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I don't know how much of this is actually a problem with the shareholder model (though I hate it). From what I understand, the whole "legal obligation to shareh

by ysavir 3y ago

I don't know how much of this is actually a problem with the shareholder model (though I hate it). From what I understand, the whole "legal obligation to shareholders" thing isn't actually a real thing. What's more likely, I think, is that the CEO meant was that if he declined the offer, the board may fire him and replace him with someone who won't decline it. So if it's an eventuality either way, he may as well be the one to lead it.

1_1xdev1 3y ago
“Legal obligation to shareholders” is absolutely a thing, in the USA anyway. “Fiduciary duty” is the term to Google.
- Vicinity9635 3y ago
  No it's not. I've been in discussions about it here and nobody could cite a law. If one can't cite a specific US code, it's not a legal obligation. It could be in a charter or contract, but it's not US law. Feel free to correct me if you can cite one. I believe this is a good starting point: https://www.congress.gov/advanced-search/legislation https://www.congress.gov/advanced-search/legislation Fiduciary duty doesn't apply to most non-finance related companies. It's mostly something that investment firms are required to do. And you'll know if you become their client. If Google is doing that they definitely need broken up. It means they have a duty to use your money to make more for you, and not lose any if possible.
  - hnbad 3y ago
    The US has a Common Law system so case law is as important as code (or even more so). The question isn't whether there's "a law", the question is whether there have been cases fought over it and what the outcome was. That seems harder to google. Likewise I have yet to hear a coherent legal justification for the idea of the "state monopoly on violence" that doesn't boil down to a just-so story invoking the fiction of the social contract (even the US only grants a limited exemption to this via the second amendment and even that still uses the context of "militias"). But even in Civil Law systems that doesn't mean the state won't act as if it is a thing and base legislation on that assumption.
  - awright415 3y ago
    The reason you can’t find a federal law is that corporations are largely governed by state law. See, for example, Section 5231 of the California Corporations Code. https://codes.findlaw.com/ca/corporations-code/corp-sect-5231/ https://codes.findlaw.com/ca/corporations-code/corp-sect-523...
    - Vicinity9635 3y ago
      So it's not a legal obligation in the US, but possibly in some states. Which boils down to the same thing. Incorporate where it's not. Viola - no legal obligation.
      - TylerE 3y ago
        The laws against murder are also state, and not federal. Doesn’t mean you have no legal obligation to not commit murder.
kelnos 3y ago
Corporate boards do have quite a few legal obligations to their shareholders. The often-mistaken popular view is that companies are required to seek ever-increasing profit above all else. While that isn't true, if a corporate board takes actions that are contrary to shareholder interest, they open themselves to liability. In the case the GP is talking about, where a buyout offer exceeded any amount of return that the company could possibly provide while remaining independent, shareholders would absolutely have a case if that acquisition offer had actually been turned down.

by ysavir 3y ago

1_1xdev1 3y ago

“Legal obligation to shareholders” is absolutely a thing, in the USA anyway. “Fiduciary duty” is the term to Google.

Vicinity9635 3y ago
No it's not. I've been in discussions about it here and nobody could cite a law. If one can't cite a specific US code, it's not a legal obligation. It could be in a charter or contract, but it's not US law. Feel free to correct me if you can cite one. I believe this is a good starting point: https://www.congress.gov/advanced-search/legislation https://www.congress.gov/advanced-search/legislation Fiduciary duty doesn't apply to most non-finance related companies. It's mostly something that investment firms are required to do. And you'll know if you become their client. If Google is doing that they definitely need broken up. It means they have a duty to use your money to make more for you, and not lose any if possible.
- hnbad 3y ago
  The US has a Common Law system so case law is as important as code (or even more so). The question isn't whether there's "a law", the question is whether there have been cases fought over it and what the outcome was. That seems harder to google. Likewise I have yet to hear a coherent legal justification for the idea of the "state monopoly on violence" that doesn't boil down to a just-so story invoking the fiction of the social contract (even the US only grants a limited exemption to this via the second amendment and even that still uses the context of "militias"). But even in Civil Law systems that doesn't mean the state won't act as if it is a thing and base legislation on that assumption.
- awright415 3y ago
  The reason you can’t find a federal law is that corporations are largely governed by state law. See, for example, Section 5231 of the California Corporations Code. https://codes.findlaw.com/ca/corporations-code/corp-sect-5231/ https://codes.findlaw.com/ca/corporations-code/corp-sect-523...
  - Vicinity9635 3y ago
    So it's not a legal obligation in the US, but possibly in some states. Which boils down to the same thing. Incorporate where it's not. Viola - no legal obligation.
    - TylerE 3y ago
      The laws against murder are also state, and not federal. Doesn’t mean you have no legal obligation to not commit murder.

kelnos 3y ago

Corporate boards do have quite a few legal obligations to their shareholders. The often-mistaken popular view is that companies are required to seek ever-increasing profit above all else. While that isn't true, if a corporate board takes actions that are contrary to shareholder interest, they open themselves to liability. In the case the GP is talking about, where a buyout offer exceeded any amount of return that the company could possibly provide while remaining independent, shareholders would absolutely have a case if that acquisition offer had actually been turned down.