Professor Bruner compares UK, US business practices in new “Research Handbook on Fiduciary Law”

Christopher M. Bruner, J. Alton Hosch Professor of Law here at the University of Georgia School of Law, has just published “Opting Out of Fiduciary Duties and Liabilities in U.S. and U.K. Business Entities.” It appears as a chapter in a 2018 Edward Elgar volume, entitled Research Handbook on Fiduciary Law, and edited by D. Gordon Smith, Dean and Glen L. Farr Professor of Law at Brigham Young University’s J. Reuben Clark Law School,  and Andrew S. Gold, Professor of Law at DePaul University College of Law.

Here’s the SSRN abstract for Bruner’s contribution:

This chapter explores the extent of contractual freedom to opt out of fiduciary duties and liabilities in U.S. and U.K. business entities, including the U.S. corporation, general partnership, limited partnership, limited liability partnership, and limited liability company, and the U.K. limited company, general partnership, limited partnership, and limited liability partnership.

Discernible commonalities emerge from this comparative analysis. Notably, corporate law readily permits reducing liability exposure for breaches of duty in each jurisdiction, yet provides only quite limited capacity to carve back at the substance of the duties themselves. Meanwhile, unincorporated entities in each jurisdiction offer substantially greater latitude to limit the duties themselves, in some cases resulting in purely contractual business relationships.

Yet substantial differences are also apparent. U.S. corporate law permits greater insulation from liability exposure, and U.S. unincorporated entities generally provide clearer and more extensive latitude to eliminate default duties of loyalty and care outright (particularly in Delaware). One cannot comprehensively declare that U.S. law universally deviates further from the “fiduciary” governance paradigm, however, because the U.K. limited liability partnership has gone further by providing an entity form in which no such general default duties apply at all.

The analysis raises some complex comparative questions, and the chapter closes with brief reflections on why such trends, commonalities, and divergences may have arisen.

Georgia Law Professor Bruner, Cambridge corporate governance book co-editor, presents at Oslo conference

Professor Christopher M. Bruner took part last week in a Norway conference leading to a new Cambridge University Press book he is co-editing.

Bruner, who is J. Alton Hosch Professor of Law at the University of Georgia School of Law and member of our Dean Rusk International Law Center Council, together with his co-editor, University of Oslo Law Professor Beate Sjåfjell, introduced, moderated, and concluded the symposium for the Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (forthcoming 2019).

Bruner also presented a draft chapter, on Hong Kong and Singapore.

The symposium, which brought together scholars from around the world who were invited to contribute to the Handbook following a competitive call for papers, was held at the University of Oslo Faculty of Law March 12-14.

Professor Bruner presents on corporate law and corporate governance at international conference in England

“Contextual Corporate Governance: Tailoring Board Independence Rules by Industry” is the title of the presentation that our Christopher Bruner, J. Alton Hosch Professor of Law at the University of Georgia School of Law, delivered Monday at the annual International Corporate Governance and Law Forum, held this year in England.

Hosted by the Centre for Business Law and Practice at the University of Leeds School of Law and cosponsored by Deakin Law School of Australia and the Alexander von Humboldt Foundation, the 2-day event brought together law and business scholars from around the world to discuss corporate board composition and process.

Bruner, a member of our Dean Rusk International Law Center Council, was among the 20 or so scholars who presented, from Australia, China, England, France, Japan, Norway, and the United States. Here’s the description of his paper:

Over recent decades, several commercially prominent jurisdictions have increasingly required that listed company boards, and certain committees, consist primarily of ‘independent’ (i.e. non-executive) directors. In the United States, for example, the Sarbanes-Oxley Act and the Dodd-Frank Act respectively require that a listed company’s audit and compensation committees be entirely independent. NYSE and NASDAQ rules go further, requiring that a majority of the whole board be independent. Such requirements reflect the prevailing view that independent directors protect minority shareholder interests through greater objectivity and practical capacity to monitor and resist domineering CEOs. That such benefits outweigh the costs – notably, limited information (relative to executive directors) – is assumed.

Recent empirical work, however, increasingly casts doubt on this assumption – at least in certain contexts. While empirical studies initially found little evidence that director independence rules impact corporate performance at all, more recent studies focusing on the cost of acquiring company-specific information suggest that the impacts of such rules are far from uniform. Indeed, mounting evidence suggests that such rules may improve performance where company-specific information can be acquired at low cost, yet harm performance where the cost of information acquisition is high. These findings – commending sensitivity to industry context – dovetail with a parallel body of post-crisis studies associating board independence (and other shareholder-centric governance structures) with potentially undesirable risk-taking incentives in certain industries – notably, finance.

These perspectives offer much-needed nuance to our thinking about corporate governance reform, strongly suggesting that one-size-fits-all rules mandating uniform board structures across the universe of listed companies may widely miss the mark in important contexts. This paper will discuss the history of such reforms, canvass relevant legal and financial literatures, and explore regulatory strategies for more targeted reforms on an industry-by-industry basis.