Peter Hommelhoff

Bio: Peter Hommelhoff is an academic researcher from Heidelberg University. The author has contributed to research in topics: Shareholder & Corporate law. The author has an hindex of 2, co-authored 2 publications receiving 14 citations.

Protection of Minority Shareholders, Investors and Creditors in Corporate Groups: the Strengths and Weaknesses of German Corporate Group Law

Abstract: German corporate group law (or rather, to be more precise, the German Recht der verbundenen Unternehmen, i.e., the law of affiliated companies, §§ 15 ff., 291 ff. Marketable Share Company Act [Aktiengesetz, abbreviated AktG]) owes its existence to special concerns of the German legislature at the end of the 1950s and the beginning of the 1960s regarding the ability to protect the interests of outsiders in group-dependent marketable share companies (Aktiengesellschaften). The interests of shareholders and creditors were considered to be so intensive, so inscrutable and so continuously endangered, that the legislature believed that the existing company law was incapable of satisfactorily providing the requisite protection.

Corporate Governance: Vertragen sich die deutsche Unternehmensverfassung und das Shareholder Value-Prinzip?

Abstract: Begreift man das Shareholder Value-Prinzip als Aufforderung an die Geschaftsleitung, sich auf die Belange der Eigenkapitalgeber auszurichten, so steht dies im Einklang zu den rechtlichen Handlungsvorgaben aus der geltenden Unternehmensverfassung. Allerdings widerspricht eine einseitig uberzogene Shareholder Value-Philosophie, die soziale Aspekte wie die Erhaltung von Arbeitsplatzen auser Acht last, der Unternehmensverfassung. Sozialpflicht und Interessenausgleich sollten die Geschaftsleitungen zu unternehmerischen Anstrengungen anhalten, die es trotz der rechtlichen Rahmenbedingungen in Deutschland auch internationalen Kapitalgebern attraktiv erscheinen last, hier zu investieren.

Theoretical foundations of corporate governance revisited: a critical review

Abstract: In this paper we review some of the initial ideologies regarding corporate governance, focusing in particular on the – in the literature dominating – Principal-Agent-Approach. We detail the implied assumptions and the thereof resulting consequences for corporate governance, including some resulting inconsistencies. Overall, we find that in the discussion about „Corporate Governance‟ the often referred to principal-agent-conflict is rarely defined with the necessary rigor, but find that the model seems to be applied to almost any situation loosely tied to the topic of corporate governance. We conclude that due to the missing theoretical rigor and the missed developments in the area of management theory the resulting corporate governance policy recommendations are often inconsistent and that the commonly applied theoretical framework for corporate governance discussions might not be the most suitable one for policy recommendations as well as for regulatory actions.

Director's Duties in Groups of Companies – Legalizing the Interest of the Group at the European Level

Abstract: The Action Plan of the European Commission of December 2012 on “European company law and corporate governance – a modern legal framework for more engaged shareholders and sustainable companies” mentioned that “the Commission will, in 2014, come with an initiative to improve both the information available on groups and recognition of the concept of ‘group interest’.” The origin of this renewed interest by the European Commission can be found in the report of the Reflection Group on the Future of EU Company Law of 2011. Recognising the interest of the group at the European level would provide many advantages, especially for groups having cross-border activities in the European Union, whether led by a large parent company or a Small and Medium Sized Enterprise (SME). In addition, recognition of the interest of the group has become Ius Commune in Europe. However, there is a need to proceed cautiously. Therefore, a recommendation would be the most attractive legal instrument. Any action at the European level should also take into consideration the distinction between wholly-owned and non-wholly-owned subsidiaries. In the case of the latter, specific instruments of protection of minority shareholders should be left to the Member States to develop.

Corporate Groups: Corporate Law, Private Contracting and Equal Ownership

Abstract: In this paper we provide a simple and general framework that explains the nature of groups, their corporate governance problems and their ownership structures as the result of the double nature of the controlling shareholder in the group as both shareholder and stakeholder of the subsidiary. We use this framework to conduct an economic and empirical analysis that explores the limitations of regulation and shareholders’ agreements to deal with this dual nature of the parent. Our analysis is able to explain the extreme ownership structures prevalent across groups as solution of last resort to unresolved corporate governance problems when regulation is inefficient and transaction costs limit the use of contracts to provide shared control. We go on to test these ideas conducting an empirical study that explains groups ownership structures and allows us to derive important policy implications. First, it exposes the structural limitations that corporate law encounters to contain the corporate governance problems of groups. Second, it calls for an acknowledgement of the crucial role of shareholders agreements in corporate governance. Shareholder agreements offer the best alternative to protect parent and subsidiary from mutual opportunism, while preserving the incentives to cooperate. Guarantying the enforceability of these contracts offers jurisdictions the most efficient way forward to reduce expropriation in corporate groups.

The Liability of Multi-national Corporations for the Torts of Their Subsidiaries

Abstract: The purpose of this article is to discuss the liability of multi-national corporations for the acts or defaults of their subsidiaries. Most frequently a corporation engaged in multi-national activities will operate in various countries through local subsidiaries incorporated there. Liability may be incurred because of hazards associated with the mining or manufacturing operations or the goods distributed through the subsidiary may cause harm to consumers or users. The subsidiary is clearly primarily responsible for its own acts or defaults. The question is: when can liability for such acts or defaults be sheeted home to the parent corporation?

Abuse of Protected Position? Minority Shareholdings and Restriction of Markets' Competitiveness in the European Union

Abstract: In corporate governance minority shareholders deserve particular protection in order to guarantee their rights in the companies' management and to avoid their passive submission to the majority's decisions. This article stresses that the protection granted to them could be used as an instrument to circumvent Competition law. More generally it is argued that participation in companies' equity, even when it does not grant control over the same companies, can in particular circumstances generate effects restrictive of competition. The paper shows that there is a substantial lack of European Courts jurisprudence and that the Commission's approach to the issue is inconsistent. The paper calls for a substantive, systematic and economically based analysis of minority shareholdings by the Commission to guarantee legal certainty, uniformity of interpretation and the resolution of some unexplained structural questions. Furthermore the paper calls for a legislative revision of the actual set of Competition rules. There is, in fact, a vacuum legis that needs to be filled because there are some circumstances in which market operations involving minority shareholdings, although outside of the scope of application of both Art.81 and Art.82 and of the Merger Regulation, can generate anticompetitive effects. In the absence of proper normative measures, these situations are ultimately undetectable by the European Competition authorities. These circumstances are described and a possible solution to the mentioned predicaments - in line with the United States approach to the question - is suggested.