 I'm here to talk about US corporate law. Why should you study US corporate law? Why should you choose that as part of your MCL program? I'm very well aware that you did not choose to come to the United States to undertake your graduate law studies. You choose to come to the UK for a very good reason. You chose Cambridge over Columbia. So why on earth would you want to study about US corporate law? Le Llawn Levyn ynbonead. Maeny sut company Llawn Levyn yn gyffredin iawn 것au, mae'r confirmed yma papier ac mae'n ffordd hyn. Ro'w cynt stabilityeth mewnbro cheekbód gy revision. Llywodraeth hyn yn roi give ei chlas oshechiantio pan fyddiaeth manewyddgingaeth a siaradau idd hagwfi yma – amdank dosSColithicjanth. Wrth gwerth g orae, mae efallai wedi这fu fy Nghymru sgolaeth yma i ddeg Durhamоч inny? Well, you have. Oh, you're a bird. There's no easy way to put that. It's nothing personal. It's purely racial. But we do have a discriminatory policy towards Americans, unfortunately. But if you're not planning, there's no loss. They're welcome to audit it. But we hope you have a choice to do Scots. So, yeah, that's fine. Just get that out of the way quickly. That's the awkward bit. Rydych ein bod chi wedi ei eistedd gyda'r Amanachau, mae hefyd yn bwysig i'r ddweud o'r law yma yma yn y US. Maen nhw'n rhoi gyda'r law ar y USA, y bydd pwysig i'r law a'r ddwyleddol y prathau yma yn y Prathau Llywodraeth, ac mae wneud hon i'r Prathau Llywodraeth, mae chi'n gwneud gael践 Crypt, yn ysbyt yw'r law USA. Mae'r busrif i'r geshleid, oherwydd staeth ystodd o'r wrthiau, Not least because large aspects of U.S. corporate law, particularly the federal aspects of U.S. corporate law, which was strictly speaking would become securities law, but nonetheless many aspects or a growing number of aspects of U.S. corporate law are federal law which can potentially have extra territorial application, especially where foreign companies, overseas companies, are listed in the US stock exchange, in which case large parts of U.S. corporate law will apply to them regardless of whereabouts in the world they are, regardless of where their place of incorporation is. Also, U.S. corporate law, as we all know, is highly influential as an international point of reference across the world. It is still today for all its various faults and weaknesses. It is still today, to a large extent, held up as the gold standard of corporate law, particularly in emerging transitional economies. Therefore, there is an interest that we have in knowing about it. And also, any company across the world, any business which wishes to incorporate across the world can become a U.S. corporation regardless of whereabouts it converts its business, which is another factor to take into account as well. A final point is we still live for better or worse in a largely U.S. dominated global political economy. U.S. corporations exercise whether we like it or not exercise considerable influence on an economic and social level over how we live our lives. So, again, we as global citizens have an interest in knowing how U.S. corporations are regulated. So, there's a variety of reasons as to why, of course, it's useful, even though you may not be directly practicing in the U.S. Second important issue, not just why should you study U.S. corporate law? What right do I have to teach you U.S. corporate law? As some of you may have noticed, I'm not from the U.S. I'm from Scotland. What qualifies me to actually teach you this subject? For a number of years, I've coordinated and taught graduate modules which deal heavily with U.S. corporate law, particularly modules at various institutions on Anglo-American corporate governance. I've also taught in the United States. I've taught U.S. business entities a lot at Seattle University School of Law before to U.S. JD students. So, for a number of years I've taught U.S. corporate law on both sides of the pond, so to speak. And also my research deals as much with U.S. law as it does with the UK, if not more so it is something that I'm very familiar with and enjoy studying a lot as I hope some of you will. Now, even though I've said U.S. corporate law is in many respects the gold standard corporate law system, it's held out as the leading international example for many other countries to follow. That does not mean that it's a normal corporate law system, so to speak. In fact, on a global level, the U.S. system of corporate law is very much the exception rather than the rule. It's the outlier. There is no other system, even systems that in some respects have tried to mimic bits of U.S. corporate law. Still today there is no system across the world. Even the UK, which many people think is very similar to the U.S. In many respects it might be, but corporate law-wise the UK and the U.S. are worlds apart. So don't think I study in the U.S. corporate law. You're in some way going to get an insight into the U.S. system. There are very, very different worlds completely. But the U.S. system is very much the weird system, the unusual system for a number of reasons. And there's no other system around the world that's really like it in any major way. First of all, as many of you will be aware, U.S. law in general, especially U.S. corporate law, is federal in nature. There is no one system of corporate law that you study. U.S. corporate law is actually comprised of 51 different systems of corporate law. State-level systems, one for each of the 50 states, and one for the District of Columbia, which operates its own state-like system. One might even say there's 52 systems of corporate law because the federal laws, which are created nationwide from Washington D.C., also add an extra layer on top of all the various state systems of corporate law that we have. So it's a hugely sophisticated, complex system in that sense, although obviously just to quam any fears we're not going to be studying all 51 different state systems, not in any levels of debt anyway, that would be possible. And in fact that we want a particular state system that we will be studying much, much more than any of the others. And it's a state which many people might not regard to be one of the most well known states in the U.S. in popular terms anyway. But there is one particular state in the U.S. which stands out as the leader when it comes to corporate law. The leader by far. Does anybody know what state that is? Delaware, yeah. Probably no offence to people from Delaware, but we don't think of Delaware as being the most conspicuous, the most well known U.S. state. It's a small state, not a great deal goes on there with all due respect to it. But one thing that they are very, very good at is corporate lawmaking. To a large extent how Delaware has made its name. So the bulk of what we will be studying in this course will be Delaware law, not least because a majority of publicly listed corporations in the United States are incorporated in the state of Delaware and thus are subject to Delaware state law. In the U.S. there is something called the free incorporation doctrine. It does not matter where you intend to conduct your actual physical business. You can choose to incorporate in any state you wish. You can become a Delaware corporation merely by the administrative act of incorporation within the state of Delaware. You may never set foot in the state of Delaware except when you come to court to litigate. You may conduct your whole business in other parts of the country, even in other parts of the world. Your corporate headquarters could be in New York City. Your upstream manufacturing operations could be in Ohio or parts of the Midwest in the U.S. Your downstream manufacturing activities could be overseas perhaps in South East Asia. It does not matter. As long as you are incorporated in Delaware it will be Delaware corporate law that governs that company. That's very different from the European Union state. In the EU we do not yet have a Delaware type system. We still to a large extent apply something called the real seek doctrine with limited exceptions. Which means that a company in Europe cannot choose a member state to incorporate independently of the issue of where it intends to conduct its business. These two aspects are still tied together to quite a large extent. In the U.S. that's not the case. You get complete freedom to choose what system of corporate law you are subject to. So what we see in the U.S. is something we don't really see anywhere else in the world. Which is interstate competition for incorporations. Different states in the U.S. will actively compete with one another. Just like producing firms to offer laws which companies and their incorporators find out. It's attractive to try and entice those companies to incorporate in their state. Because states get a lot of advantages from incorporations. They will get incorporation fees. They will get franchised tax revenues. And they will get all the associated benefits of being a locus of incorporation. Such as a vibrant legal and associated professional services sector. Which can be a lot of benefit to the state. So that's another thing we have to get used to. Regulators as competitors competing with each other. And undoubtedly there is the winner of that competition. At least as I understand today. Another important characteristic of U.S. corporate law which marks it out for most if not all other systems of corporate law. Is that it very much aims to be at least at state level. It aims to be a facilitative system of law. Not a mandatory or regulatory system of law. Now most of us, especially those of us who come from civil law backgrounds. Time to think of law as being something that's coercive, that's mandatory. It constrains what we're able to do. Whether as a citizen or as a business that limits a range of choices. Now you need to dispel that notion out your head quickly if you want to study U.S. corporate law. Because U.S. corporate law does not aim to regulate. It does not aim to coerce or constrain. It aims to facilitate. It aims to increase the range of choices available to contractors and businesses. Rather than reduce them. And for that reason we see a very unique feature of U.S. corporate law. Which we're going to concentrate on to a large extent in our first seminar next week. Which is that large aspects of U.S. state law can be opted out of. If it does not suit you to comply with a particular law. You effectively put in an offsetting term into the company's constitution or by-laws. And opt the company out of that particular law. Which is a very unique feature of law. But something that's been part and parcel of U.S. corporate law for a long time. So that just gives you a flavour of the uniqueness of U.S. corporate law as a subject. Another aspect of U.S. corporate law that I will mention. Something which also marks it out quite considerably from other systems across the world. Is the significant degree of leeway that it grants to boards or management of companies. There is something, a particular doctrine of law that lies at the very heart of U.S. state law. Particularly Delaware state law in the U.S. Which is called the business judgement rule. And the business judgement rule in a way channels and influences so much more of U.S. corporate law around it. The business judgement rule is basically a presumption that a board of directors of a company made its decisions, exercised its discretion on a loyal good faith and informed basis. On unless a plaintiff shareholder can rebut either of these three facets of the presumption. By showing that the board were either disloyal, that the board were unfaithful, that they were involved in self-dealing perhaps. Or that the board acted on an uninformed basis which can be very very difficult to prove. Unless one of those three facets of the presumption can be rebutted by the plaintiffs. Then basically the board will enjoy a watertight bubble of protection from any liability. And that is a hugely hugely influential doctrine. And also a reason why U.S. in particularly Delaware law is so attractive. Especially from the point of view of boards of directors. Because of this important in a way immunisation that affords them to a greater extent than most if not any other national system of corporate law. And going hand in hand with that principle is another important crucial facet of U.S. corporate law at state level. Which is called the director of primacy doctrine. And this is the notion which we don't really see to anywhere near the same extent in other national systems of law. It's the notion that the directors, the board of directors of a corporation manage the company. The shareholders put their money in the company, they invest in the company. But that's pretty much all they do. If the shareholders are not happy with the decisions that the board are taking on their behalf. There's not a great deal they can do about it. Apart from the best of money elsewhere. UK company law does not take that view. UK company law to a large extent empower shareholders. Enable shareholders to displace the board. Or in some cases to exert coercive influence on what the board are doing. In order to try and redress that balance of power. U.S. corporate law with limited exception today remains largely premised on this view that the board of directors are supreme and sovereign. Now that strikes many people as surprising. Most people think of the U.S. economy, the U.S. political economy as being in a way the land of profit maximisation. Thus it follows surely that U.S. corporate law should be all about empowering shareholders. It should be all about shareholder primacy or shareholder wealth maximisation. Actually no, U.S. corporate law is mainly about disempowering shareholders rather than empowering them. The U.S. is actually a very bad place to be a shareholder because you don't get a lot of powers. Because you would get in other countries. And that's another thing that strikes people as surprising about the topic. Well hopefully I've sort of stimulated your appetite for the subject. That's all the main things I wanted to say about the subject itself. A few housekeeping rules, the immediately important stuff. We will meet at 9am on Tuesday mornings in Room G11 which has just crossed the corridor. Nice circular seminar room which works quite well. 9am on Tuesday mornings with two others. There is no textbook for this course, important point. You do not need a textbook. Readings will be supplied for the exception of those readings which are available as electronic journals online. Or books which are readily available from the library. Everything else will be supplied to you in advance. And the reading list is already available on the website. Eight seminars obviously as a standard. There are a couple of optional books you may wish to buy. One is my favourite US cases and materials. Corporations and other business associations cases and materials by Kelly and Thompson. Which will be available on the handout. I don't actually recommend you buy it. Not least because it's an excessive $200. And you don't know what you've got other things to spend your money on. And the materials will be supplied anyway. Another book and I'm not just trying to push my own book. Because I don't make that much money from it anyway. But I will be supplying quite a lot of the excerpts from this book. Corporate Governance in the Shadow of the State. It's fairly readily available in the library. But if there's an issue of library resources which we can't immediately redress. You may wish to invest in the book. I think that's all the key housekeeping stuff. Which to see if there's anybody else. Assessments by way of an unseen exam as is pretty standard. And just check if there's anything else to mention. I think that's everything. My email address is available on the course handout. So any other questions that we don't deal with now. Feel free to revert back to me.