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8 - BSPs and the Law

from Part III - Legal Issues

Published online by Cambridge University Press:  19 April 2018

Stephen M. Bainbridge
Affiliation:
University of California, Los Angeles School of Law
M. Todd Henderson
Affiliation:
University of Chicago School of Law
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Summary

Chapter 8 explores the legality of BSPs under current law, which admittedly creates numerous obstacles to affecting our proposal, all of which therefore require rethinking. The most obvious hurdle is the requirement—embedded in a surprisingly large number of provisions of state corporation law, stock exchange listing standards, and various federal laws—that directors be “natural persons.” This Chapter identifies the legal barriers to creating BSPs and argues that they should be eliminated so as to allow BSPs to become an option for corporations hiring board services. In addition to reviewing U.S. law, this Chapter will examine the law of other countries to determine the extent to which they permit the use of BSPs. Particular emphasis will be placed on the UK example, where BSPs are permitted but rarely used.
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Chapter
Information
Outsourcing the Board
How Board Service Providers Can Improve Corporate Governance
, pp. 137 - 156
Publisher: Cambridge University Press
Print publication year: 2018

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