devoirs des administrateurs Gouvernance Normes d'encadrement objectifs de l'entreprise Valeur actionnariale vs. sociétale
A Legal Basis for Corporate Long-Termism
Ivan Tchotourian 17 janvier 2018 Ivan Tchotourian
Petite lecture sur l’ouverture des sociétés par actions au long-terme avec cet article de Arjya Majumdar : « A Legal Basis for Corporate Long-Termism » (Oxford Business Law Blog, 9 Jan 2018).
My recent paper attempts to reconcile the divergent positions of the shareholder and stakeholder primacy debate by proposing that directors- acting for the corporation- should preserve intergenerational equity. Three arguments are presented in course of this proposition.
Firstly, there has been a slew of judgments in UK common law which suggest that courts are reticent to recognize fiduciary duties that directors may have towards shareholders. The primary reason for this is that the assets controlled, administered and managed by directors belong to the corporation as a legal entity separate from its shareholders. As a result, directors have a higher fiduciary duty to the corporation and future shareholders, over that of present shareholders.
Secondly, corporations are perpetual in nature or, at least, are designed to be, and their continuing existence is predicated upon the ability of individual owners to transfer their ownership. This aspect of corporate perpetuity is little discussed, but of considerable significance in conjunction with fiduciary duties to corporations.
If directors owe their primary duty to the corporation, they must ensure -to the best of their abilities- that the corporation is maintained in good condition throughout. This forms the legal basis of protection to future shareholders. Since the survival of the corporation is paramount compared to the investment of the shareholder, directors are under an obligation to preserve the corporation.
Finally, in order to safeguard the interests of future shareholders, corporations must necessarily strive to preserve the natural and social environments upon which the future of the corporation and the wealth of future shareholders depends. Businesses must, therefore, either create sustainable methods of harvesting resources, or move to an alternative. Failure to do so would result in non-viability and consequent ‘extinction’ of the business itself.
À la prochaine…
Ivan Tchotourian
devoirs des administrateurs Gouvernance Normes d'encadrement objectifs de l'entreprise Valeur actionnariale vs. sociétale
Vien de paraître : Mythes de la gouvernance d’entreprise – osons déboulonner certaines idéologies entourant la gouvernance !
Ivan Tchotourian 12 janvier 2018 Ivan Tchotourian
Avec MM. Jean-Christophe Bernier et Charles Tremblay-Potvin (étudiants au CÉDÉ), nous venons de publier dans la Revue internationale de droit économique (RIDE) un article critiquant certaines normes de gouvernance d’entreprise et proposant des alternatives : « Les 5 mythes de la gouvernance d’entreprise: perspective économico-juridique nord-américaine« .
Résumé : La gouvernance d’entreprise est aujourd’hui au cœur d’une profonde réflexion et fait l’objet de vifs débats sur le sens et le contenu des règles qui l’encadrent. Cet intérêt pour le sujet n’a rien d’étonnant, compte tenu de la place qu’occupent les entreprises sur l’échiquier mondial, et s’avère encore plus justifié depuis la crise économico-financière de 2007-2008 et les scandales qu’elle a permis de mettre en lumière. Pourtant, encore aujourd’hui, sous l’influence notable d’une culture anglo-américaine largement diffusée dans les cercles intellectuels, le cadre théorique dominant de la gouvernance d’entreprise repose sur une série de présupposés qui semblent relever davantage d’une mythologie que de la réalité objective, et ce, malgré une prétention à la scientificité de la part de ses promoteurs. Le présent texte analyse cinq de ces mythes et montre comment ils sont porteurs d’un message sur le plan idéologique.
Abstract : Corporate governance is still, to this day, the topic of the most intense discussions among scholars, especially concerning its legal and regulatory development over the past few years. As most of the current developments are dealing with global concerns about the impact of recent financial crises and their related scandals, the academics have yet been able to settle the score with long dated matters of corporate governance. Indeed, under the significant influence of an Anglo-Saxon culture, largely disseminated among the literature, the prevailing theoretical framework of corporate governance is still based on a series of preposterous presumptions. These presumptions of another time appear to originate more from rhetorical statements rather than deep analysis of the issues characterizing the early era of modern corporate governance. As they fulfilled their task, over the years, of supporting the development of capitalism throughout the industrial world and providing a legitimate rationale for corporate owners to adopt some aggressive and reckless behaviors, those corporate governance assumptions have since been held up as the cornerstones of an efficient social economy, profitable for all and everyone. As global economy has encountered a few unfortunate setbacks over the past decades, it is important to question ourselves on the legal value of these presuppositions, as they might have more to do with unsubstantiated myths than a complete legal and scientific work. As this Article has not the presumption of presenting the paramount truth on this topic, it has the purpose of highlighting the discrepancies between what have always been considered as the foundation of corporate governance and what it should have been if it had not being carried on only to nurture some illegitimate purposes of modern capitalism, such as shareholder primacy or financial profitability. Therefore, this Article is exploring five typical myths of corporate governance: (1) the corporation as a nexus of contracts, (2) the shareholders as owners of the corporation, (3) the shareholders as the only residual creditors of the corporation, (4) the effectiveness of shareholder activism and (5) the corporate governance as a legitimate rationale for shareholder primacy. As the aggregate theory of corporations, asserting that the corporation is nothing less than a nexus of contracts and that it may only benefit the shareholders, has made its way through most of the 20th century, it is now confronted with some more inclusive and realistic theories of unprecedented rigor, such as considering the corporation as an institution pursuing a social purpose. Therefore, considering the shareholders as the owners of the corporation might be of another time as well. Undeniably, what the recent ups and downs on the financial markets have shown the world is that the corporate directors ought to be considered as the center core of the corporation, acting collectively, but independently from the shareholders, and promoting the success of the company throughout the interests of all corporate stakeholders. Consequently, the shareholders cannot still be considered the owners of the corporation, dictating directors as to how they must govern, as the corporation has its own legal personality, effectively managed and controlled by the board of directors. Subsequently, neither they can be considered as the only residual creditors of the corporation, as all the other stakeholders’ investments are also at stake. More importantly, as shareholders became more active over the years, the effectiveness of their implication in the management of the corporation has been questionable, as they often lack a long term vision and considerations for other stakeholders’ interests. Finally, it is quite arguable to still promote shareholders’ primacy in today’s world, as law, jurisprudence and doctrine have, timidly but still, embraced the stakeholder theory which states that the board of directors has to consider the whole corporation interests first, rather than simply focus on short term profitability for the shareholders.
À la prochaine…
Ivan Tchotourian
devoirs des administrateurs Normes d'encadrement normes de droit objectifs de l'entreprise Valeur actionnariale vs. sociétale
À relire : Shareholder Wealth Maximization and Its Implementation Under Corporate Law
Ivan Tchotourian 19 décembre 2017
Le professeur Bernard S. Sharfman a publié il y a deux ans un article très intéressant sur la primauté de la valeur actionnariale en droit des sociétés : « Shareholder Wealth Maximization and Its Implementation Under Corporate Law », 66 Fla. L. Rev. 389 (2015). À redécouvrir !
This Article tackles the question of when courts should intervene in the decision-making of a corporation and review a corporate business decision for shareholder wealth maximization. This Article takes a very traditional approach to answering this question. It notes with approval that courts have historically been very hesitant to participate in the process of determining if a corporate decision is wealth maximizing. Courts have restrained themselves from interfering with board decision-making because they understand that it is the board of directors (the board) in coordination with executive management that has the best information and expertise to determine if a corporate decision meets the objective of shareholder wealth maximization. Nevertheless, the courts have found that they can play a wealth-enhancing role if they focus on making corporate authority accountable when there is sufficient evidence to show that the corporate decision was somehow tainted. Therefore, the courts will interpose themselves as a corrective mechanism when a board decision is tainted with a conflict of interest, lack of independence, or where gross negligence in the process of becoming informed in the making of a business decision is implicated.
When judicial review veers from this traditional approach, the court’s opinion must be closely scrutinized to see if the court had valid reasons for implementing a different approach. Such a veering from the traditional path can be found in the Delaware Chancery case of eBay Domestic Holdings, Inc. v. Newmark, a case where the court, in its review of a shareholder rights plan under the Unocal test, required the directors to demonstrate that the corporate policy being defended by the poison pill enhanced shareholder value. As argued here, the court was wrong in its approach, and in general courts should never be in the position of adding this additional component of analyzing board decisions for shareholder wealth maximization unless the business decision was tainted with a conflict of interest, lack of independence, or gross negligence.
À la prochaine…
Ivan Tchotourian
Gouvernance mission et composition du conseil d'administration Normes d'encadrement objectifs de l'entreprise Valeur actionnariale vs. sociétale
Dividendes : les risques d’une dette
Ivan Tchotourian 22 octobre 2017
Dans Les affaires, Patrick Thénière et Rémy Morel reviennent sur la logique du versement des dividendes aux actionnaires dans un billet critique intitulé : « Ne touchez pas à notre précieux dividende ! ».
Comme on le sait, une entreprise peut s’abstenir de verser un dividende à tout moment. Cependant, donnez quelque chose à quelqu’un sur une base régulière, et vous verrez qu’il deviendra difficile de vous arrêter sans créer l’émoi! (…)
Pour cette raison, nous pensons que les investisseurs recherchant les revenus avant tout prennent parfois des risques insoupçonnés. Nous vous invitons à lire la petite histoire fictive de Lucie et Martin que nous avions publiée il y a plus d’un an.
Idéalement, un dirigeant d’entreprise devrait pouvoir couper un dividende à tout moment, sous seul prétexte qu’il compte effectuer plutôt un rachat d’actions, ou réinvestir dans les activités de la société pour les améliorer. Dans les faits, cela se passe rarement de cette façon. C’est pourquoi nous pourrions presque considérer ce paiement annuel au même titre qu’une dette.
À la prochaine…
Ivan Tchotourian
Normes d'encadrement rémunération Valeur actionnariale vs. sociétale
The role of executive pay in promoting responsible business
Ivan Tchotourian 28 août 2017
Dans Lexology, RPC propose une synthèse intéressante qui rappelle une évidence : la rémunération des hauts-dirigeants a un rôle à jouer dans la pérennité à long-terme des entrepris. Un article synthétique à lire qui revient sur le projet de réforme britannique de gouvernance d’entreprise : « The role of executive pay in promoting responsible business » (24 mars 2017).
Executive pay is a thorny issue. Well-structured remuneration packages can help to ensure that companies are run responsibly for the benefit of shareholders, employees, customers, and wider society. However, when improperly designed, executive pay packages can encourage short-term and risky behaviour which dents public confidence in business.
(…)
The ultimate aim for businesses is to attract and retain top talent whilst ensuring that those individuals are motivated to achieve sustainable, long-term value creation for the company. Where there is a perception that ever more generous remuneration packages are necessary in order to achieve those objectives, we are unlikely to see any reversal in current pay trends, with or without reform.
À la prochaine…
Ivan Tchotourian
devoirs des administrateurs Gouvernance Normes d'encadrement Nouvelles diverses
Prise en compte des parties prenantes par le CA : Leo Strine l’affirme
Ivan Tchotourian 3 février 2017
Bonjour à toutes et à tous, merci à Leo Strine de rappeler cette évidence : les CA doivent se préoccuper des parties prenantes ! Dans son article « Corporate Power is Corporate Purpose I: Evidence from My Hometown », Leo Strine s’appuie sur une analyse historique ô combien intéressante… À lire de toute urgence
Le message est clair (j’ai extrait deux phrases qui me semblent ne prêter guère le flanc à la critique) :
- This article is the first in a series considering a rather tired argument in corporate governance circles, that corporate laws that give only rights to stockholders somehow implicitly empower directors to regard other constituencies as equal ends in governance.
- DuPont’s board knew that only one corporate constituency — the stockholders — called the shots and that they were expected to make their end investors’ best interests, even if that meant hurting other constituencies. The DuPont saga isn’t a story about bad people, but a reminder to those with genuine concern for non-shareholder constituencies to face the truth and support changes in the power dynamics affecting corporate governance that make due regard for non-shareholder constituencies a required obligation for the conduct of business.
Using recent events in the corporate history of E. I. du Pont de Nemours and Company—more commonly referred to today as DuPont—as a case study, this article makes the point that the board of directors is elected by only one constituency—stockholders—and that core power structure translates into corporate purpose. DuPont is an American icon, creator of household names like Nylon and Mylar, which prided itself on its core values, which included commitments to the safety and health of the communities in which DuPont operated and to treat its employees with dignity and respect. But when an activist investor came, DuPont reacted by preemptively downsizing—cutting jobs, and spinning off assets. After winning the proxy fight, DuPont failed to meet the aggressive earnings it used in its campaign. More job cuts came, the CEO was replaced with a member of her proxy fight slate, and DuPont soon embraced a merger consistent with the activists’ goals. At the same time, DuPont demanded tax and other incentives from the affected community it had asked to rally around it in the proxy fight. It did all this even though at no time was there a threat of a lawsuit or judicial intervention from unhappy shareholders. The DuPont saga illustrates how power dictates purpose in our corporate governance system. DuPont’s board knew that only one corporate constituency—the stockholders—called the shots and that they were expected to make their end investors’ best interests, even if that meant hurting other constituencies. The DuPont saga isn’t a story about bad people, but a reminder to those with genuine concern for non-shareholder constituencies to face the truth and support changes in the power dynamics affecting corporate governance that make due regard for non-shareholder constituencies a required obligation for the conduct of business.
À la prochaine…
Ivan Tchotourian
Gouvernance Normes d'encadrement Nouvelles diverses responsabilisation à l'échelle internationale Structures juridiques Valeur actionnariale vs. sociétale
Cours DRT-7022 : Gouvernance de l’entreprise
Ivan Tchotourian 31 août 2016
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
