Why Delaware LLCs?
For years, scholars have debated why parties choose to incorporate under Delaware law companies that operate businesses in other states — since different answers to this question lead to different normative assessments of the practice. Traditionally, this debate focused on public corporations and ignored private firms and non-corporate forms of business. The exploding use of limited liability companies (LLCs) instead of corporations, and the formation of LLCs under Delaware law to operate businesses outside Delaware, call for expanding this discourse to ask “Why Delaware LLCs?”. This article adds to the recent literature seeking to answer this question empirically. It critiques recent studies that looked for statistically significant correlations between state of formation choices for LLCs and differences in state LLC statutes and legal infrastructure. Finding this methodology suffers from inherent limitations, this article presents results from a different approach. I interviewed business attorneys whose clients have formed LLCs and asked them a battery of questions designed to ascertain why their clients formed LLCs in Delaware. The results of this survey provide important insights into the aspects of Delaware’s substantive LLC law and its legal infrastructure that motivate formation of Delaware LLCs, and thereby serve as an important complement to the existing statistical studies.
Committing to Doing Good and Doing Well: Fiduciary Duty in Benefit Corporations
Can someone running a business do good while doing well? Can they benefit society and the environment while still making money? Supporters of social enterprises believe the answer is yes, as these companies aim at both making money for shareholders while also pursuing other social benefits. Since 2010, states have begun to enact statutes creating the “benefit corporation” as a new legal form designed to fit social enterprises. Benefit corporations proclaim to the world that they will pursue both social good and profits, and those who run them have a fiduciary duty to consider a broad range of social interests as they make their decisions rather than a duty to focus solely on increasing shareholder value. Does this novel fiduciary duty effectively commit these businesses to doing good? How will courts actually apply this duty in practice? Will this new duty accomplish its goals without unduly high costs?This article is among the first to analyze in detail the fiduciary duty provisions in several versions of these new benefit corporation statutes. It compares duties in benefit corporations to duties in traditional corporations in the leading categories of fiduciary duty cases. It argues that there is likely to be a modest “flattening” in the risk of liability for directors and officers of benefit corporations. That is, as compared to the level of risk in ordinary corporations, the risk of being held personally liable will be bigger for decisions where that risk is weakest in ordinary corporations, while the risk of liability will be smaller for decisions where that risk is highest in ordinary corporations.The article then asks whether the statutes strike the proper balance in holding directors and officers accountable. The statutes could be too strong if they scare off investors and managers. They could be too weak if they allow managers to proclaim their virtue while ignoring their duties with no fear of legal sanctions. Neither possibility can be dismissed, but this paper argues that the statutes have got it just right. They create enough risk of liability that managers must pay attention to their legal duties, allowing courts to help shape norms of appropriate behavior, while not imposing such high risk that this promising new business form becomes unattractive.
Tourism in the Amazon: identifying challenges and finding solutions
Purpose – The purpose of this paper is to provide an overview of the tourism sector in the Amazon regions of Bolivia, Brazil, Colombia, Ecuador, Guyana, Peru, and Suriname and then discuss the manner in which tourism activity assists the protection of the Amazon rainforests. The paper also describes the manner in which the first World Hospitality and Tourism Themes Roundtable on Tourism in the Amazon is organized in 2009.Design/methodology/approach – Teams of researchers from the Ministries of Tourism, the private sector and academia in the Member Countries of Treaty for Amazon Cooperation collaborated to address, in ten‐page papers, the question “Does sustainable tourism offer solutions for the protection of the Amazon rainforest?”Findings – The paper provides valuable information on the current state of tourism policy and practice in the Amazon Member Countries. It also articulates the challenges that attend the development of sustainable tourism as a mechanism for the protection of the Amazon.Practical...