Abstract
I have known John for 32 years, more or less. He is an expert about many matters, including fine Australian and New Zealand wines (particularly the latter). Professionally, though, he possesses an international reputation in company law, and is known and highly regarded in the U.K., Hong Kong, Malaysia, Singapore, and the U.S., among others, as well as in Australia and New Zealand (Farrar and Hannigan in Farrar’s Company Law. Butterworths, London, 1998). With John, for fourteen years, I co-taught the Master of Laws course “Duties of Directors and Corporate Governance” at the University of Melbourne Law School, a course in which Professor Farrar pulled the laboring oar. This essay centers on what, in the first instance, John taught me, and in the second instance, the ways in which John helped expand my incipient understanding. John is a leading attorney and scholar in the field of corporate governance, as author of Corporate Governance: Theories, Principles, and Evidence evidences (Farrar in Principles of corporate governance: theories, principles, and practice. Oxford University Press, Melbourne, 2005). “Corporate Governance,” John notes in his introduction, though, “is far too important a subject to be left to lawyers” (Principles of Corporate Governance, xxvi.). It also is much more than law, composed as is of law, legal concepts, “hard soft law” (ASIC and ASX regulations, for example), and soft soft law, extending outward to business ethics and moral precepts.
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Notes
- 1.
Under a company law schematic, substitute “managing director,” although the trend everywhere seems to be to adoption of the CEO (Chief Executive Officer) title.
- 2.
The large board-executive committee model is frequently encountered in the not-for-profit sphere.
- 3.
Branson (2007). See page 88 (5821 Fortune 500 company directors in 2001) and page 97 (5161 directors in 2007).
- 4.
Dodd-Frank. The U.S. federal scheme is pursuant to a disclosure mandate. So, the statute itself requires companies to disclose if they have a compensation committee and, if not, why not. Few, if any, registrants follow the latter course. Thus, the disclosure framework translates into a de facto substantive requirement. All, or almost all, public companies have a compensation committee.
- 5.
Farrar (2005), 127. Professor Farrar adds, “more is being expected, perhaps to an unrealistic degree and in a bureaucratic manner.”
- 6.
Corporations Act 2001 (Cth) s180(2). See generally Farrar (2017).
- 7.
Nev. Rev. Stat. §78.138(7)(a-b) (directors or officers not liable unless that have engaged in “intentional misconduct, fraud, or a knowing violation of law”). See also Wynn Resorts v. Eighth Judicial District, 399 P.3rd 34, 354 (Nev. 2017). Nevada is the Delaware of the West, a fact known in the western U.S., but little noted in the remainder of the states.
- 8.
Branson (2002). See also page 645 (discussion of differences between safe harbor and presumption).
- 9.
Corporations Act 2001 (Cth) s180(2).
- 10.
American Law Institute, Corporate Governance Project §4.01(c)(1994). Cf. Warshaw v. Calhoun, 221 A.2d 487 (Del. 1966)(business judgement rule as a presumption). See also Aronson v. Lewis, 473 A.2d 805 (Del. 1984) (same).
- 11.
The Delaware Supreme Court has decreed that the business judgment rule is available to shield from judicial scrutiny directors’ adoption of most, but not all, takeover defenses. See Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985) (business judgment rule applies with the add-on that the defense adopted must be proportionate to the threat posed); Revlon, Inc. v. Macandrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986)(action phase business judgment rule: when directors have decided, or circumstances dictate, that the company will be sold, the board ceases to be a defender of the corporate bastion and must seek the best prices for shareholders). These and other Delaware cases have become and represent the U.S.’s national standards. Nothing, though, under any U.S. law protects directors’ adoption of a takeover defense that s “draconian” or “preclusive.”
- 12.
Farrar, Corporate Governance, 377: “Modern financial management is aimed at protecting the company against risk in the areas of interest rates, credit, currency, and liquidity. [T]he modern concept of risk management extends beyond financial management risks to such matters as health and safety, public liability, trade practices, property and environmental protection ….”
- 13.
Brane v. Roth, 590 N.E.2d 587 (Ind. App. 1993).
- 14.
Patrick and Webb (2021).
- 15.
Archegos Hit Tops $10 Billion, 2.
- 16.
Both in the U.S. and internationally, many financial firms such as Normura and UBS became banks during the 2008–09 worldwide financial crisis. Qualifying with U.S. regulators as banks, the financial institutions were able to gain access to the U.S.’s Federal Reserve “discount window.” In that manner, they were able to obtain large loans at low, low interest rates, enabling them to amass capital sufficient to navigate the 2008–2009 crisis.
- 17.
Ibid.
- 18.
Toplensky (2021)
- 19.
Patrick (2021).
- 20.
See generally Chung et al. (2021).
- 21.
ASX Recommendation 6.1 reproduced in Farrar (2017), 378–79.
- 22.
Farrar (2017), 380.
- 23.
Farrar and Bosch (2003).
- 24.
Farrar (2017), 403–404.
- 25.
Ibid., 408–410 (emphasis in original).
References
Branson, Douglas M. 2002. Indiana Supreme Court Lecture: The Rule That Isn’t a Rule – The Business Judgment Rule. Valparaiso University Law Review 36(3): 631
Branson, Douglas M. 2007. No Seat at the Table: How Governance and Law Keep Women Out of the Boardroom. New York: New York University Press.
Juliet Chung et al., “Bans Tighten Up After Archegos,” Wall Street Journal, May 6, 2021, A-6.
Farrar, John H., and Bosch, Henry. 2003 Guidelines on Corporate Governance for SMEs in Hong Kong. Hong Kong Institute of Directors.
Farrar J. H., and Hannigan, Brenda. 1998. Farrar’s Company Law, 4th ed. London: Butterworths.
Farrar, John. 2005. Principles of Corporate Governance: Theories, Principles, and Practice, 2nd ed. Melbourne: Oxford University Press.
Farrar, John H. 2017. Corporate Governance. Chatswood: LexisNexis Butterworths, 139–45.
Patrick, Margot, “New Credit Suisse Head Resets Agenda,” Wall Street Journal, May 1, 2021, B-12.
Patrick, Margot & Quentin Webb, “Archegos Hit Tops $10 Billion After Losses at UBS, Nomura,” Wall Street Journal, April 28, 2021, A-1.
Toplensky, Rachel, “Credit Suisse Brings in a Fixer,” Wall Street Journal, May 1, 2021, B-14.
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Branson, D.M. (2023). John Farrar: Leading Expert and Scholar in Company Law and Corporate Governance. In: Ghori, U., Hiscock, M., Parsons, L., Watters, C. (eds) Globalisation in Transition. Springer, Singapore. https://doi.org/10.1007/978-981-99-2439-4_2
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