The public enforcement of corporate law
Traditionally, corporate law has been viewed as having characteristics that are commonly associated with private law. Largely, this view developed as a result of the 'law and economics' scholarship which dominated the corporate law debate, especially in the United States, in the last quarter of last century. While the traditional law and economics approach supports the view that corporate law should be treated as a branch of private law and that the state should have no role in its enforcement, other scholars, particularly those that adopt a progressive approach, argue that corporate law has and should be recognised as having characteristics that are usually associated with public law. In addition, some progressive scholars argue that corporate law and regulation have a wider ethical purpose than the narrow advancement of shareholder interests.
This research is concerned with how corporate regulation can be enforceable where the actions of corporations have global societal impacts; when creditors, citizens and other stakeholders are disadvantaged by the misuse of the corporate form; or where the governance arrangements of transnational corporations fail to prevent their agents engaging in bribery and corruption.
- Michelle Welsh
- Michelle Welsh, ''Realising the Public Potential of Corporate Law: Twenty Years of Civil Penalty Enforcement in Australia' (2014) 42 (1) Federal Law Review 217.
Public and private enforcement of securities laws
Class actions on behalf of aggrieved shareholders and other investors have become the most common form of group litigation filed in the Federal Court of Australia. This increasing importance of investor class actions has raised a number of important practical and conceptual issues. One such issue is how this private enforcement of the laws that are intended to protect investors interacts with the operation of the public enforcement model and their respective abilities to deter illegal conduct and secure compensation for the losses suffered by investors. The aim of this project is to explore this issue by comparing and contrasting the enforcement actions that have been undertaken by the Australian Securities and Investments Commission, the public regulator, with the federal class actions that have been filed on behalf of investors with respect to the same conduct or legal disputes over a 17 year period. This empirical study focuses on the nature of the relief that was sought, the persons and entities against whom this relief was sought and/or secured, the outcomes of these actions and the problems that may be encountered when the same conduct prompts public and private enforcement activity.
- Professor Vince Morabito
- Associate Professor Michelle Welsh.
- Michelle Welsh and Vince Morabito, 'Public vs. Private Enforcement of Securities Laws: An Australian Empirical Study' (2014) 14 (1) Journal of Corporate Law Studies 39 - 78.
Risk disclosure in periodic reporting
Disclosure is a primary form of investor protection and is fundamental to market efficiency. Knowledge of the risks facing them is integral to the successful operation of business enterprises and is also of benefit to their investors. Whilst continuous disclosure is a policy that should provide a good basis for risk disclosure, periodic disclosure of risk has received significantly less attention. This is because periodic disclosure is more traditionally an area for disclosure in financial accounts than for management discussion and analysis. However, this may be changing, particularly due to the enactment of s 299A of the Corporations Act 2001 (Cth) in 2004 and ASIC’s more recent interpretations of that section.
- Michael Duffy
Salomon’s case and the law dealing with the tort liabilities of corporate groups
Salomon’s Case has for a long time been widely seen as a landmark case that is the keystone of modern company law. A mythology has developed around the case that has resulted in the Salomon principle exercising an iron grip on company law. The rigid application of the principle in Salomon’s Case to corporate groups has enabled corporate groups to structure themselves in ways that limit the tort liabilities of the group as a whole and so raises important social, economic and ethical questions regarding the allocation of risk that are not addressed by the application of the Salomon principle. The research suggests that given the importance of the social, economic and ethical issues raised in cases of mass torts that invariably involve corporate groups, it is preferable that these issues are resolved by tort law, which is concerned with the allocation of risk, thereby circumventing the dead hand of Salomon.
- Dr Phillip Lipton
- "The Mythology of Salomon's Case and the Law Dealing with the Tort Liabilities of Corporate Groups: An Historical Perspective" (2014) 40(2) Monash University Law Review 452
Securities market operators’ use of the "please explain" price query
Securities market operators’ use of the "please explain" price query and its impact on compliance
Market operators in New Zealand and Australia, such as the New Zealand Exchange (NZX) and the Australian Securities Exchange (ASX), have the regulatory power in their listing rules to issue queries to their market participants to explain unusual fluctuations in trading price and/or volume in the market. The operator will issue a price query where it believes that the market has not been fully informed as to price relevant information. Responsive regulation theory has informed much of the regulatory debate in securities laws in the region. Price queries map on to the lower level of the enforcement pyramid envisaged by responsive regulation and are one strategy that a market operator can use in communicating its compliance expectations to its stakeholders. The issue of a price query may be a precursor to more severe enforcement activities. The aim of this study is to investigate whether increased use of price queries by the securities market operator in New Zealand corresponded with an increase in disclosure frequency by all participating companies. The study finds that an increased use of price queries did correspond with an increase in disclosure frequency. A possible explanation for this finding is that price queries are an effective means of appealing to the factors that motivate corporations, and the individuals who control them, to comply with the law and regulatory requirements. This finding will have implications for both the NZX and the ASX as well as for regulators and policy makers generally.
- Larelle Chapple, Thu Phuong Tran and Michelle Welsh, ‘A Securities Market Operator’s Use of the “Please Explain” Price Query and Its Impact on Compliance’ (2014) 32 Companies and Securities Law Journal 173