Showing papers in "European Company and Financial Law Review in 2004"
TL;DR: In this paper, the authors highlight a trend towards specialised rules for listed companies and indicate growing convergence of internal control mechanisms independent of board structure in Europe, and the trend to greater structural flexibility on board level is strongly triggered by the introduction of a threefold board model choice under the French Loi Nouvelle Regulations Economique of 2001 and under the Italian Vietti-Reform that is in force since January 2004.
Abstract: The struggle for efficient internal management control is the centre of the corporate governance debate in Europe since the incorporation of the Dutch Verenigde Oostindische Compagnie in 1602. Recent developments in Europe illustrate a trend towards specialised rules for listed companies and indicate growing convergence of internal control mechanisms independent of board structure. The revised Combined Code in the United Kingdom and also the French revised Principles of Corporate Governance, both of 2003, strengthen the presence of independent directors on one-tier boards in Europe. Another systemic break-through for the two-tier board model is the growing tendency to separate the positions of CEO and board chairman. For the German two-tier structure, the strengthening of the strategic role of the supervisory board (Aufsichtsrat) by the new German Corporate Governance Code of 2002 means an attempt to incorporate a key advantage of the one-tier model. Similarly, the control duties of the Italian internal auditing committee (collegio sindacale) were extended by the Testo Unico of 1998 and bring the Italian second board closer to the German supervisory board. The common trend to stricter standards of independence is challenged in Germany by its rigid concept of co-determination and, to a lesser extent, by the more fl exible model of labour participation in France. Director’s duties and liabilities and also derivative actions are a focus of the reform debate in Germany since 1998 and are currently under review in the United Kingdom. After the Enron debacle the interplay between internal control devices and independent external auditing has become a major focus of interest in all countries considered. Driven by Anglo-Saxon codes of conduct audit committees today serve as a common denominator for good corporate governance. Though formal convergence is strong company organs in each country take on their own specifi c garment. Path dependent system development especially depends on shareholder structures and banking systems. The trend to greater structural fl exibility on board level is strongly triggered by the introduction of a threefold board model choice under the French Loi Nouvelle Regulations Economique of 2001 and under the Italian Vietti-Reform that is in force since January 2004.
57 citations
TL;DR: In this paper, the authors examine the current controversy as to the effectiveness of executive remuneration as a tool of corporate governance but place the analysis in the particular context of the dispersed ownership/blockholding ownership faultline which runs across European corporate governance.
Abstract: This article examines the current controversy as to the effectiveness of executive remuneration as a tool of corporate governance but places the analysis in the particular context of the dispersed ownership/blockholding ownership faultline which runs across European corporate governance. It reveals that there is a close relationship between governance systems and the sophistication and rigour of the regulatory response to executive remuneration. To place the European responses to the executive remuneration question in context, Part I sets out the main theoretical arguments which frame the executive remuneration debate and examines the link between remuneration and corporate governance. Part II examines, in the light of the preceding discussion, the regulatory strategies adopted by EU Member States with regard to executive remuneration and reveals the extent to which their responses track corporate governance systems in terms of sophistication and degree of intervention in remuneration practices, particularly with respect to disclosure. Overall, regulatory strategies focus on company disclosure and corporate governance structures, and are grounded both in public regulation and in corporate governance best practices. Part III discusses reform perspectives with particular reference to the 2002 Winter Report and the 2003 Company Law Action Plan.
28 citations
TL;DR: In this article, the authors introduce a series of papers in the ECFR discussing the new European Takeover Directive and look back on the long and winding road to the final version, marked by trading posts where Member States haggled over their support.
Abstract: The following article introduces a series of papers in the ECFR discussing the new European Takeover Directive. It looks back on the long and winding road to the final version, marked by trading posts where Member States haggled over their support, and questions whether the remaining weaknesses really justify a pessimistic view of its future role.
15 citations
TL;DR: In this paper, the core question that regulators on national and European levels do have to answer is how far such disclosure regulation should or even can replace mandatory substantive regulation, which is state of the art in modern company and capital market law legislation.
Abstract: Requiring disclosure of company related information is state of the art in modern company and capital market law legislation The core question that regulators on national and European levels do have to answer is how far such disclosure regulation should or even can replace mandatory substantive regulation
14 citations
13 citations
TL;DR: The recent evolution of the practice of corporate governance in France reveals a manifest convergence with the guiding principles preached by Anglo-Saxon law as mentioned in this paper, however, a particularism emerges in practice and in the field of application.
Abstract: The recent evolution of the practice of corporate governance in France reveals a manifest convergence with the guiding principles preached by Anglo-Saxon law. However, a particularism emerges in practice and in the field of application. In France, it is by way of legislation that the principles of corporate governance have been imposed indeed, not only on listed companies but (at least some principles) on all corporations. Moreover, the topic of corporate governance surpasses the limits of our corporate laws: the employee-shareholders are implied in the running of their business, and the non-listed companies must publish information on how they account for the social and environmental impact of their activity. While remaining an essential condition for the development of capital markets, a good practice of corporate governance must also take social, environmental and even political interests into account. The management of corporations is not restricted to the technicalities of corporate law, but concerns the whole of our society.
12 citations
TL;DR: In this paper, the authors evaluate the mandatory bid rule in the new Takeover Directive and question the rationale and effectiveness of this central feature in light of the wide discretion left to the Member States, in particular regarding the permissibility of defensive measures, and end with provocative views on "cui bono?".
Abstract: The following article critically evaluates the mandatory bid rule in the new Takeover Directive. It questions the rationale and the effectiveness of this central feature in light of the wide discretion left to the Member States, in particular regarding the permissibility of defensive measures, and ends with provocative views on “cui bono?”.
12 citations
TL;DR: In this article, the role, application and practical significance of the wrongful trading remedy under section 214 of the Insolvency Act 1986 are explained and analysed in the context of the broader approach or "package" of measures the law in the UK adopts to deal with problems stemming from the principle of limited liability.
Abstract: In this article the role, application and practical significance of the wrongful trading remedy under section 214 of the Insolvency Act 1986 are explained and analysed in the context of the broader approach or “package” of measures the law in the UK adopts to deal with problems stemming from the principle of limited liability.
9 citations
TL;DR: The rules on conflict of laws are the cornerstones of the new European Directive on Takeovers as mentioned in this paper and the following article will critically but overall positively evaluate their solutions by way of comparison with the scope and applicability of domestic takeover laws in Germany, France, the UK and the USA, concentrating in various manners on the real seat of the target, on the place of its listing or on the residence of the shareholders
Abstract: The rules on conflict of laws are the cornerstones of the new European Directive on Takeovers. The following article will critically, but overall positively evaluate their solutions by way of comparison with the scope and applicability of domestic takeover laws in Germany, France, the UK and the USA, concentrating in various manners on the real seat of the target, on the place of its listing or on the residence of the shareholders
9 citations
TL;DR: In this article, the applicability of local transfer restrictions to foreign companies is examined and it may well be the case that the transfer of shares of an English limited company is, despite lex societatis, subjected to German formal requirements (notarisation) when taking place in Germany.
Abstract: The free movement of companies all over Europe subsequent to the ECJ rulings in Centros, Uberseering and Inspire Art has created a wide range of new conflict of laws issues. The following essay deals with one of these questions: the applicability of local transfer restrictions to foreign companies. After a broad overview of the regime of share transfers in the different European jurisdictions, it analyses the European conflict rules to end with a surprising result: It may well be the case that the transfer of shares of an English limited company is, despite lex societatis, subjected to German formal requirements (notarisation) when taking place in Germany. Legal advice should be aware of this potential risk.
7 citations
TL;DR: The Spanish Private Company Laws has just undergone its most important reform since it was passed in 1995 as discussed by the authors, which introduced the so-called New-Business Private Company, which is a special, simplified private company, as opposed to the ordinary private company.
Abstract: The Spanish Private Company Laws has just undergone its most important reform since it was passed in 1995. This reform has introduced the so-called New-Business Private Company, which is a special, simplified private company, as opposed to the ordinary private company. The reform has also made some changes in the ordinary regulation of the private company, aimed at improving its performance in practice.
TL;DR: In this paper, the authors apply network economics to a particular aspect of the statute of the Societas Europaea (SE), which allows companies that decide to use the SE form to choose between a two-tier organisational structure (supervisory organ and management organ) and a one-tier organizational structure (administrative organ).
Abstract: This article applies network economics to a particular aspect of the statute of the Societas Europaea (SE). The statute allows companies that decide to use the SE form to choose between a two-tier organisational structure (supervisory organ and management organ) and a one-tier organisational structure (administrative organ). By applying the theory of network economics to company law, the article firstly shows that path dependency may arise in the choice of the adopted structure on the basis of the past national regulation. Secondly, the article shows that to overcome this path dependency the incorporation theory would be superior to the real seat theory as provided for by the statute of the SE.
TL;DR: In this paper, the authors present an overview of recent reforms in Italian company law and reveal the Italian legislator's struggle to balance out two conflicting aims: the need for liberalisation and deregulation in the interest of shareholders and the need to protect by mandatory rules.
Abstract: The company laws around Europe are currently evolving. After reports on new developments in France and Spain (ECFR 2004, 36 and 60), the recent reforms in Italian company law are introduced. The overview will critically reveal the Italian legislator’s struggle to balance out two conflicting aims: the need for liberalisation and deregulation in the interest of shareholders and the need for protection by mandatory rules.
TL;DR: In this article, the principle of freedom of establishment was interpreted as precluding a Member State from establishing a mechanism for taxing unrealised increases in value when a taxpayer transferred his tax residence outside that State.
Abstract: In Lasteyrie du Saillant the ECJ ruled that the principle of freedom of establishment laid down by Article 52 of the EC Treaty (now, after amendment, Article 43 EC) must be interpreted as precluding a Member State from establishing a mechanism for taxing unrealised increases in value when a taxpayer transfers his tax residence outside that State. The following case note will show how this is in line with a coherent jurisdiction by the Court concerning the fundamental freedoms and why neither the coherence of the tax system nor the protection of taxable items nor the prevention of tax evasion could justify restrictions on the freedom of establishment imposed by such rule as laid down by Article 167a of the French Code General des Impots.
TL;DR: Smith v Henniker-Major as discussed by the authors examined the scope of the UK legislation governing the authority of the board of directors to act for the company, which implements Article 9(2) of the First European Company Law Directive.
Abstract: The recent case of Smith v Henniker-Major & Co [2002] BCC 544 (Ch D) and [2002] 2 BCLC 655 (CA) examined the scope of the UK legislation governing the authority of the board of directors to act for the company, which implements Article 9(2) of the First European Company Law Directive. In particular two questions were considered in relation to section 35A of the Companies Act 1985: does it affect the application of this section if the board was inquorate when it purported to act for the company, and can a director of the company rely on this statutory protection when contracting with the company? This article examines the answers which were given in Smith v Henniker-Major, suggests that the answers are problematic and unsatisfactory on various levels, and puts forward an alternative analysis of these issues.
TL;DR: In this paper, the authors describe current UK reforms in company law and corporate governance, primarily for non-UK readers, and explore the implications of reformed fiduciary agency principles for corporate governance and company structures, eg in the UK-registered European company.
Abstract: The paper describes current UK reforms in company law and corporate governance, primarily for non-UK readers. After a summary overall survey of UK reform activity, two main distinguishing features of UK law and their strengths and weaknesses are described – ie first, the common law fiduciary agency basis of company structure and governance; and second, the highly concentrated pattern of institutional shareholder ownership and control of listed companies and the resulting influence of such owners on governance and wider regulation. The second part of the paper covers current proposals to clarify and modernise these aspects. The implications of reformed fiduciary agency principles for corporate governance and company structures, eg in the UK-registered European company, are explored. The conditions on which the ownership structure and its effectiveness to discipline management depend and the latest developments in law and practice affecting company control and discipline are then analysed. These include the Operating and Financial Review (providing all stakeholders with broader information) and the new corporate governance code and the new regime governing board remuneration, a major development with general effects on governance. The conclusion is positive, but it is questioned whether the legal and factual conditions on which the effectiveness of the UK system depend can, or should, be replicated outside the UK, and whether substitutes are needed. Questions are also raised about the effects of regionalisation and globalisation of capital markets on the continuing effectiveness of the UK, and proposed wider EU, transparency based systems.