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Unpublished Paper
Subverting Shareholder Rights: Lessons from News Corp's Migration to Delaware
ExpressO (2009)
  • Jennifer Hill, Vanderbilt University
Abstract
Subverting Shareholder Rights: Lessons from News Corp's Migration to Delaware JENNIFER G. HILL University of Sydney – Faculty of Law; Visiting Professor, Vanderbilt University – School of Law; Research Associate – European Corporate Governance Institute (ECGI) Abstract This article critically analyzes News Corp’s re-incorporation in Delaware against the backdrop of two major contemporary corporate governance debates, relating to shareholder empowerment and convergence theory. Legal scholars opposing greater shareholder power often argue that the lack of shareholder participatory rights under US law provides evidence that such rights are neither desired nor valued by investors. Also, an underlying assumption of convergence theory is that there exists a unified “Anglo-American” model of shareholder protection, suggesting that shareholder rights are similarly restricted throughout the common law world. The article challenges both these assumptions, by means of a detailed case study of News Corp's migration from Australia to Delaware. News Corp’s original re-incorporation proposal prompted a revolt by a number of institutional investors, on the basis that a move to Delaware would strengthen managerial power and reduce shareholder rights. The institutional investors were particularly concerned about the effect of the move on the ability of the board of directors to adopt anti-takeover mechanisms, such as poison pills, which are not generally permissible under Australian law. The article places News Corp’s re-incorporation in Delaware within the framework of contemporary corporate governance theory. It also uses the re-incorporation to highlight a number of significant, but under-appreciated, differences between US corporate law and that of other common law jurisdictions. Specifically, the article shows how News Corp's migration from Australia to Delaware effectively subverted shareholder rights.
Keywords
  • corporate governance,
  • comparative corporate governance,
  • News Corporation,
  • Rupert Murdoch,
  • institutional investors,
  • shareholders,
  • shareholder empowerment,
  • managers,
  • directors,
  • corporate charters,
  • charter amendments,
  • shareholder meetings,
  • mergers,
  • takeovers,
  • poison pills,
  • entrenchment mechanisms
Disciplines
Publication Date
February 18, 2009
Citation Information
Jennifer Hill. "Subverting Shareholder Rights: Lessons from News Corp's Migration to Delaware" ExpressO (2009)
Available at: http://works.bepress.com/jennifer_hill/1/