This article offers a novel account of the likely impact of new technologies—such as big data, algorithms, artificial intelligence, the blockchain, and smart contracts—on corporate governance. It shows that, contrary to common predictions, one of the most significant and immediate effects of these technologies on corporations concerns the distribution of competences and responsibilities among corporate bodies. The claim is supported by identifying five primary determinants of the current balance of powers in corporate organizations: (i) the speed and frequency of the decisions; (ii) the information necessary to decide and who has access to it; (iii) the costs of assigning decision-making responsibilities to a collegial body; (iv) the decision-makers’ incentives and interests; and (v) their competence and skills. Looking at whether and how these five dimensions are altered by technological innovation is the essential, and yet unexamined, analytical tool to accurately predict the impact of technology on corporate governance. While in some cases technological innovations may simply require managers to possess or acquire new competences and skills or may strengthen existing corporate roles, providing those who already make decisions with new tools to operate more efficiently, in other cases technology may shift the balance on who is the best decision-maker within the corporation. Technology may reduce some of the transaction costs that make collective decision-making burdensome for some corporate actors, suggesting, for example, that decisions that have been traditionally reserved for the board of directors may be made by shareholders. Similarly, competences that have commonly been delegated to executive officers and managers because of the need of particular operating expertise may shift back to the board of directors due to the informational decision-making support provided by technological tools. The result may not seem revolutionary at first glance, but it has potentially disruptive consequences for existing corporate governance models.
The Securities and Exchange Commission (SEC) seeks both to protect investors and to promote efficient capital formation, but in the context of cryptoassets these goals sometimes collide. The SEC vigorously reacts to fraudulent offerings of cryptoassets but has had to do so by forcing crypto into an antiquated framework designed with very different interests in mind. Even worse than the convoluted and complex arguments needed to force crypto into the existing category of “investment contracts,” once crypto is treated as a security, a host of onerous and inapt disclosure requirements and regulations follow. Developers, promoters, exchanges, and others who might assist in the sale of such assets are all forced into a regime that was never intended to cover this new class of assets.This Article therefore suggests changes to the existing regulatory regime to more fairly apportion duties and responsibilities between regulators, issuers, promoters, and purchasers. This Article suggests that the SEC is the appropriate agency to oversee transactions in cryptoassets, but the underlying legislation should be amended to create a new category of securities, with different disclosure requirements and exemptions tailored to the informational needs of potential crypto purchasers. Maintaining the current anti-fraud rules will protect the public while allowing for innovation in this rapidly moving space. It will avoid wasting assets of both regulators and the regulated by eliminating the debate over whether crypto is or is not a security and will avoid duplication of efforts between the SEC and other federal regulators. It will also improve the relevance of available information for potential purchasers. This approach has the dual advantage of facilitating both parts of the SEC’s mission: protection of investors while supporting innovative capital formation for legitimate crypto enterprises.
The Supreme Court of Canada has yet to rule on whether the American doctrine of equitable subordination is part of Canadian law. In Re US Steel, the Ontario Court of Appeal suggested in obiter that section 183 of the Bankruptcy and Insolvency Act (BIA) conferred upon courts the power to equitably subordinate a claim. This article focuses on the specific point of whether section 183 of the BIA provides the court jurisdiction in equity to subordinate a claim and alter the statutory priority scheme. Equitable jurisdiction found in section 183 of the BIA does not represent a broad power to reorder statutory priorities based on notions of fairness and good conscience. The section 183 jurisprudence simply does not support the obiter statement in US Steel. In interpreting section 183, Canadian courts have relied upon traditional doctrines of equity. To allow equitable subordination under section 183 would be an attempt to ignore the legislative will of Parliament and the BIA priority regime. There may be no need to import equitable subordination as there are existing provisions in the BIA which subordinate claims of the type often considered under the American doctrine of equitable subordination. Canadian law also effectively deals with creditor and insider misconduct through the oppression remedy and the new statutory duty of good faith.
In the depths of the Great Depression, R.B. Bennett’s Conservative government appointed W.J. Reilley as Canada’s first Superintendent of Bankruptcy. Reilley’s experience made him eminently qualified. He had trained as a lawyer and had been the Registrar of the Bankruptcy Court of Ontario at Osgoode Hall for many years. The creation of the federal Superintendent’s office in 1932 is one of the major milestones in the legislative history of Canadian bankruptcy law. In the bankruptcy law literature, there is a broad recognition that the 1932 reforms were vital. These accounts are incomplete. This article seeks to provide a fuller understanding of these reforms by examining sources of opposition to the establishment of the Superintendent’s office. Not all accepted the new regulatory approach and the prospects of a bankruptcy bureaucracy during the Depression. Within months of Reilley taking office, critics called into question his qualifications and demanded his resignation. Little is known about the 1932 reforms as the creation of the Superintendent’s office has largely been overshadowed in the insolvency field by the enactment of corporate reorganization legislation in 1933 and farm credit legislation in 1934.
