LAWDM0069 Corporate Law & Governance Unit Guide PDF

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LAWDM0069 Corporate Governance in the United Kingdom and United States Unit Coordinator: Lee Price POSTGRADUATE UNIT GUIDE

Law School 2019/2020

Contents Unit Description ................................................................................................................................ 3 Teaching Staff.................................................................................................................................... 3 Learning and Teaching on this Unit .................................................................................................... 3 Learning Opportunities – Formative Assessments.............................................................................. 4 Requirements for passing the unit – Summative Assessments: .......................................................... 4 Intended Learning Outcomes............................................................................................................. 5 Approach to Study ............................................................................................................................. 6 Core Texts and Resources .................................................................................................................. 7 Outline of Lectures ............................................................................................................................ 8 Outline of Seminars/Tutorials ............................................................................................................ 8 Seminar 1 - Introduction to Corporate Governance ........................................................................... 9 Seminar 2 – Theories of Corporate Governance: Contractarianism and shareholder primacy and Managerialism................................................................................................................................. 12 Seminar 3 - Corporate Pluralism and Stakeholder Theory ................................................................ 15 Seminar 4 ........................................................................................................................................ 17 The Division of Decision-Making Power Between the General Meeting and Board........................... 17 Seminar 6 - Boardroom composition, Non-Executive Directors and the Monitoring Board ............... 24 Seminar 7 - Disclosure and audit requirements................................................................................ 28 Seminar 8 - Executive Remuneration ............................................................................................... 31 Seminar 9 - Corporate Social Responsibility ..................................................................................... 36 Seminar 10 Regulation of the Market for Corporate Control ............................................................ 39

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Unit Description This unit aims to give students a fundamental understanding of the legal rules that determine the balance of decision-making power within Anglo-American public companies. It assesses the main theoretical models of the business corporation as developed within English and American jurisprudence and scholarship, in order to provide a basic conceptual structure to the course material. It then proceeds to examine and compare the key features of UK and US (Delaware & federal) company and securities law in relation to issues such as: the distribution of authority between directors and shareholders; the structure & composition of the corporate board; directors’ duties and financial risk management; and takeovers & the market for corporate control; and the relationship between corporate governance and corporate social responsibility. The emphasis is on studying how the legal rules and institutions interact with wider market pressures in establishing effective managerial incentives and disciplinary mechanisms.

Teaching Staff This unit is taught by: Unit Co-ordinator Mr Lee Price ([email protected]) Teaching staff: Mr Nigel Davis (email: TBC) Mr Vijaiya Poopalsingham (email: TBC) Mr Lee Price ([email protected]) Dr Roseanne Russell ([email protected]) Please view the contact details on Blackboard for office location and consultation hours (this is located in the Blackboard Organisation: ‘Law School – Student Pages > Contact Details / Staff Consultation Hours’). You are welcome to visit during consultation hours to discuss matters connected to this unit. Staff consultation hours will be advertised outside their offices and on Blackboard. If these times are not convenient for you, you should make contact by e-mail to arrange an appointment.

Learning and Teaching on this Unit For the time/location of classes please refer to your personal timetable (www.bristol.ac.uk/mybristol). The contact hours for this unit will be approximately 40 hours and will include a mixture of lectures, seminars, feedback sessions and workshops. The format of the ten two-hour seminars will be discursive and active participation is required. The materials and reading lists are only indicative and students are expected to develop their own research skills. Students are expected, in particular, to study and discuss the case-law and the reports indicated in the handout. 3

In the 10x two-hour seminar sessions, you should expect a mixture of: • Lectures • Seminar discussions • Group work • Presentations There will be one seminar per fortnight, as set out on your student timetable. You will be notified of any changes by email, so please make sure you use your University of Bristol e-mail account and check it regularly.

Learning Opportunities – Formative Assessments A formative assessment is intended to aid your learning but does not count towards the overall unit mark. The formative assessment/s for this unit is detailed below. Formative assessments are aimed at, among other things, assisting you in preparing for the summative assessment by testing your ability to engage critically with a topic or topics; and your general writing abilities. Full details of the formative assessment, including the list of titles that students can choose will be circulated via Blackboard. The submission deadline details are listed below.

Type of assessment

% Contribution

Title/ Submission date

Formative Coursework x1

Does not count towards overall mark.

TBC

Word count

1,500 words

Requirements for passing the unit – Summative Assessments: Summative assessment provides the mark for the unit. The overall mark for all summative work in the unit must be a pass (50 or above). Details of the marking scale and descriptors can be found on the Blackboard Law Student pages and in your Programme Handbook The assessment(s) will assess all the Intended Learning Outcomes for this unit in the context of topics selected by the examiners. The unit will be summatively assessed by means of:

Type of assessment

% Contribution

Title/ Submission Word count date

Coursework 1 and Coursework 2

CW1 - 50% CW2 - 50%

TBC

CW1 - 3,000 words CW2 - 3,000 words

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Coursework For the summative coursework on this unit students must choose one question from a list of set questions that will be distributed during the relevant term. Students will be notified directly once they are available. Coursework submission Coursework must be written and correctly referenced according to the Law School guidelines. Full details about all requirements and rules regarding assessed coursework are on Blackboard and in the Programme Handbook. Instructions for the submission of coursework are also available on Blackboard and must be followed closely. The submission deadline details are listed above. Plagiarism and Late Submissions Please note that students are heavily penalised for late submission and plagiarism. Details can be found on Blackboard and in your Programme Handbook. Ensure you are familiar with the current antiplagiarism guidelines, which can be found on the Blackboard course ‘Effective Legal Scholarship’. You are advised to plan your time carefully, particularly if you take other units with assessed work, to ensure you are able to complete all work before the deadline.

Intended Learning Outcomes By the end of the course students will: •

be able to explain the different theoretical approaches to corporate governance in the UK and the US;

•

have gained a knowledge and understanding of the regulatory institutions and the different corporate governance structures available to companies in the UK the US and across the world;

•

be familiar with contemporary debates and issues within corporate governance;

•

be able to research traditional literature sources and library and internet databases; and

•

be able to demonstrate an ability to research independently and to present a coherent written argument on a variety of corporate governance topics.

Students with no prior knowledge of company law are advised also to take the Company Law LLM unit (LAWDM0008).

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Approach to Study Students should develop an understanding of corporate law and corporate governance regulation in order that they may formulate their own opinions on legal, theoretical and practical issues in particular topics and to carry out a sustained piece of original research on a selected topic. Students should also identify legal and regulatory problems and to evaluate and use this knowledge for practical purposes, such as advising governments, company boardrooms and civil society organisations. Analytical skills will be developed through the study of primary sources of law and secondary sources of literature. Students will apply the knowledge and understanding referred to above, plan and produce detailed research, using appropriate research techniques, thereby demonstrating the capacity for sustained independent thought. All compulsory reading should be done in advance of the relevant seminar. Students should select from the optional reading to follow up on particular issues discussed in the seminar. It is always helpful for students to do their own independent research on particular topics. Where this is done, it will be noted and rewarded in the marking of the summative coursework. In the course of the year, students should become comfortable in presenting this analytical work to their peers and working within groups doing specific exercises. Internet materials will be used as a key source of references and projects will be provided to enable students to hone their web research skills. In particular, you should consider doing the following: 1. Read selectively It is almost impossible to read in a week all the material listed under each seminar topic. You should start by reading the questions and use these as a guide to your reading. Skim over pages which do not seem relevant to the questions asked and focus on the material which is relevant. You will find overlaps between articles and books, in which case you should focus on looking for information which you do not already possess. Think also about the issues and questions raised by specific authors and raise these for discussion in seminars.

2. Use electronic sources This is a dynamic field of study. Policy is changing daily in this field, leading to institutional reforms and changes in regulatory approaches. You should be accessing primary source materials and relevant institutional websites yourself and attempting to track these changes. Also, because the material covered in this course aims to be topical, we refer you to ‘essential reading’ contained in journals not available in paper form in our law library. You will have access to journal articles via the University portal.

3. Use your initiative It is important to stress that, in common with other LLM courses, the reading lists for this course are NOT definitive. This is by design, not accident. As postgraduate students, you are meant to develop your own research and study skills. Indeed, you will be required to do so when writing your summative assessments and dissertations. Each week will contribute towards that learning process. It is up to you to explore the library, follow up interesting 6

points and draw them to the attention of the group. The seminar reading will provide the basic outlines and the starting points: it is for you to define its limits. You will ALL be expected to contribute to seminar discussions and from time to time to make presentations to the group.

Core Texts and Resources •

Mayson French and Ryan, Company Law (36th ed, 2019, OUP)

•

C.A. Mallin, Corporate Governance, (6th ed, OUP, 2019)

•

Tricker, Corporate Governance Principles, Policies and Practices (4th ed, OUP, 2019)

Blogs This is a subject that requires you to be up to date with more recent events, so the following may also be useful: •

Corporate Law and Governance (Dr Robert Goddard): http://corporatelawandgovernance.blogspot.co.uk

This is an excellent resource for keeping up to date with developments in the law and relevant industries. •

Corporate Governance (OUP): http://corporategovernanceoup.wordpress.com

News You should also keep up with the news on the corporate world regularly. We would encourage you to read the Financial Times when possible. Although the website suggests you should pay to access their articles, if you sign up for a free account you can read a number of articles for free (there is a monthly limit). The FT is also available via Westlaw.

Twitter •

An excellent twitter feed with regular relevant links is Lee Roach @UKCompanyLaw: https://twitter.com/UKCompanyLaw

•

Also see Professor Charlotte Villiers’s feed for regular updates: https://twitter.com/CharlotteV64

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Outline of Lectures 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Corporate Governance: An Introduction (1 lecture) Theories of Corporate Governance (3 lectures) The Regulatory Framework of Corporate Governance in the UK (1 lecture) The Comply or Explain Principle (1 lecture) Inside the boardroom (1 lecture) How the Board Operates (1 lecture) Executive Pay (1 lecture) Boardroom and Shareholders in General Meeting (2 lectures) Shareholder activism (2 lectures) Socially Responsible Investment (1 lecture) Disclosure and corporate governance (1 lecture) Integrated reporting (1 lecture) Corporate Responsibility, Sustainability and Corporate Governance (1 lecture) The Market for Corporate Control (1 lecture) Conclusions (1 lecture)

Hopefully, there will also be one guest lecture from a Distinguished Alumnus in addition to a lecture on writing techniques as general feedback from the formative or summative coursework.

Outline of Seminars/Tutorials 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Introduction to Corporate Governance Theories in corporate governance Corporate Pluralism and Stakeholder Theory Division of Decision-Making Power between the General Meeting and the Board Institutional Shareholder Activism and Private Equity Boardroom composition, Non-Executive Directors and the Monitoring Board Disclosure and audit requirements Executive Remuneration Corporate Social Responsibility Regulation of the Market for Corporate Control

The remainder of this Unit Guide contains the reading and advance preparation for each seminar.

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Seminar 1 - Introduction to Corporate Governance In this seminar we explore the following: 1) The meaning of corporate governance 2) Why corporate governance is considered necessary 3) The main corporate governance actors 4) The key corporate governance concerns 5) Historical evolution of corporate governance from the rise of the joint stock company to financialization

** Please bring along to the first seminar a recent newspaper cutting of what you regard to be a topical corporate governance issue. The best newspaper for this purpose is the Financial Times, although the business sections of other broadsheets may also be useful. You will be expected to give a very brief (approx. 2 minute) presentation of this issue to the class, explaining: (a) why it is relevant to the topic of corporate governance; and (b) what important problem(s) it highlights.

Questions for discussion (1) What is corporate governance? Why do we need it? What social problems should an effective system of corporate governance be designed to tackle? (2) Who should be involved in a developed corporate governance system, and what are their roles? (3) What are the key features and principles to be found in the Corporate Governance Codes for Public and Private Companies in the UK? (4) What are the key features you would expect to find in a developed corporate governance system institutionally and within the corporation? (5) How effective is the FRC as a regulatory body? (6) What has the European Commission identified as the key issues relevant to the effectiveness of the corporate governance framework in Europe? (7) What have been the consequences of financialization?

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Required reading C.A. Mallin, Corporate Governance, 6th ed (2019), chapters 1 – 3 Tricker, Corporate Governance, 4th ed (2019), Chapters 1 - 2 OECD Corporate Governance: Factbook 2017 (gives an overview of corporate governance frameworks across OECD countries), available at: http://www.oecd.org/daf/ca/corporate-governancefactbook.pdf B.R. Cheffins, “The Rise of Corporate Governance in the UK: When and Why” (2015) Current Legal Problems. Advance on-line access available at: http://clp.oxfordjournals.org/content/early/2015/07/09/clp.cuv006.full.pdf+html. Marie L’Huillier, Barbara. "What does “corporate governance” actually mean?" Corporate Governance 14.3 (2014): 300-319. Turnbull, Shann. "Corporate governance: its scope, concerns and theories." Corporate Governance: An International Review 5.4 (1997): 180-205. International Finance Corporation (2015) A Guide to Corporate Governance Practices in the European Union: http://documents.worldbank.org/curated/en/750681468001781687/pdf/97118-WP-PUBLICBox391470B-CG-Practices-in-EU-Guide-PUBLIC.pdf A. Haldane, “Who Owns a Company?” Speech at University of Edinburgh Corporate Finance Conference, 22 May 2015, available at: https://www.bankofengland.co.uk/speech/2015/who-owns-a-company J.W. Winter, "The financial crisis: does good corporate governance matter and how to achieve it?" DSF policy paper 14 (2011). Financial Reporting Council, UK Corporate Governance Code 2018 available at: https://www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-d2f4f48069a2/2018UKCorporate-Governance-Code-FINAL.pdf FRC, Draft Wates Corporate Governance Principles for large private Companies June 2018, available at https://www.frc.org.uk/getattachment/48653f86-92c3-4cd6-8465da4b7cac0034/;.aspx Independent Review of the Financial Reporting Council 6 June 2018, available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file /717492/Independent_Review_of_the_FRC_-_Call_for_Evidence_-_FINAL.pdf House of Commons Business, Energy and Industrial Strategy Committee, Corporate Governance, Third Report of Session 2016–17, HC 702 available at: https://publications.parliament.uk/pa/cm201617/cmselect/cmbeis/702/702.pdf

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Department for Business, Energy and Industrial Strategy, Corporate Governance Reform: Government response, August 2017: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file /640631/corporate-governance-reform-government-response.pdf Anat R. Admati, ‘A Skepitcal View of Financialized Corporate Governance’ (2017) 31:3 Journal of Economic Perspectives 131-150

Further reading A.A. Berl...