Preemption and Federalism in Corporate Governance: Protecting Shareholder Rights to Vote, Sell, and Sue
Posted: 8 Feb 2000
Abstract
The long running debate over the relative roles of federal and state law in regulating corporations, which in recent years has tilted toward state regulation even while the debate has remained relatively quiet, may have taken a new turn. This article suggests that in one segment of corporate law, the role of shareholders, a distinct federal trend is visible. The article discusses: 1) federal preemption in the Uniform Standards Act of 1998, 2) federal law which has expanded the place of shareholder voting, and 3) state disclosure law deferring to federal disclosure rules. The discussion occurs within the author's suggested structure for approaching corporate law based on the three types of rights for shareholders: they vote, sell or sue, all in limited doses. The article concludes with an examination of whether there is a hierarchy among these three functions as to what law can do as compared to markets or private ordering, and what federal and state lawmakers have chosen to have law do.
JEL Classification: K22
Suggested Citation: Suggested Citation