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one version would be to make sure that fines is paid in freshly raised (and dedicated) capital and not from the operating budget, or that shareholders are made

one version would be to make sure that fines is paid in freshly raised (and dedicated) capital and not from the operating budget, or that shareholders are made financially responsible up to the value of their shares for criminal fines against the company. If you combine that by making should have known the company was doing things illegally an good enough reason for the shareholders to sue the responsible executives into bankruptcy and you might see a change in behavior. The problem is that when all of the costs comes out of the operating budget there is very little reason for the general assembly to hold the board responsible and if the board is not held responsible neither will the executives.

doctor_eval 5y ago
This seems like an awesome idea, at least on the surface. I’d say fines should be paid in issued capital - I’m going to be thinking about this for a few days I think! Several problems remains however. Simply knowing that the company was breaking the law isn’t sufficient for a shareholder to be able to do anything about it. If you own <5% of a company’s shares[0], you have basically no way to change the behaviour of a company even if you know it’s wrong and want it to stop. Also, the value of a privately held business is difficult to compute. Although setting fines as a percentage of issued capital rather than a dollar value would ameliorate that. Finally, what would the government do with those shares? If the government simply destroys them then the actual value of the remaining shares won’t change. And the market for privately held shares isn’t huge. Still I love the basic idea. Can’t imagine it happening though, nobody wants to be held accountable. [0] if you’re a shareholder with less than 5% of shares in Australia you basically have no right to access anything other than the annual reports, so your ability to even know what’s going on is extremely limited. Don’t know if it’s the same in other countries.
- Stranger43 5y ago
  What i mean is that the shareholders should be able to reclaim lost value from any CEO who can be found to should have known the company was breaking the law, in civil court. The shareholders should be held financially responsible for any fines not levied directly at the board or the executive team, hence why their liablity should be capped to the value of the shares. The point is to force the large institutional investors to really care about the integrity of the boards they elect, so it might be worth putting in an lower limit to exclude retail investors with trivial amounts along with holders of non-voting shares from liability. The government would not be holding or owning the share they would be paid their fine in USD raised by the company from either newly created shares, or fresh investment in the case it's not publicly traded. And if they cant it's up the current owners to either pony up loose all of their investments. It should be up to the company fined to market those shares not the goverment. Remember that issuing shares without generating investment money devalue the existing shares, which is the point of the operation. IT might not be the one true solution but letting fines be paid from revenue disincentivize the owners from caring that much about legal fines.

doctor_eval 5y ago

This seems like an awesome idea, at least on the surface. I’d say fines should be paid in issued capital - I’m going to be thinking about this for a few days I think! Several problems remains however. Simply knowing that the company was breaking the law isn’t sufficient for a shareholder to be able to do anything about it. If you own <5% of a company’s shares[0], you have basically no way to change the behaviour of a company even if you know it’s wrong and want it to stop. Also, the value of a privately held business is difficult to compute. Although setting fines as a percentage of issued capital rather than a dollar value would ameliorate that. Finally, what would the government do with those shares? If the government simply destroys them then the actual value of the remaining shares won’t change. And the market for privately held shares isn’t huge. Still I love the basic idea. Can’t imagine it happening though, nobody wants to be held accountable. [0] if you’re a shareholder with less than 5% of shares in Australia you basically have no right to access anything other than the annual reports, so your ability to even know what’s going on is extremely limited. Don’t know if it’s the same in other countries.

Stranger43 5y ago
What i mean is that the shareholders should be able to reclaim lost value from any CEO who can be found to should have known the company was breaking the law, in civil court. The shareholders should be held financially responsible for any fines not levied directly at the board or the executive team, hence why their liablity should be capped to the value of the shares. The point is to force the large institutional investors to really care about the integrity of the boards they elect, so it might be worth putting in an lower limit to exclude retail investors with trivial amounts along with holders of non-voting shares from liability. The government would not be holding or owning the share they would be paid their fine in USD raised by the company from either newly created shares, or fresh investment in the case it's not publicly traded. And if they cant it's up the current owners to either pony up loose all of their investments. It should be up to the company fined to market those shares not the goverment. Remember that issuing shares without generating investment money devalue the existing shares, which is the point of the operation. IT might not be the one true solution but letting fines be paid from revenue disincentivize the owners from caring that much about legal fines.