Protecting Minority Stockholder Rights: On a Conflict of Interest at Revlon

The principle of majority rule is a staple of democratic theory. Typically the victor of a close election is quick to proclaim that “the people” have spoken. That “the people” corresponds to 51% of those who voted is beside the point. What about the 49% who voted against the victor? What about the minority’s rights? In the U.S. Senate, the fact that it takes 60 out of 100 votes to end a filibuster means that a large minority can halt a majority’s bill. In the European Council, the qualified majority rule means that for a bill to pass, the states in the majority must be at least 55% of the total number of states and must have at least 55% of the E.U.’s population between them.  A large minority can therefore stop a small majority. In both of these “intergovernmental” bodies, the implication is that 51% of a vote is not as significant as the principle of majority rule suggests. What about the rights of a minority of shares of stock in corporate governance? When a majority stockholder has control of management, the interests of the minority stockholders can be shirked. This is particularly true when a majority stockholder proposes a going-private transaction with the aid of management.

The full essay is at "Protecting Minority Stockholders."

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1. Peter Lattman, “To Perelman’s Failed Revlon Deal, Add Rebuke From S.E.C.,” The New York Times, June 14, 2013.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. Ibid.

The Checks and Balances of Federalism: Hungary vs. the European Parliament

One of the benefits of federalism is the checks and balances between the two systems of government existing in a federal system—that of the states and that of the federal government. That is to say, federalism can be thought of as a governmental system that contains two systems of government—that of the states and that of the federation. Either of these systems can go too far, and the other system should have the wherewithal to pull the other back without compromising its viability. This is why the consolidation of power in one system (e.g., the U.S. Federal Government) compromises the viability of a federal system at least with respect to its checks and balances. One other point: the two systems in a federal system are on the same level; that is, one is not “above” the other. Hence, the supremacy clauses in the E.U. and U.S. refer only to competencies or domains assigned to the federal government.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.