphere. In 2013, the Supreme Court of Canada has allowed the commencement of proceedings by indirect purchasers by way of a class action (see cases of Pros-sys, Sun-Rype and Infineon). Case law contemplates limiting the negative impact of anti-competition practices implemented by multinational corporations. The objective is to reinstate an economic balance as between corporations and its clients. The consumer is indeed called upon to play a protective role in the market in addition to the Canadian Competition authority’s competence. As affirmed by the Canadian Competition Tribunal in the decision of Visa/Master Card certain competition disputes between merchants are of common interest. Thus, the public should be made aware of the difficulties met by the businesses in the market. In light of the recent Canadian case law standpoint, it most certainly raises questions about the role that competition policies play within the corporation’s economic activities framework. This paper suggests showing the current legal positions of Canadian corporations and its competition law framework, in addition to putting them into perspective with  their US and European counterparts. In addition to demonstrating their convergence in favor of a more social concern, we stand for the proposition that corporations, as has been defined by the jurist, does not only form a contract. Indeed, it is an institution that carries responsibilities as against its own environment.

À la prochaine…

Ivan Tchotourian

En voilà une question allez-vous me répondre et pourtant… Un récent article du Harvard Business Review de Suntae Kim, Matthew Karlesky, Christopher Myers et Todd Schifeling intitulé « Why Companies Are Becoming B Corporations » aborde la question de face.

2 raisons essentielles sont identifiées :

1. First, as large established firms have ramped up their corporate social responsibility efforts, small businesses that have long been committed to social and environmental causes want to prove that they are more genuine, authentic advocates of stakeholder benefits.
2.  The qualitative evidence, gathered from firms’ B corporation application materials, revealed that certifying firms believed “the major crises of our time are a result of the way we conduct business,” and they became a B Corporation to “join the movement of creating a new economy with a new set of rules” and “redefine the way people perceive success in the business world.”

So why do certain firms (and not others) choose to identify as B Corporations? Individual leaders are partly why some organizations broaden their purpose beyond maximizing shareholder value. We might look to Sir Richard Branson, who in 2013 co-launched the “B Team,” publicly decrying corporations’ sole focus on short-term profits and calling for a reprioritization of people- and planet-focused performance. We might also consider leaders of firms like Ben & Jerry’s or Patagonia (both B Corporations) that have prioritized societal and environmental agendas.

Clearly, such leaders can be important catalysts of social change. However, the explosive growth of B Corporations seems also to be driven by broader trends and changes in the corporate landscape that cannot be explained by individuals’ actions alone.

Two of us (Suntae Kim and Todd Schifeling) conducted research to build a more robust understanding of the rise of B corporations. By qualitatively examining the internal motives of firms in the process of becoming a B corporation, and quantitatively testing key factors in these firms’ external industry environment – including the shareholder- and stakeholder-focused behaviors of their corporate competitors – we found that there are at least two major underlying reasons why firms choose to seek B Corporation certification.

À la prochaine…

Ivan Tchotourian