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CORPORATE FINANCE(4)

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CORPORATE FINANCE(4)

    COMPARATIVE CORPORATE LAW:

    GOVERNANCE, TRANSACTIONS, AND PRACTICE

    Georgia State University Summer Legal and Policy Study in Rio de Janeiro

    May 2009

Joan M. Heminway

    The University of Tennessee College of Law

    Room 384

    865-974-3813

    jheminwa@tennessee.edu

    Biographical information available at: http://www.law.utk.edu/faculty/heminway/index.shtml

    Course Syllabus and Outline

    Class Meetings: Class is scheduled for the first module of the program (with classes held on May 18-29, 2009). Class meetings generally will be held from 8:30 am 12:30 pm (three 70-minute sessions with

    two 15-minute breaks), Monday through Friday, except for our field trip day (May 20).

Course Materials: There are two required texts for this course, STEPHEN M. BAINBRIDGE, MERGERS

    AND ACQUISITIONS (Foundation Press, 2d ed. 2009), referenced as BAINBRIDGE below, and FRANKLIN

    GEVURTZ, GLOBAL ISSUES IN CORPORATE LAW (Thomson West, 2006), referenced as GEVURTZ below.

    These books are not readily available in Brazil and therefore should be purchased in the United States or through U.S. vendors in advance of the start date for the course. Other course materials, as designated in the Course Outline included with this Course Syllabus, (1) must be obtained by you through resources at 1your school before you leave for Brazil or (2) are being distributed on a CD-ROM (with this syllabus) or

    in class. Please let me know as soon as possible if you have a special interest in any aspect of this course. I may be able to address your area of interest by bringing some additional materials with me or suggesting additional materials for you to assemble on your own.

    In addition to the required texts and other materials designated in the Course Outline included with this Course Syllabus, your course CD-ROM includes selected sections from the Delaware General 23Corporation Law (DGCL) and the Model Business Corporations Act (MBCA), two key corporate

    law sources in the United States. In addition, certain U.S. federal laws and regulations have been copied 4onto the CD-ROM for your reference. These state and federal statutes and rules may be referenced in

    class, and you may want to use them in assignments. The CD-ROM also includes English translations of selected Brazilian laws and guidance from the CVM, Brazils federal securities exchange commission.

    Sections from these Brazilian sources also may be referenced in class or used by you in your work for the course. The English translations of the Brazilian rules are somewhat rough and include formatting errors, repetitious wording, typos, and other errors, none of which should impair your ability to understand key

     1 Materials on the CD-ROM are designated [CD-ROM] in the Course Outline included with this Course Syllabus and have

    been given file names that key into the relevant statutes or descriptions in the Course Outline. 2 The General Corporation Law of the State of Delaware (DGCL) is found in Title 8 of the Delaware Code. Please note that,

    due to some issues with Lexis, these are statutes from 2008. Accordingly, rely on these only for our course work this spring.

    Do not rely on them for work product outside this course. 3 Citations are to the 1984 version of the Model Business Corporation Act, as amended through 2004 (MBCA). 4 Please note that, due to some issues with Lexis, these are statutes from 2008. Accordingly, rely on these only for our course

    work this spring. Do not rely on them for work product outside this course.

     1

    provisions. Overall, these U.S. and Brazilian statutory and regulatory materials are important to corporate governance and transactions; they provide a basis for and illuminate the assigned readings. 5Accordingly, you should review or skim them throughout the course with these purposes in mind.

Course Administration and Grading Policy: This class involves an intense learning environment

    spread out over only ten class days. Accordingly, attendance at and preparedness for our class

    meetings are absolute essentials for this course and the program has policies in this regard. Active

    participation in class meetings and completion of written assignments also is required. In sum, you are expected to meet or exceed the attendance policy for the program, and you must be mentally and physically present in class. To reinforce these values, 25% of your grade in this course is based on your

    class attendance and participation in class meetings and in-class exercises. As for the remainder of your course grade, 35% is based on two short written projects completed outside class and 40% is based on

    an expository essay and your in-class presentation of the idea for that essay, each as briefly described below.

Course Objective: This course compares and contrasts systems of corporate law by exploring corporate

    law and governance in general and in a cross-border transactional context. The primary comparison will be between the United States and Brazil, but the laws of other countries also will be explored as necessary or desirable.

    The cross-border transactional focus of the course comprises negotiated and hostile business combinationsmergers, stock purchases (including tender offers), asset transfers, and other available transactions. The course therefore includes examinations of merger and acquisition and related laws and regulations on both national and sub-national levels, as appropriate.

    Throughout, emphasis is placed on underlying theory and policies and effects on corporate constituencies in and outside the core corporate governance structure (i.e., other constituencies‖—like

    employees, distributors, suppliersas well as directors, officers, and shareholders). In this vein, the course will address managerialism and the market for corporate control, as well as evidence of board primacy or shareholder primacy in merger and acquisition regulation, in various countries and identify implications of these themes for corporate governance in particular countries and in the global marketplace. In addition, the course will involve discussions and analyses of underlying/overarching comparative law themes, e.g.: common and civil law traditions; the convergence/path dependence debate; overall social, political, and economic forces that determine acquisition and takeover regulation; whether law matters; and the differing roles of regulatory organizations. The course also will illustrate and allow for the practice of related research techniques, legal planning and drafting skills, and expository writing proficiency.

     5 Students who have not taken a course in corporations or business associations/organizations may want to spend more time with the Delaware and Model Business Corporation Act statutory sections to familiarize themselves with the statutory origins of general corporate structure, governance, and merger and acquisition processes under state law. For others, this statutory material should represent a review of items assigned in a basic course covering state corporation law.

     2

Written Projects: You are required to complete and submit three principal written projects, as briefly

    described below. Together (and including a brief oral presentation on the third project), they comprise 75% of your grade for the course. Detailed guidelines for each project (other than the Course

    Questionnaire, which is attached) will be distributed and discussed in class.

    ; Course Questionnaire You are required to (1) print out and complete the attached Course

    Questionnaire and bring it with you to our first class meeting or (2) electronically submit the

    attached Course Questionnaire to me as an email attachment on or before Thursday, May 14.

    This project comprises 10% of your grade for the course. Due date: Thursday, May 14 (for

    electronic submissions); Monday, May 18 (for hard-copy submissions).

    ; Planning/Drafting Memorandum You will draft and comment on specified provisions for a

    cross-border merger or acquisition agreement, as directed. This project comprises 25% of your

    grade for the course. Due date: Wednesday, May 27.

    ; Expository Essay (and Related Presentation) You must (1) identify one aspect of U.S. law

    relating to corporate governance or mergers and acquisitions, (2) critique that aspect of U.S. law

    using materials and themes from this course, and (3) suggest possible changes to U.S. law based

    on the materials and themes from this course. Look for ideas as the course proceeds. It will

    not benefit you to wait until the last minute on this. Suggested changes may include, e.g.,

    amending existing statutes or rules, suggesting new statutes or rules, repealing existing statutes

    or rules, or (as and if appropriate) recommending changes in related decisional law. This project,

    together with your in-class presentation of the idea for this project, comprises 40% of your grade

    for the course. Due date: Friday, May 29 (in-class idea presentation); Monday, June 25

    (expository essay).

     6Course Outline

Set forth below is a day-by-day summary of the course coverage and assignments. Please review this

    summary upon receipt of this Course Syllabus and Outline and contact me with any questions you may have.

    I am privileged to have access to two instructors form Brazil to assist me in teaching you during this course. They are Fernando de Souza Penteado (corporate governance and cross-border transactions) and Patrícia Regina Pinheiro Sampaio (antitrust) from Fundação Getulio Vargas Law School in Rio. Their academic backgrounds complement mine, and they are extremely valuable resources for us in learning about Brazilian law and practice. As youll see from the Course Outline set forth below, we also plan to

    visit a local law firm on a field trip and be graced by a few other guest speakers. Our current plans for these experiences are noted in this Course Outline.

     6 Please note that this Course Outline remains subject to change, in particular because of the schedules of our local faculty, guest speakers, and field trip host.

     3

     7Assignments; Required Readings Date Coverage

    Monday, Laying a Foundation: Basics Please submit: the attached Course Questionnaire and bring 8May 18 of U.S. and Brazilian the completed hard copy with you to class for submission,

    Corporate Law and unless you submitted your Course Questionnaire

    Governance (with F. electronically on or before Thursday, May 14. Please read:

    BAINBRIDGE, chs. 1 & 2, pp. 1-48; Erica Gorga, Culture and Penteado)

    Corporate Law Reform: A Case Study of Brazil, 27 U. PA. J.

    INTL ECON. L. 803 (2006); Andre Antunes Soares de

    Camargo, Three Essential Aspects of Corporate Law: A Brief

    Overview of Brazilian and American Approaches, 9 SW. J.L. 9& TRADE AM. 89 (2002/2003); and the PowerPoint slides on

    BOVESPA and the Novo Mercado, available at

    http://www.google.com/url?sa=t&source=web&ct=res&cd=

    2&url=http%3A%2F%2Fwww.ifc.org%2Fifcext%2Fcgf.nsf

    %2FAttachmentsByTitle%2FBelgrade_Stock_Exchange_C

    onf_Bovespa_ppt%2F%24FILE%2F5th%2BBelex%2B151

    106%2BMHelena.ppt&ei=0ojjScSnJZbItgeqxoSwDA&usg

    =AFQjCNGnVgHnN65cYT_eOBXeyX03FVzYiQ.

    Tuesday, AINBRIDGE, ch. 3, pp. 49-128; GEVURTZ, chs. More on Corporate Law and Please read: B10May 19 Governance: Structures and I, II & IV.

    Rules; Introduction to

    Mergers & Acquisitions 12Wednesday, Overview of Cross-Border Roger S. Aaron, et al., Chapter 2: 2006 Please read:

    May 20 Transactions: Theory, Trends in Cross-Border M&A: A European Perspective with

    Policy, and Practice (incl. a U.S. Commentary, in THE INTERNATIONAL COMPARATIVE

    GUIDE TO: MERGERS & ACQUISITIONS 2007, available at field trip Machado,

    http://www.skadden.com/content/Publications/Publications1Meyer, Sendacz e Opice, 11Rio office) 245_0.pdf; Dana Stringer, Note: Choice of Law and Choice

    of Forum in Brazilian International Commercial Contracts:

     7 Please note that the first two days of reading are the heaviest in the entire course. However, they form the basis of your understanding for the rest of our two weeks together. Consider starting these readings before you arrive in Brazil (where there

    are many enticing distractionstrust me). Also, the texts for this course are published in a relatively small page-size format, the GEVURTZ text is printed in relatively large type, and you are required to read only the text of assigned law review articles, not the footnotes. Accordingly, the aggregate number of assigned pages may mislead you as to the amount of reading required for any given day. Many of the readings are news articles available on the Web. Most of them are quite short and easy to read. If a hypertext link does not work, please cut and paste the url into your browser. It then should work. Contact

    me if you have any questions not addressed here. 8 Please note that this assignment is due no later than the beginning of class. Accordingly, ensure that you arrive early enough

    to submit the assignment on time. Late submissions are subject to a penalty. 9 The text of the Gorga article is about 44 pages, and a number of these pages are charts. Accordingly, it is not as lengthy as

    it appears. 10 You will receive detailed guidelines for the Planning/Drafting Memorandum, due on Wednesday, May 27, at this class meeting. Optimally, you should work on this assignment a little bit each day during the time that you have the assignment. You are responsible for getting a copy of the assignment even if you are not in class. 11 The field trip is expected to run from (approximately 3:00 pm to 5:00 pm, not including travel to and from the Machado, Meyer offices. I also will teach a class session for 1.5 hours earlier in the day to prepare you for the field trip. We will arrange

    the exact timing of that class session once we get to Brazil. 12 This assignment looks ridiculous, but many of the items are quite short. Remember to dress appropriately (business attire)!

     4

    7 Assignments; Required ReadingsDate Coverage

    Party Autonomy, International Jurisdiction, and the

    Emerging Third Way, 44 COLUM. J. TRANSNATL L. 959 13(2006); Elzio Barreto, Citigroup sees record Brazil M&A

    deals in 2007, REUTERS, Aug. 7, 2007, available at

    http://www.reuters.com/article/innovationNews/idUSN0737

    369620070807; Brazil Legal, Market Overview, Mergers

    and Acquisitions, available at

    http://www.iflr1000.com/PracticeArea/309/Mergers-and-ac

    quisitions.html; Tony Danby, Mergers, Acquisitions Loom

    Over Brazil Sugar, Ethanol Indus, available at

    http://royaldutchshellplc.com/2009/01/22/mergers-acquisitio

    ns-loom-over-brazil-sugar-ethanol-indus/; Priscilla Murphy,

    Companies rush to complete M&A deals in Brazil ahead of

    uncertainty about tax break after 2009, available at

    http://www.ft.com/cms/s/2/016ff6a4-fe84-11dd-b19a-00007

    7b07658.html; Guillermo Parra-Bernal, Brazil Mergers,

    Acquisitions Poised for Hot 2008 (Update1),

    BLOOMBERG.COM, March 25, 2008, available at

    http://www.bloomberg.com/apps/news?pid=20601086&sid

    =aVtLH6GpI76E&refer=latin_america

     14Thursday, Factors Other Than Please read: European Commission, Mergers,

    May 21 Corporate Law Part I: Legislation, Notices and Guidelines, Notices on Substance,

    Antitrust (with P. Pinheiro); available at

    Drafting Principles http://ec.europa.eu/competition/mergers/legislation/notices_

    on_substance.html; ICN Merger Working Group:

    Investigation and Analysis Subgroup, ICN Merger

    Guidelines Workbook, available at

    http://www.internationalcompetitionnetwork.org/media/libr

    ary/conference_5th_capetown_2006/ICNMergerGuidelines

    Workbook.pdf; Ministry of Finance, Ministry of Justice,

    Horizontal Merger Guidelines, available at

    http://www.mj.gov.br/services/DocumentManagement/File

    Download.EZTSvc.asp?DocumentID=%7B5661A56A-64A

    3-4B2D-8D75-E9B5C31AA7A5%7D&ServiceInstUID=%7

    B2E2554E0-F695-4B62-A40E-4B56390F180A%7D

    U.S. Department of Justice, Horizontal Merger Guidelines,

    available at

    http://www.usdoj.gov/atr/public/guidelines/hmg.pdf;

     13th This reading relates specifically to your assignment due May 27. You should consider using the opportunity you will have

    at Machado, Meyer (to interact with Brazilian lawyers who do cross-border transactions) to your advantage by asking our

    field trip hosts questions relating to choice of law provisions for cross-border transactions. 14 A detailed reading of the various horizontal merger guidelines assigned for review is not necessary. Read these with

    enough focus and in enough detail to be able to understand the basics of merger review and discuss the similarities and

    differences in approach and content as among the different nations represented.

     5

    7 Assignments; Required ReadingsDate Coverage

    Organisation for Economic Cooperation and Development

    (OECD), Competition Law and Policy in Brazil: A Peer

    Review (2005), pp. 1-44 & 102-19, available at

    http://www.oecd.org/dataoecd/12/45/35445196.pdf.

    Thomas Krümmel, Influences of Anglo-American Legal

    Language on Civil Law Contracts, EUROPÄISCHE UNION /

    INTERNATIONALES, Sept. 2007 [CD-ROM].

    Friday, May BAINBRIDGE, chs. 4-5, pp. 129-191. Factors Other Than Please read:1522 Corporate Law Part II:

    Securities Regulation; Tax Brazil: Taxation of Cross-Border Mergers & Acquisitions

    (2008 Edition) available at

    http://www.kpmg.com/NR/rdonlyres/2C1DF9A9-8EF2-4CF

    D-A9E1-AFE89E6EB26E/0/MA_Brazil_2008.pdf Deloitte

    Touche Tohmatsu, International Tax 2009, Brazil

    Highlights, available at

    http://www.deloitte.com/dtt/cda/doc/content/dtt_tax_highlig

    hts_2009_Brazil.pdf; PricewaterhouseCoopers,

    Brazil: Additional new regulations for the tax on financial

    transactions, available at

    http://www.internationaltaxreview.com/?Page=10&PUBID

    =35&ISS=25227&SID=715715&TYPE=20.

    Monday, Cross-Border Case Studies Please read: CNOOC Withdraws 18.5 billion offer for

    May 25 Part I: Analysis of Three Unocal, available at

    Cross-Border Deals (with F. http://www.redorbit.com/news/general/194745/cnooc_withd

    raws_185b_offer_for_unocal/index.html; Jad Mouawad & Penteado)

    David Barboza,

    In Seeking Unocal, Chevron Ruffles an Asian Partner,

    available at

    http://www.thepowerhour.com/news/seeking_unocal.htm;

     James Politi & Francesco Guerrera, U.S. Lawmakers meddle

    in CNOOCs Unocal bid, available at

    http://www.chinadaily.com.cn/english/doc/2005-07/06/cont

    ent_457677.htm.

    Arcelor-Mittal offers 13.7165 eur/share for minorities in

    Brazil unit, FORBES.COM, Apr. 27, 2007, available at

    http://www.forbes.com/markets/feeds/afx/2007/04/27/afx36

    62482.html; Arcelor Mittal raises offer for Brazilian unit,

    REUTERS, Apr. 6, 2007, available at

    http://www.reuters.com/article/mergersNews/idUSL062635

    6820070406; Jeb Blount, Regulators order Arcelor Mittal to

    pay $5 billion for Arcelors Brazilian unit, INTERNATIONAL

     15 At or before this class meeting, you will receive detailed guidelines for the Expository Essay due on Monday, June 25 and

    the related presentation on Friday, May 29.

     6

    7 Assignments; Required ReadingsDate Coverage

    HERALD TRIBUNE, March 23, 2007, available at

    http://www.iht.com/articles/2007/03/22/bloomberg/bxsteel.p

    hp; Brazil antitrust body OKs Mittal-Arcelor merger,

    REUTERS, March 28, 2007, available at

    http://www.reuters.com/article/governmentFilingsNews/idU

    SN2837397520070329; James Kanter et al., Arcelor agrees

    to Mittal takeover, HERALD TRIBUNE, July 7, 2006, available

    at

    http://www.iht.com/articles/2006/06/25/business/steel.php.

    Brazil VCP buys $1.7 bln Aracruz stake, may merge,

    available at

    http://uk.biz.yahoo.com/06082008/323/brazil-vcp-buys-1-7-

    bln-aracruz-stake-merge.html; Carlos Caminada, Aracruz,

    VCP to Merge, Form Top Eucalyptus-Pulp Maker, available

    at

    http://www.bloomberg.com/apps/news?pid=20601086&refe

    r=news&sid=a.0ZRPotKneA; Ben Rollin, Votorantim

    Purchases 28% of Aracruz and May Take Control of the

    Company, available at

    http://www.incainvest.com/index.php/20090120545/Comm

    odities-News/votorantim-purchase-28-of-aracruz-and-may-t

    ake-control-of-the-company.html; VCP Expands Stake in

    Aracruz Celulose, available at

    http://www.euwid-paper.com/news_single.html?&tx_ttnews

    [tt_news]=410&cHash=4ee20f2c3a.

    Tuesday, Cross-Border Case Studies Please read: BAINBRIDGE, ch 6, pp. 192-251; GEVURTZ, ch.

    May 26 Part II: Unsolicited VII.

    Transactions and Related

    Defenses

    Wednesday, The Practice of Law in a Please submit: your Planning/Drafting Memorandum, in 16May 27 Cross-Border Context: accordance with the detailed guidelines supplied to you.

    Theory, Policy, Practice, and Please read: Laurel S. Terry, A How To Guide for

    Professional Responsibility Incorporating Global and Comparative Perspectives into the

    Required Professional Responsibility Course, 51 ST. LOUIS (with Timothy J. Smith,

    L.J. 1135 (2007); Jamie Y. Whitaker, Note: Current Esq. and Salim J. Saud,

    Development 2005-2006: Remedying Ethical Conflicts in a Esq., Squire, Sanders &

    Global Legal Market, 19 GEO. J. LEGAL ETHICS 1079 (2006); Dempsey LLP, Rio office) ;

    Carolyn J. Buller, Managing Your Cross-Border

    Transactions, available at

    http://library.findlaw.com/2004/Jul/22/133528.html;

    Wachtel, Lipton, Rosen & Katz, Cross-Border M&A 2008

    Checklist for Making Acquisitions in the U.S., Dec. 20, 2007,

     16 Please note that this assignment is due no later than the beginning of class. Accordingly, ensure that you arrive early

    enough to submit the assignment on time. Late submissions are subject to a penalty.

     7

    7 Assignments; Required ReadingsDate Coverage

    available at

    http://blogs.law.harvard.edu/corpgov/files/2008/01/2008010

    2-cross-border-ma-checklist.pdf.

    Thursday, Insider Trading Regulation: Please read: Comparative insider trading regulation 17May 28 Example of an International readings [CD-ROM].

    and Comparative

    Cross-Border Transaction Jennifer G. Hill, The Persistent Debate about Convergence

    Problem in Comparative Corporate Governance, Sydney Law School

     Research Paper No. 06/3, available at SSRN:

    Summary of Cross-cutting http://ssrn.com/abstract=881896.

    Comparative Law Themes:

    Common Law/Civil Law;

    Convergence/Path-Depende

    nce; Social, Political,

    Economic, and Cultural

    Forces; the (Un?)Importance

    of Law; and Regulatory

    Organizations and

    Institutions

    Friday, May Applying Knowledge: Please prepare and deliver in class: a five-to-ten-minute

    29 Student Presentations on presentation on your Expository Essay topic, in accordance

    Expository Essay Topics with the detailed guidelines supplied to you.

     17 These are all in a single folder named Insider Trading: Global Developments and Analysis 2008 (eds. Ali & Gregoriou) on

    the CD-ROM.

     8

     COMPARATIVE CORPORATE LAW:

    GOVERNANCE, TRANSACTIONS, AND PRACTICE

    Georgia State University Summer Legal and Policy Study in Rio de Janeiro

    May 2009

Joan M. Heminway

    The University of Tennessee College of Law

    Room 384

    865-974-3813

    jheminwa@tennessee.edu

    Course Questionnaire

    Please answer the questions set forth below. Your answers will be evaluated based on their degree of responsiveness to the questions posed. Your performance on this Course Questionnaire comprises

    10% of your course grade. You may complete this Course Questionnaire in typewritten or handwritten form. You may supply your answers in the spaces provided in this Course Questionnaire or on attached sheets (with appropriate cross-references noted on the Course Questionnaire to any attached sheets) or both. You must either (a) bring a hard copy of the completed Course Questionnaire to our first class meeting (Monday, May 18) and submit it to me at the beginning of that class meeting or (b) submit a copy of the completed Course Questionnaire to me in electronic format (by email attachment) on or before Thursday, May 14.

    1. Have you taken one or more courses covering the law of business associations (e.g., Business

    Associations, Business Organizations, Corporations, Unincorporated Business Associations, etc.)

    or corporate finance (including, e.g., Business Planning or Mergers & Acquisitions, as well as

    courses denominated Corporate Finance)? If so, please list those courses and briefly describe

    their coverage.

     9

2. Why are you taking this course?

    3. What do you expect to learn (and otherwise take away) from this course? Be as specific as

    possible. You may answer this question by listing items (i.e., you need not write in full

    sentences).

     10

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