December 02, 2004

The End of Corporate Democracy?

Corporate democracy is an interesting concept. Briefly, it means that if you own an interest, a share, of a corporation, you are entitled to vote on matters which are required to be put for a vote before the shareholders. What matters? Well, elections of directors, corporate and shareholder resolutions, mergers and acquisitions, and certain kinds of asset sales. This right to vote is a fundamental aspect of corporate and share ownership. It may not apply to all classes of stock, of course.

The system is premised on the following concept: those with an economic interest should be permitted a voice in proportion to that economic interest. One share, one vote, in other words. This system has worked pretty well up to now and courts take very seriously issues of shareholder disenfranchisement, freeze out, and other maneuvers by which shareholders are pushed out of their rights to vote.

The system, however, has just been totally gamed. It may not be a bad thing, but it is certainly very interesting.

The NY Times reported this morning on a technique used by the "owner" of 10% of a corporation's outstanding and issued shares in regard to a merger vote. Why is owner in quotes? Simple. The owner of the shares simultaneously bought them while another party, a counterparty (I think), sold the shares short. Result? He owns the shares with absolutely no economic interest or risk. In other words, he has the voting rights but no exposure to the fluctuation of the share price in the market place. Shareholder rights activists are up in arms over this. I, too, was initially quite disturbed by it. But the article, at the absolute very end, quotes a law professor who points out that shareholders in a large public company have no fiduciary duty to each other. I forgot that as I got caught up in the drama of the article. This is important. Shareholders voting on a merger are under no compulsion to vote anything other than what is in their best interests, not the best interests of their fellow shareholders. To require otherwise would be unwieldy at best and at worst would require a level of care in a relationship of co-shareholders that is absolutely unwarranted.

This is an interesting issue, I think. Gaming the corporate democracy system by holding voting shares with no economic exposure. It raises the question of why you would want to do it at all if you don't stand to gain by any price movement in the shares you "own". The article in the Times did not address this question. But suppose the "owner" really did own shares in the other company in the merger. . . Maybe that's where the play is. Very clever, if so.

Posted by: Random Penseur at 08:58 AM | No Comments | Add Comment
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Zimbabwe -- Let the Children Eat, what, cake? Nothing?

Mugabe is in the process of running out of Zimbabwe all foreign aid organizations. We have discussed previously how it has become a criminal offense to accept foreign money in connection with any electoral monitoring and we have also commented on the exclusion of the foreign press and the enhanced criminal penalties authorized for those who "tell falsehoods" about government. So I should not be astonished to learn that a charity responsible for giving 90,000 the only hot meal that they eat in a day has been kicked out of the country. Medair, a Swiss organization devoted to food distribution, had this to say:

It is with real sadness that after 2 years Medair has this week left Zimbabwe. The final move which forced the decision was the refusal by the Zimbabwean government to issue work permits for our 2 remaining senior expatriate staff members.

This follows months in which we had seen our temporary registration to continue our school feeding programmes in Gokwe North and Mudzi districts expire and not be renewed despite our best efforts, and all remaining expatriate staff refused work permits. Unable to work and consequently to fund our continued presence, we were left with no choice but to finally withdraw from the country.

The timing of this decision is all the more significant because of the deteriorating economic and humanitarian situation within the country. On the 15th of November the Famine Early Warning System Network for Zimbabwe (FEWS) reasserted their prediction that 2.2 million rural households would require food aid before the end of the year. Indeed, earlier this month World Food Programme (WFP) reported falling school attendances in Mudzi district as parents took their children out of school to work in the fields or find food. This was highlighted as a direct result of the halting of the Medair school feeding programme in August after our registration renewal was refused by the government.

‘We’d really hoped to continue the school feeding programme in partnership with WFP, but instead we found ourselves prevented from distributing, and so the food has sat deteriorating in the warehouses since August. It’s been so frustrating not being free to work and now we leave knowing the increasing food insecurity that faces those primary school children and their families’, said Mark Screeton, Medair Desk Officer for Zimbabwe.

At this time of great need our thoughts remain with the beneficiaries we have tried to serve in Zimbabwe over the last 2 years, and with our great local staff who have worked tirelessly, and who now find themselves unemployed at a time of national economic crisis.

Mugabe is a terrifying dictator in the worst of the authoritarian tradition. Children will starve as a result of his personally wrecking his country's economy.

I wonder if it will end in some form of armed uprising.

Posted by: Random Penseur at 08:17 AM | Comments (6) | Add Comment
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December 01, 2004

Future of Welsh Hip-hop

Go check out GLC (goldie lookin chain) to catch their new single, Your Mother's got a Penis, and ponder, if you dare, the future of Welch Hip-hop.

Come on, you know you want to.

UPDATE:

If you are visiting, I have another post on Welsh Hip Hop here. Also, congratulations (link to my small tribute post) to the nation of Wales on the outstanding Six Nations Rugby Grand Slam!

Posted by: Random Penseur at 02:53 PM | Comments (162) | Add Comment
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The Practice of Law -- small rant

What do you think, assuming you are not a lawyer, about what the practice of law is? I think that there are many different images. Maybe you think it is like television, all Ally McBeal or LA Law -- lots of well dressed people running about like idiots and arguing with judges. Maybe you think it is the movie image of Atticus Finch in To Kill a Mockingbird or Tom Cruise in a Few Good Men. Maybe you have the used car salesman image of the sleazy personal injury or insurance defense lawyer. Maybe it is the tweed coat wearing law school professor image or the ivory tower Supreme Court litigator who sits high above and contemplates serious issues. What else? Maybe the grizzled old criminal defense lawyer or the young earnest prosecutor. Maybe the crusading environmental lawyer or the terribly serious public interest guys with the long hair and earrings who still think that smoking weed is consistent with the oath they took upon admission to the Bar.

Reality? Pretty much nothing like the above descriptions. At least, not in my practice. No, in reality, even at the big firms, a lawyer is a small business operator. He sells services to individuals and to companies and then he tries to get paid for them. Some of the services are measured by the amount of time spent performing them and those are charged on an hourly basis. That hourly basis charge is a very expensive way for an individual to purchase legal services, especially the services I provide -- complex corporate litigation and dispute resolution. Litigating by the hour is a terrible way to go, for most. In fact, just out of curiosity, how much do you think my firm charges out my time at? I'll be interested to see what you come up with.

I spend some of my time dealing with the frustration of making sure my clients pay the firm for the services we provided. I do a good job for my clients and usually obtain pretty good results, but there is no guarantee about anything and I have had some bad decisions and bad results. But, those bad results don't mean that the client is relieved of his obligation to pay his bills. And if the client doesn't pay me, what can I do? I can't stop performing services because I am a fiduciary to my client. I can make a motion to the court to be relieved as counsel but that is not a guarantee that I will be relieved. I may be stuck with this client, as I am probably stuck right now, with a client who has a $40,000 plus bill and has not given me anything on it but empty promises and mumbles.

It is annoying to be lied to about your bills.

So, no, instead of thinking of a lawyer as an Armani suit wearing guy who spends his days yelling at judges, think instead of a small business owner who struggles to get paid. And also sometimes yells at judges, if they get lucky.

Posted by: Random Penseur at 10:54 AM | Comments (13) | Add Comment
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Harvard Admits: We Suck

Harvard students, tricked by the Yalies, admit: We Suck.

harvardsucks.jpg

Posted by: Random Penseur at 10:44 AM | Comments (3) | Add Comment
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