Australian Journal of Corporate Law Volume 32 Part 2
Jennifer Dickfos, Catherine Brown and Therese Wilson
We live in an era of disruption. Think of innovative disruptors like Uber and Airbnb. Disruption is our friend.
Innovation has become a buzzword that excites socially mobile, inner-city types; but for other Australians, creates anxiety — about job losses and insecurity ... Some old ways of doing things are becoming uncompetitive and obsolete. Disruption and change are inevitable — here and across the global marketplace. Either we acknowledge the change, or we risk being overwhelmed and disadvantaged by it.
The corporation as a constructed ethical agent: Monism, pluralism and options for reform — (2017) 32 Aust Jnl of Corp Law 91
M M Worthington
What is to be done? How do we choose between possibilities? What and how much must we sacrifice to what? There is, it seems to me, no clear reply.
This article extends Sir Isaiah Berlin's 'Value Pluralism' to argue that the for-profit corporation functions as a powerful, constructed ethical agent. This constructed ethical agency helps to explain both the remarkable success of the corporate form, and its pronounced antisocial tendencies. In particular, this article contends that in its current configuration corporate ethical agency precludes other-regarding behaviour. Facilitating more responsible corporate conduct is, therefore, a matter of reconfiguring corporate ethical agency to instill more 'pluralist' sensibilities. Two changes in particular are necessary: jettisoning the duty to act 'bona fide in the best interests of the corporation'; and creating a permission for corporations to engage in profit sacrificing behaviour.
The historical development of corporate law in Australia: Politics and possibilities — (2017) 32 Aust Jnl of Corp Law 122
Assumptions about the underlying ideological purpose of corporate law are often used to oppose calls for reform, but these assumptions are not consistent with the historical record of corporate law development. This article considers the circumstances and motivations surrounding the implementation of corporate law in 19th century Australia. The nature of the political contestation of corporate law is demonstrated using a variety of primary sources contemporary to the developments being considered. An analysis of these primary sources shows that modern corporate law is the result of a series of compromises affected by a variety of factors, including politics, economic pressures and even interactions of personality between key decision-makers. This historical analysis undermines arguments based on a single purpose theory of corporate law, especially where such arguments seek to preclude consideration of social concerns. Implications of this analysis, which may be applied to a wide variety of concerns, are addressed here through the example of debates about women on corporate boards
The principles and practices of corporate governance are never static. This article reviews recent develoments in corporate governance, concerning corporate social responsibility and the social licence, directors as gatekeepers, corporate culture, institutional investors, and self-regulation. What these developments tell us about the likely trajectory of corporate governance and corporate law is not yet clear, but they may signal a move towards a more 'post-law' future.
Australian private securities class actions and public interest — Assessing the 'private Attorney-General' by reference to the rationales of public enforcement — (2017) 32 Aust Jnl of Corp Law 162
Michael J Duffy
Private securities class actions now appear to be a part of Australia's legal landscape but opinions about their value are not unanimous. This article reviews the 'private attorney-general' argument for the utility of private securities class actions as 'vindicating the public interest' and supplementing public enforcement of securities laws. It then makes an original contribution to the debate by analysing the rationales for public enforcement of securities laws and assessing the extent to which private securities class actions seek to, can or do achieve these objectives. Data on the nineteen largest successful securities class actions or claims in Australia are examined by reference to various attributes which derive from these rationales and public interest scores allocated accordingly.
Exploring the limits of corporate culture as a regulatory tool — The case of financial institutions* — (2017) 32 Aust Jnl of Corp Law 196
Recent financial market and corporate crises have led to a loss of faith in many traditional legal regulatory tools used to control financial markets. The failure to successfully pursue criminal actions against senior officers in banks and financial institutions following the global financial crisis has focused attention on this issue and raised questions regarding the utility of criminal prosecutions in this area. This has seen the development of a significant loss of trust in banking and financial institutions. It could be argued that these institutions to some degree reflect a wider malaise. This is important as banking and financial entity failures have provided us with many of the cases that have shaped corporate governance principles, at least since the 19th century. One response to these problems has been a renewed interest in the idea of corporate culture and its value as a corporate regulatory tool. This approach has drawn upon earlier models developed by socio-legal scholars and lawyers. Regulatory authorities have been keen to use the idea of culture in the regulation of financial institutions, although the fuzziness of the concept has made it a difficulty tool to use as a legal mechanism, such as in criminal prosecutions. Although conceptually appealing, for a variety of reasons discussed here, the fluidity of the idea of corporate culture is such that it is unlikely to be the 'quick fix' that many regulators have hoped for to re-establish public confidence and trust in public companies.
Larelle Chapple, Kerrie Sadiq and Feng Xiong
This article examines the widened scope of disclosure and dissemination enabled by social media outlets and explores the challenges and opportunities faced by Australian companies when engaging with social medial as a disclosure channel for corporate information. It specifically investigates three sources of tension between a company's use of social media to report or disseminate information and the regulatory environment in which a company operates. To undertake this investigation, the article analyses evidence and reported instances of current corporate use of social media reporting by companies to highlight relevant challenges and opportunities. Once the relevant challenges and opportunities are established, the final part of this article proposes eight practice recommendations which can be adopted by companies to minimise potential regulatory breaches.
SPVs as a barrier to cross-border insolvency proceedings: Lessons from Indonesia — (2017) 32 Aust Jnl of Corp Law 241
The proliferation of international trade and investment coupled with the 2008 financial crisis and recent economic slowdown has highlighted the importance of cooperation and clear standards in cross-border insolvency proceedings. However, the use of special purpose vehicles ('SPVs'), a common investment tool, casts doubt on the fairness and enforceability of restructuring plans. This article, while examining the Indonesian restructuring of PT Bakrie Telecom ('BTEL'), illustrates how the use of SPVs to issue bonds on behalf of a parent company excludes investor participation in insolvency proceedings of the parent company by virtue of investors being creditors of the SPV. It further outlines how, in line with existing principles of directors' duties upon a company's insolvency, investors should be represented through the claims of the SPV against the parent company.
Managing the control contest in corporate bankruptcy: An argument for mandatory mediation in South Africa's business rescue procedure — (2017) 32 Aust Jnl of Corp Law 260
Richard S Bradstreet
In the context of corporate financial distress, a company's creditors — as the residual risk holders in the vicinity of insolvency — prioritise obtaining the highest possible return and seek to minimise any further exposure to risk that may be associated with an attempt at reorganising the affairs of the company. As a matter of economic necessity, the rights of creditors must be protected in order to maintain access to credit, and thus even insolvency regimes that seek to facilitate a more equitable distribution of value amongst stakeholders afford significant decision-making power to the body of creditors. From the perspective of the business rescue provisions contained in the Companies Act 2008 (South Africa), which has attempted to embrace a more stakeholder inclusive philosophy of corporate law, this article analyses some of the shortcomings of the procedure and proposes a model of facilitation (based on that used in relation to labour matters) which may be able to promote a wider range of interests than traditional creditor-centred insolvency procedures and counteract the imbalance of power that necessarily arises as a result, without undermining the protection to which creditors have become accustomed.