!!Экзамен зачет 2023 год / Black and Kraakman - A Self Enforcing Model of Corporate Law-1

enterprise can depart, jointly or unilaterally. But, as with any set of default rules, it will be costly to ignore them or contract around them.

There may also be penalties harsher than loss of reputation for breaking the rules. A world without official enforcement will surely develop unofficial enforcement. Suppose, plausibly, that some shareholders are willing and able to resort to violence if their rights are violated, and that company directors are not sure which shareholders may react this way. Fear of these few can cause directors to behave properly toward all shareholders.57

Few shareholders are likely to shoot a director just for making a bad business decision. That would be foolish: it is unlikely to encourage better decisions in the future and risks retaliation in kind. But the situation is very different if the directors break a clear rule conferring voting rights. Now a wrong has been committed, and directors will face personal liability of a tangible kind if some shareholders feel they must respond. Thus, few directors will blatantly disregard the written law. At the very least, they will take seriously a 20% shareholder's demand for board representation by weighing the personal risks from rejecting the demand against the benefits, much as if official enforcement of shareholder rights were in prospect. The more blatantly shareholder rights are violated, the more likely a shareholder is to take extralegal action, and thus the greater the expected sanction will be. For example, removing a shareholder from the share register is more likely to provoke a violent response than refusing to use the required procedures for approving a self-interested transaction.58

We do not suggest that unofficial enforcement is anything near ideal. Some directors will be shot for imagined wrongs or, as at Krasnoyarsk Aluminum, as part of a quite literal takeover "battle." Shareholders, too, will be at risk if they complain too loudly when a company is looted. Large shareholders may succeed in extorting private benefits from companies when these can be hidden from other shareholders. But on the whole, men with guns will often be polite to each other, especially if, as is common for corporate enterprises, they expect to meet again. Repeated interaction magnifies both the importance of reputation and the risk of retaliation for misbehavior. Unofficial yet still organized enforcement may arise and coalesce around the written law.59 In sum, a corporate law that defines norms of politeness

57 See Jonathan Hay, Private Enforcement of Law (1996) (unpublished manuscript, on file with the Harvard Law School Library).

58 From this perspective, the Krasnoyarsk Aluminum case, discussed above in note 31, where a company wiped a 20% shareholder out of its share register, can be seen as the exception, not the norm. During the year before the company's action, someone had waged an intimidation campaign against Krasnoyarsk's managers, killing several senior managers and beating up others, including the CEO. That someone, some informed observers believe (and Krasnoyarsk's managers surely knew, one way or another), was the 20% shareholder, who already controlled the two other large aluminum refineries in Russia and wanted control of the third -- Krasnoyarsk. If so, then Krasnoyarsk's managers were responding -- extralegally but perhaps appropriately -- to an extralegal effort to take control of their firm.

59 In Russia, organized extralegal enforcement of norms of business conduct already occurs to some extent. Small businessmen, each "protected" by different mafia gangs, sometimes bring disputes to mafia-run "courts,"

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in ways that the participants perceive as reasonable can be partially effective even without official enforcement.60

An example: our model law limits the right of insolvent companies to distribute assets to shareholders or to sell assets for less than equivalent value. In a developed country, these "fraudulent conveyance" rules are enforced by courts and bankruptcy trustees, who chase and often retrieve improperly transferred assets. In Russia, creditors cannot rely on this kind of official enforcement. But there is a substitute already in place: creditors often threaten, and not infrequently shoot, debtors who haven't repaid their debts. The corporate law can help private actors to distinguish situations when an asset distribution was proper, even though the business later couldn't pay its debts, from situations when the asset distribution was improper when made. If the rules of conduct are clearer, borrowers with good investment opportunities will be more willing to risk borrowing money to finance these investments. The effective cost of capital will decline.

Once we reinstate the possibility of some recourse to courts, even corrupt courts, the self-enforcing model's effectiveness quickly increases. A corrupt judge can twist a "reasonableness" standard to reach the decision he was paid to reach, but cannot so easily twist a requirement that the company provide cumulative voting or appraisal rights. If the judge finds an exception on some spurious ground, it will be obvious to all. Yet few corrupt officials want to admit their corruption in public. Such a judge will also risk personal retaliation, much as corporate managers do, at the hands of private enforcers.

Moreover, over the longer term, blatant violation of reasonable norms can create a constituency for enforcement. Shareholders will bring political pressure to strengthen enforcement capability and will have obvious abuses to point to. News stories will highlight scandals, bringing further pressure for enforcement. Test cases, even if they fail in corrupt or incompetent courts, will form a basis for public opinion -- and repeat players in financial markets may be willing to underwrite the costs of such test cases.

called "razborkas." (In Russian, razborka is a noun meaning "sorting out.") Only the very foolish do not comply with a razborka's decision. See, Michael Specter, Survival of the Fittest, N.Y. Times, Dec. 17, 1995, Magazine, at 66, 69-71.

60 Cumulative voting in Russia offers an example of how law can take hold without official enforcement. Since December 1993, privatized Russian companies with 500 or more shareholders have been required to elect directors through cumulative voting. See Decree of the President of the Russian Federation No. 2284, supra note 56, § 9.10. In a developed country, one could expect near universal compliance with such a requirement. In Russia, companies could not be forced to comply with this requirement, and initial compliance was low, partly because managers didn't understand how cumulative voting was supposed to work. In a survey of 40 privatized firms conducted in early 1994, only 15% had implemented cumulative voting or even planned to do so within two years. See Blasi & Shleifer, supra note 16, at 83. By late 1995, actual compliance had climbed to 16% of all privatized firms, including 26% of firms with less than majority ownership by managers and employees. Compliance with the spirit of cumulative voting was somewhat higher, because some firms that did not formally use cumulative voting had voluntarily ceded one or more board seats to outside blockholders. The late 1995 data is from a survey by Professor Joseph Blasi of Rutgers University.

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Finally, even if official enforcement is weak today, it may be stronger tomorrow. The prospect that future enforcement may threaten their gains will make corporate actors reluctant to presume nonenforcement, especially if the official sanctions, if imposed, are likely to be severe. For example, managers may prefer to seek shareholder approval of a self-interested transaction if they believe that approval is likely, rather than run even a small risk of facing a future lawsuit to disgorge profit or have the transaction unwound.

In short, the claim that corporate law can do much to shape private behavior even under conditions of weak official enforcement is not as strange as it may first appear to be. And even law with no official enforcement is not an oxymoron.

III. Governance Structure and Voting Rules

This Part and the next two Parts of this Article describe and justify in greater detail the elements of the self-enforcing model, with particular reference to our proposal for Russia. In many cases, there are no clear lines, only informed judgments, concerning how much shareholder protection, and what forms of protection, are optimal in the Russian environment. This Part discusses overall governance structure; Part IV considers the voting and transactional rights that attach to particular corporate actions; and Part V discusses remedies.

The self-enforcing approach to corporate law constrains the discretion of managers and majority shareholders by granting voice and sometimes veto rights over corporate actions to outside directors, non-controlling shareholders, or both, in the expectation that these actors can best determine whether proposed corporate actions are value-increasing for the enterprise or merely wealth transfers to insiders. To avoid manipulation of the board and shareholder voting mechanisms, governance structure must be simple, and malleable only within narrow limits. Some of the enabling model's flexibility with regard to governance, voting processes, and capital structure is sacrificed to protect investors while simultaneously preserving flexibility over the range of substantive actions a company may take.

A. Allocation of Decisionmaking Power

There are two broad strategies available in choosing a review process for corporate actions: representative democracy, under which shareholders elect representatives (a board of directors) to act on the shareholders' behalf; and direct democracy, under which shareholders directly approve particular actions. Representative democracy alone is often unsatisfactory because boards can too easily become lazy or be captured by management. Thus, the company laws of all developed countries provide direct shareholder review of selected corporate actions such as mergers. On the other hand, direct democracy is far too slow and costly for most corporate decisionmaking. Moreover, because small shareholders must act on limited information and face severe collective action problems, direct democracy can quickly deteriorate into total manager control in widely-held companies.

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We mediate between the weaknesses of each approach with a simple hierarchical governance structure that allocates managerial power to a board of directors, subject to shareholder review of particular actions. The shareholders elect the board of directors; the board chooses the managers (subject to shareholder review of its choice of top manager); and the board (sometimes a defined subset of the board) approves particular types of actions, including those that require shareholder approval. For all other actions, the board decides when the managers can act unilaterally and when they need board approval.

Governance rules, within the range left open by the law, are specified in a company charter. To protect minority shareholders against changes in governance rules, charter amendments require approval by two-thirds of the outstanding shares, and appraisal rights (discussed in Part IV) attach if a charter amendment reduces the rights of a class of outstanding shares.61 To enhance shareholder control of a firm's governance rules, charter amendments do not require board approval.

This governance structure has multiple advantages. First, it ensures a measure of accountability; shareholders know whom to blame if things go wrong. Second, it provides the board with reasonable though not total flexibility. The board decides how best to use its own limited time, but it must make enough business decisions to avoid descending into ill-informed irrelevancy -- a strong risk in the German two-tier board model, in which the supervisory board meets rarely and does little more than choose management.62 Third, the structure provides double review, by both the board and the shareholders, of important or suspect transactions. Fourth, this structure does not require more of shareholders than they can deliver. Apart from choosing the board of directors, shareholders generally review actions that have been proposed by the board, rather than make decisions unilaterally. This process accords with the limited information available to most shareholders.

Our proposed structure gives broad power to the board of directors. But this power is constrained, in turn, by granting shareholders broad power over the board's constituency. Shareholders elect directors annually through cumulative voting and retain the authority to remove the board (as a whole) at any time without cause.63 Moreover, the path toward

61 The two-thirds-of-outstanding-shares voting requirement for charter amendments, and the specific vote requirements for other corporate actions discussed below, are minimums. The charter can prescribe a higher but not a lower voting requirement.

62 Our proposed structure has enough flexibility to allow a company largely to replicate the two-tier management structure if the board so chooses or the charter specifies. The "board of directors" can hire a "board of managers" and delegate to it day-to-day management responsibility. The board of managers will then be subject only to whatever oversight the board of directors chooses to exercise, except when the law or the charter requires approval by the board of directors. However, the board of directors remains responsible to the shareholders for the consequences of this choice; the board cannot blame a legal structure that limits its power over management.

63 For mechanical reasons, a system with cumulative voting must restrict shareholder power to remove individual directors, but not the entire board. If directors could be removed individually, a majority shareholder

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effective shareholder use of this power is smoothed in various ways, including restricting companies to a single class of voting securities (that carry a residual interest in the company's profits) and facilitating shareholder nomination of director candidates.

B. Allocation of Voting Power: One Share, One Vote

The self-enforcing statute allocates investor voting power in proportion to economic interest by mandating a single class of voting common stock that has both a residual interest in corporate profits and one vote per share. This allocation increases the likelihood that corporate actions will maximize firm value.64 The one share, one vote principle is widely accepted across jurisdictions. It is the dominant rule in the United States, Great Britain, and Japan even when it is not a statutory requirement, and it is mandated by statute in many emerging market jurisdictions.65 Moreover, non-voting or low-voting stock has come under strong criticism from large investors in countries like Germany, where it has been common.

The case for the one share, one vote rule turns primarily on its ability to match economic incentives with voting power and to preserve the market for corporate control as a check on bad management. By contrast, the case for permitting companies to deviate from a one share, one vote rule turns on (i) the usual claim that informed parties will choose optimal arrangements on their own; and (ii) the existence of a reasonably efficient market, in which the proceeds that company founders realize when they sell their shares will reflect the voting rights that those shares carry.66

could vote to remove a director elected cumulatively by a minority shareholder, and thus nullify the effect of cumulative voting. Cf. Del. Code Ann. tit. 8, § 141(k)(i) (1991) (providing that cumulatively elected directors may not be removed individually if votes against removal would be sufficient to elect them).

64 To avoid evasion of this rule, the law must limit the voting rights of securities (preferred stock and debt) that are senior to a company's common stock, and limit the company's ability to issue nonvoting securities, principally options to purchase common stock, that are equivalent or junior in priority to common stock. In our model, preferred shareholders must approve a charter amendment that reduces the rights of a class of preferred stock, and the charter can give preferred shareholders the right to vote (as a class or together with the common stock) on specific corporate actions such as mergers. But the charter can allow preferred shareholders to vote for directors only in two limited cases: (i) if preferred dividends are in arrears; or (ii) if the preferred stock is convertible into common stock. In these cases, preferred stock can be given a number of votes equal to the number of common shares into which it is convertible.

65 In the United States, a one share, one vote rule is maintained by agreement among the principal stock exchanges rather than by company law. In Britain, one share, one vote is essentially universal because of strong support from institutional investors, who refuse to buy the shares of a company with a different rule. See Black & Coffee, supra note 6, at 2024. The one share, one vote rule is expressly mandated by statute in 9 of the 17 jurisdictions examined in our survey of company laws in emerging markets. See infra Appendix.

66 For aspects of the extended American debate over the one share, one vote rule, see Ronald J. Gilson,

Evaluating Dual Class Common Stock: The Relevance of Substitutes, 73 Va. L. Rev. 807 (1987); Jeffrey N. Gordon, Ties That Bond: Dual Class Common Stock and the Problem of Shareholder Choice, 76 Cal. L. Rev.

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The arguments against a one share, one vote rule lose much of their force in emerging markets for several reasons. First, public offerings in those markets are unlikely to be priced with a high degree of efficiency. Second, in newly privatized economies, including Russia, there were no true founders who could make an economic decision to sell control rights together with economic rights. Instead, one faces in such cases the more troubling prospect of midstream charter changes, perhaps coerced in various ways by managers who want to cement their control without paying significant economic value.67 Third, in emerging markets there is more need for investor protection against self-dealing by company managers. In Russia, for example, stories abound about company managers who sell most of the firm's output to another company but never collect the accounts receivable -- presumably in exchange for payments to these managers' foreign bank accounts -- while not paying the company's rent, taxes, utilities, or even employees for months or years.68 Voting common shares are no panacea for this behavior, but they can help, especially when they are acquired by large outside shareholders.

From a theoretical perspective, control (like other assets) tends to move to those who value it most. Multiple-class voting structures create incentives for control to move from good hands to bad because those who are willing to abuse control will often value it more than those who will not. In developed economies, market and cultural constraints are often strong enough to keep abuse at manageable levels. In emerging markets, however, abuse will proliferate. To draw an analogy to ordinary product markets, when product quality is difficult for buyers to measure (the "lemons" situation), minimum quality rules can be welfare-enhancing. The case for minimum quality rules in securities markets is especially strong because of the risk (largely unique to securities markets) that the quality of what one has bought will be changed after the date of purchase, and the incentive for unscrupulous insiders to profit by doing precisely that.69

C. Voting for Directors: Cumulative Voting

The one share, one vote rule is conventional in many jurisdictions and has easily understood virtues. Our approach to voting for directors, however, relies on a less common

1 (1988); Louis Lowenstein, Shareholder Voting Rights: A Response to SEC Rule 19c-4 and to Professor Gilson, 89 Colum. L. Rev. 979 (1989).

67 For discussion of the special problems created by midstream charter changes, see Bebchuk, Limiting Contractual Freedom, cited above in note 23, at 1825-59; and Gordon, Mandatory Structure, cited above in note 23, at 1573-85.

68 See, e.g., Russian Capitalism, Economist, Oct. 8, 1994, at 21, 23.

69 For example, a mandatory one share, one vote rule protects shareholders in companies that initially issue only one class of voting stock, by preventing a subsequent charter amendment that changes the rule.

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solution: mandatory cumulative voting, together with related requirements for minimum board size and annual election of directors.70

By giving large minority shareholders a place on the board and a voice in board actions, cumulative voting addresses several problems at once. First, a board seat provides access to company information and gives large shareholders a substitute for the disclosure that is provided in developed economies in other ways, such as financial disclosure rules, financial press reports, market price signals, and non-public financial reports to lead banks in Germany and Japan. Second, cumulative voting makes it more likely that a minority of directors is truly independent of management and -- also important though often neglected in the United States -- that these directors will owe affirmative loyalty to the shareholders who elect them.71 Director independence interacts with rules, discussed below, that vest in independent directors the power both to review transactions in which managers have a personal financial stake and to choose the company's auditors and share registrar (who also counts shareholder votes). Third, cumulative voting reinforces the principle that directors owe their loyalty to shareholders, not to the company's officers. The presence of some outside directors who truly represent shareholder interests can, over time, influence how all directors understand their role in the corporate enterprise. Thus, cumulative voting is part of a broader effort in the selfenforcing model to promote behavioral norms that have served developed countries well.

Because cumulative voting serves these multiple purposes, it is a central element of a self-enforcing corporate law. We are not so sanguine as to rely on the board of directors as a whole, or even the board's nominally independent directors, as the sole protectors of outside shareholder interests; we also contemplate a broad range of transactions for which shareholders have veto power or other protections. But cumulative voting can strengthen the boards of many companies.

Russian data suggest that large outside blockholders both want and expect to receive board seats. Thus, many investors will make use of the power to elect their own representatives if it is available.72 Moreover, cumulative voting can have an effect even when management's slate is the only one proposed. Its availability may determine whom management puts on its slate, or deter management from actions that could provoke an outside shareholder to nominate its own slate.

70 Under cumulative voting, if a board includes n members elected annually, a shareholder who holds 1/n of the votes can elect one director. See Clark, supra note 42, § 9.1 at 361-66. Staggered board terms and small board sizes dilute the effectiveness of cumulative voting because they reduce the number of directors elected at one time. We would require a firm with 1000 shareholders to have at least seven directors, and a firm with 10,000 shareholders to have at least nine directors.

71 See Ronald J. Gilson & Reinier Kraakman, Reinventing the Outside Director: An Agenda for Institutional Investors, 43 Stan. L. Rev. 863, 872-76 (1991).

72 See Blasi & Shleifer, supra note 16, at 81.

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The fact that many companies choose not to adopt cumulative voting in both developed and advanced emerging economies does not detract from its value as a cornerstone of a selfenforcing law.73 In most of these countries, market, legal, and cultural forces combine to achieve the goals that cumulative voting can help to attain. Consider outside shareholder representation on the board of directors. In the United States, large outside shareholders can often obtain representation on the board of directors in rough proportion to their ownership interest, if they want such representation. Although company managers might be able to defeat the large shareholder's nominees in an election contest, the managers will often offer the shareholder a couple of board seats rather than risk losing the contest, which could mean losing their jobs. Many companies also offer board representation to large investors to induce them to invest. Even companies with no large investors typically appoint a majority of independent directors to the board, simply because it is customary to do so. These directors can then perform some of the oversight that would be undertaken by directors chosen by large shareholders under cumulative voting.74

The principal argument raised against cumulative voting is that a divided board may be less effective than a board elected on a winner-take-all basis. But this risk is not likely to be large in practice. Experience in developed countries suggests that proportional representation of large shareholders on the board, whether through cumulative voting or agreement with management, usually works well. Empirical studies undertaken in developed countries also suggest that shareholders benefit from the availability of cumulative voting.75 Moreover, logic suggests that large shareholders rarely have an interest in interfering with the smooth functioning of the board. When a large shareholder does attempt to interfere, it is often a sign

73 Cumulative voting can be adopted by charter provision under the corporate laws of almost all developed countries and many emerging market jurisdictions. None of the 17 jurisdictions examined in the Appendix prohibits cumulative voting. Straight voting is the default rule in most cases, but two jurisdictions (Mexico and Chile) mandate forms of proportional representation akin to cumulative voting. Note, too, that mandatory cumulative voting was common in the United States until the 1950s. See Jeffrey N. Gordon, Institutions as Relational Investors: A New Look at Cumulative Voting, 94 Colum. L. Rev. 124, 142-46 (1994) [hereinafter Gordon, Institutions as Relational Investors]. Mandatory cumulative voting was subsequently rolled back in the United States. But Professor Gordon attributes the decline of this system primarily to the political power of incumbent managers who wanted to make proxy contests more difficult. See id. at 153.

74 Developed countries that do not rely heavily on shareholder-nominated directors have often developed other oversight mechanisms. For example, institutional shareholders in Great Britain often lack direct board representation, but British managers know that a modest number of institutional investors can combine forces to oust the board if the need arises. British institutional investors are also pressing for boards to include more independent directors, to supplement the crisis-oriented oversight that they now exercise themselves. See Black & Coffee, supra note 6, at 2037-38. Similarly, in Japan, large shareholders can act through the main bank to force a change in management, much as American shareholders might act through an independent board of directors. See Roe, Some Differences, supra note 3, at 1943-46.

75 See Sanjai Bhagat & James A. Brickley, Cumulative Voting: The Value of Minority Shareholder Voting Rights, 27 J.L. & Econ. 339, 341-42 (1984).

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of some pathology. Cumulative voting is an incomplete cure for the pathology, but it is better than the alternative: a unified board stolidly supporting management as the company slides toward disaster.76

Our proposed Russian law also requires that large-company boards contain at least onethird independent directors (defined as directors who are not, and during the last five years have not been, officers of the company and who are not related to a company officer). Of course, many of these directors will be independent only in name. But even independent directors chosen by management may sometimes provide a voice against management selfdealing, especially if a truly independent director or two, perhaps elected through cumulative voting, can take the lead role in questioning a management proposal. And the independentdirector requirement can reinforce the norm that the board of directors is in substantial part a watchdog institution, charged with monitoring management on the shareholders' behalf.

D. Voting Procedures: Universal Ballot

One share, one vote and cumulative voting are only part of the architecture of a voting system for emerging economies. Ancillary rules are also needed to govern the form of shareholder proxies (or ballots), how shareholders can nominate candidates for election to the board or introduce other proposals for shareholder vote, and how shareholder votes are counted.

We adopt a "universal ballot" as the framework for nominating and choosing among directorial candidates, and for introducing and voting on other proposals. The laws of developed countries typically require each faction in a proxy contest to distribute its own ballots. By contrast, the universal ballot lists all candidates on a single consolidated ballot prepared at company expense and made available to shareholders well before the shareholder meeting. Under this regime, the incumbent board, and all shareholder groups exceeding a threshold size (for Russia, we use a threshold of 2% of the outstanding shares), may nominate candidates on the company's ballot. Shareholder groups exceeding this threshold size may also include other proposals for a shareholder vote (for Russia, we allow a maximum of two proposals), with no restrictions on subject matter.77

Like cumulative voting, these liberal provisions for including shareholder nominations and proposals on the company's ballot permit relatively small aggregations of shares to participate in shaping the company's voting agenda. Shareholder groups of a somewhat larger threshold size should also have the power to convene special shareholder meetings. For Russia,

76 Cf. Gordon, Institutions as Relational Investors, supra note 73, at 170-74 (describing the value of cumulative voting in overcoming the rational apathy of institutional investors).

77 The size threshold is intended to weed out nuisance candidates and proposals. The 2% of outstanding shares threshold that we suggest for Russia seems large enough to accomplish this without blocking shareholder proposals or nominations that have a realistic chance of success.

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we use a threshold of 10% of the outstanding shares, which reflects both the expense of holding a shareholder meeting and the fact that most decisions at such a meeting (such as a decision to oust the board of directors) would require at least a majority vote -- compared to the 10-15% necessary to elect a director under cumulative voting. Majority approval is unlikely unless a proposal has substantial backing from the outset.

E. Protecting Honesty and Quality in Voting

The best possible voting procedures are useless if they are subverted by coercion, vote buying, or fraud in counting ballots -- chronic dangers in emerging economies. Coercion and vote buying occur when someone -- typically a company insider -- induces shareholders to vote against their investment interests by punishing "wrong" votes, rewarding "right" ones, or both. In Russia, coerced voting of employee shares is a particular danger because management can often use its workplace authority to control how employees vote.

The first defense against coercion and vote buying is a mandatory rule of confidential voting. Insiders who cannot monitor shareholder votes lose the power to manipulate votes through rewards or sanctions. To protect against fraud and secure confidentiality, we take the functions of collecting, tabulating, and storing shareholder ballots out of management's hands. The Russian statute vests the tabulation function in an independent share registrar -- a position large companies are already required to maintain for the separate purpose of reliably recording share transactions.

These protections won't always work, but they will make cheating more difficult. It is much harder to police a company's count of its own ballots than to determine whether the company has an independent registrar. Relatively few independent registrars are likely to exist because this business has large economies of scale. These few can be monitored through licensing requirements, and will have a strong reputational interest in counting votes honestly.78 Moreover, some cheating will be so obvious that recourse to the courts or to unofficial enforcement will be feasible. For example, if a company has seven directors, a 15% shareholder has the power to elect one director under cumulative voting. If the shareholder seeks to exercise this power, an attempt by the company to subvert cumulative voting will be easily provable.

In many Russian companies, he who votes the employees' shares controls the company. This fact was not lost on company managers, who quickly developed ways to control how employee shares are voted. Confidential voting and independent tabulation help to address this problem because managers who do not know how an employee has voted cannot punish her for a vote against management. But more is needed, lest managers resort to other coercive techniques. For example, some Russian managers have forced or convinced employees to

78 In Russia, independent share registrars are licensed by the Securities Commission, which can revoke a registrar's license, thus putting it out of business, if the registrar misbehaves.

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