european business law lesson 8 april 17 th, 2013

European Business Law

Lesson 8

April 17th, 2013

Tod

ay’s le

sson

Week 8:

Lecture 1 EU Fifth Company Law Directive proposal

Lecture 2 The EU company (Council regulation (EC) 2157/2001 of 8.10.2001 on the Statute for a European company (SE))

Lecture 3 Involvement of employees (Directive 2001/86/EC of 8.10.2001 supplementing the Statute for a European company with regard to the involvement of employees)

Corp

ora

te g

overn

an

ce What is corporate governance?

CG involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed

Corporate governance main areas of interest: Shareholders vs. creditors Shareholders vs. workers Shareholders vs. managers Managers vs. investors

CG key words Shareholders’ value (welfare) Corporate social responsibility Interest of the company as a whole Conflicts of interests (related parties; disclose or abstain) Business judgment rule

Man

ag

em

en

t & C

ontro

l S

yste

ms

One-tier board (US, France A, UK, Italy, Spain, Belgium)Board of directors (committees, independent

directors)

Two-tier board (Germany, France B, Netherlands, Portugal, Finland)Supervisory board: Aufsichtsrat, Conseil de

surveillance, Raad van Kommissarien, Conselho fiscal

Managing board: Vorstand, Directoire, Raad von Bestuur, Conselho de administraçao

Three-tier board (Soviet union after perestroika)Supervisory board, Executive Board, Audit

One tie

r board

Italy

’s colle

gio

sind

aca

le

Two tie

r board

Germ

an

y’s co

-dete

rmin

atio

n

Pro

posa

l of V

Com

pan

y

Dira

ctive a

nd

Regu

latio

n

on

SE

Proposal of V Company law directive (1972) and of a Societas EuropaeaMandatory two-tier board systemMandatory co-determination (within the

supervisory board)

New Proposal of V Company law directive (1983) and of a Societas EuropaeaOptional two-tier board systemOptional co-determination (various systems)

Regulation of SEReg. 2157/2001 (optional 2TB)Directive 2001/86/EC (optional co-

determination)

Th

e S

E m

ain

featu

res

Formation By merger of national companies from different member

states By the creation of a joint venture between companies (or

other entities) in different member states By the creation of an SE subsidiary of a national company

(or an SE subsidiary of another SE) By the conversion of a national company into an SE

Minimum capital: 120.000 €

Registered office: the place where it has its central administration, that is to say its true centre of operations

Applicable law

Does SE have any success? Why choosing an SE? Some figures follow…

Overa

ll nu

mb

ers

Distrib

utio

n

Board

structu

re

Board

structu

re

Inte

rpre

tatio

n o

f data

(1

.4.2

01

3)

Why an SE? No worker participation shelf-companies for foreign investors

How was the SE created? SE “incubator” of other SE subsidiaries; no workers

participation arrangement

Which CG model? Two-tier system in 80% of the cases Both in Germany, Austria and Czech Republic 2t is

mandatory and traditional However, the majority of Austrian SE prefer one-tier and

40% of the German SE also do

Issues o

f CG

Who drives the car? Business judgment ruleFiduciary dutiesConflicts of interests prevention(the case for increasing shareholders‘ powers?

Babchuk)

Who controls the driver?The law... or the market?

Does the ‘ownership’ of enterprises interfere (Hansmann)?

Corp

ora

te g

overn

an

ce a

nd

effi

cien

cyWhere does the driver lead?

Shareholders’ value vs. social corporate responsibilityTeam Production Theory and other Challenges

to “Shareholder Primacy” (Blair, Stout)The end of history for corporate law

(Hansmann, Kraakman) (you may react on this paper)

Is there a GC model which may be considered more efficient? Can efficiency be measured with a “linear regression”?Law and finance doctrineLegal origins doctrine