The LL.M. Subject Forum is an event held at the beginning of each academic year to help current LL.M. students decide which courses to take. Course convenors for each course discuss for approximately 10 minutes the goals and objectives of their course. Potential applicants to the LL.M. viewing this video must bear in mind the students who were in the audience were intended as the target audience. Most of the courses offered each year will run in subsequent years, but not necessarily all of them. Please see The LL.M. Curriculum for more information.

Transcript

I’m Professor Cheffins and I’m here to talk about corporate governance. Corporate governance is concerned with the systems by which companies are directed and controlled. In theory, Corporate Governance is a topic that’s relevant to all types of companies, but in practice the primary focus is on the public company, meaning companies with shares traded on the stock market. Now, until around 20 years ago, the term ‘corporate governance’ was rarely used. Things have now changed dramatically; corporate governance has generated considerable debate over the past two decades in Britain and has been discussed widely in other countries as well.

The recent financial crisis threw matters into overdrive, as many observers cited inadequate corporate governance at major banks as a key cause of the 2008 financial meltdown. Now, what this course does is it introduces students to the key aspects of corporate governance, and in so doing it provides insights concerning the operation of publicly traded companies and the legal rules that govern such firms. Now, what’s the market for this course? The students will find it’ll be the greatest immediate relevance for those who anticipate that they’re going to enter some form of corporate legal practice, with the focus being on publicly traded firms. Now, the audience, I would like to think, will not be restricted, however, to prospective corporate lawyers. Indeed, any student who has an interest in the role that large business enterprises play in the economy and how they function and how they’re regulated should find the course to be of interest.

The course focuses pretty much entirely on developments in Britain. Students from other countries should, nevertheless, find the material covered to be of value, with one reason being that corporate governance is a topic that’s widely discussed, as I indicated, not simply in Britain but, in fact, worldwide. Another reason is that reform model that the UK has adopted over the past 20 years has been widely imitated in other countries. Britain’s also a good place to look because the financial crisis hit Britain really, really hard and correspondingly the extent that corporate governance’s reform has responded to this, Britain’s a good place to look.

Now, I should offer some caveats for students that might be interested in taking the course. Professor Ferran has talked about previous expertise concerning corporate law. It certainly would be a big help if you have taken a course already in company law or corporate law and not so familiar with the basic role and position of directors, shareholders and so on. If you have no previous exposure to corporate law, you will have to play catch-up.

Second is that focus here is going to be on lectures, there will not be supplementary small group teaching because of various logistical issues, size of the class and the number of people teaching it – just one, but there will an opportunity and what I will do at the end of the first term is I’ll provide you with the opportunity to do a voluntary take home question that we will go through in class in the beginning of the spring term to give you a sense of where you’re at and what might be expected come late May or early June.

The third caveat is that there is no single text or casebook, again unlike corporate finance where the obvious go to book is Professor [inaudible 0:03:31], there is no single go to book for corporate governance. A text that I think many of you will end up purchasing is a company law book by Davies and Gower, but do note that this is a book on company law not about corporate governance and so there is a lot of other ground to cover, but I will draw your attention to numerous sources that you can look to to find out what you need to know for the purposes of the course.

The course will proceed as follows. After the topic of corporate governance has been introduced, what I’ll do is I’ll provide an overview of the legal framework within which UK public companies operate. We’ll consider in some detail the manner in which managerial authority is allocated in UK companies and the duties which directors owe to their companies. We’ll then turn to the legal position of shareholders, taking into account the influence that they have over the selection of directors, the mechanics of shareholder meetings and the scope that minority shareholders have to use litigation in case they feel aggrieved.

As we consider the elements of company law relevant to corporate governance, I will refer often to provisions in the Companies Act 2006. So, what that means is you’re going to have to purchase up-to-date statutory materials. More details will be available at first lecture. Once the legal foundation has been taken into account, we then turn to pivotal corporate governance topics. We consider first, non-executive directors, who are individuals who are elected as directors who did not serve in an executive capacity but are instead expected to be watchdogs, constraining incompetent or dishonest executives. We then turn to the controversial topic of executive pay. After this we consider shareholder activism, which involves shareholders who are seeking to improve returns by prompting changes in corporate policy or orchestrating managerial turnover.

The course will conclude with an analysis of private equity, focussing on the acquisition and taking private and publicly traded companies. The angle we’re looking at here is that private equity provides a different corporate governance model than exists in a publicly traded firm, it’s not meant to be a detailed analysis of private equity, it’s the corporate governance model that is of particular interest.

There are two evaluation options for this course: one, by far the most popular, is the three-hour examination. Another couple of points here:

1) This would be an open book exam – an open book exam.

2) In terms of most examinations for the LL.M, typically students get a choice, three from six, or something.

Past pattern in corporate governance, no choice, you do all the questions. You don’t like executive pay; you don’t want to write about it, too bad. Okay? I’m not saying there’s going to be an executive pay question, but it could happen.

Now, the second option is a thesis. I’m assuming that you went to the session this morning where Professor Barnard talked about the basic logistics. If you have any questions about that take a quick look at the LL.M. handbook. The point I want to make here about this is that the thesis must fall within the parameters of the syllabus. This is a course about UK corporate governance, correspondingly any thesis will have to have a strong UK orientation, it will also have to deal with topics covered by the course. It is not a licence with a thesis to just cover some corporate topic; it has to fall within the parameters of the reading list in the syllabus. The reading list in the syllabus as well as the lecture outlines for the first three topics of the course are currently available on-line at my web page, which you can get by the Law Faculty. The first lecture is tomorrow, and I’ll provide more details then. So, hope to see some of you tomorrow at 9am.

Added on 05/10/2011.

Last modified on 06/10/2011

Accessed 8 times.