Comparative Corporate Law

transcript

Marco VentoruzzoNLS of India University, Bangalore

Spring 2009

ROSS A. WILSON v. LOUISIANA-PACIFIC RESOURCES, INC.(138 Cal. App. 3d 216)

ROSS A. WILSON v. LOUISIANA-PACIFIC RESOURCES, INC.

(138 Cal. App. 3d 216)

country type of company

minimum capital setup costs

Austria GesmbH 35,000 3,500

France SARL 1 450

Germany GmbH 25,000 1,000

Italy Srl 10,000 2,750

Luxemburg SARL 12,500 2,300

Netherlands BV 18,000 1,750

Spain SL 3,010 600

UK Ltd 2 425

Source: Becht et alt., 2006Source: Becht et alt., 2006

Limited liability companiesLimited liability companies

10001000

20012001 2003200319991999

Centros Uberseering Inspire Art Centros Uberseering Inspire Art

Source: Becht et alt., 2006Source: Becht et alt., 2006

germany

other EU

(c) Marco Ventoruzzo 14

Par. 23(5) “Aktiengesetz”: “The articles of incorporation may opt out of specific provisions of this Statute only if the Statute explicitly so permits. The articles may contain additional provisions, except as to matters that are conclusively dealt with in this Act.

Some elements looked at to disregard the corporate structure

(DeWitt test – 540 F.2d 681 (4th Cir.1976)

• Undercapitalization• Failure to observe corporate formalities (including

absence of corporate records, accounting, etc.)• Non-payment of dividends• Siphoning of corporate funds by dominant shareholder

(more generally, commingling of funds and assets between individual sh. and corporation)

• Non-functioning of officers and directors beside defendant

• Passivity of other sh. other than defendant• …

Piercing

Piercing: different approaches

Incorporating and Piercing USA vs.

Some Civil Law Countries

Practical Implications?Your attempts are just mildly annoying…

Incorporation Process(in some civil law countries)

Articles of association

Period (duration)

Purpose

Capital

Internal org.

Articles of association

Period (duration)

Purpose

Capital

Internal org.

Capital

Capital: different approaches

Eligible contributions

Contributions in kind (property): different approaches

Business Unit Of A

Profit/Loss of the Business Unit

Profit/Loss of Corporation A as a Whole

Maximum Dividend Distributable to Each Business Unit (all other variables being equal)

Situation 1

B 10110

C 100 100

Situation 3

B - 595

C 100 95

Situation 4

C - 15 0

No stockholder shall sell to third parties his stock or any portion thereof without first having given written notice of such intention to this Corporation and to each other stockholder. During the fifteen days succeeding the announcement each other stockholder shall have the right to purchase such stock at the same conditions offered by third parties.

No stockholder shall sell or otherwise transfer his stock or any portion thereof without first having given written notice of such intention to this Corporation and to each other stockholder. Upon such notice the Corporation shall promptly evaluate the stock…During the fifteen days succeeding the announcement each other stockholder shall have the right to purchase such stock at the price set forth by the Corporation…

Share transfer restrictions: different approaches

The problem of the choice

Major Sources and their Evolution

• Legislative Decree n. 58 of 1998 (new governance rules for listed corporations);

• Legislative Decree n. 5 of 2003 (reform of the general corporate law contained in the Civil Code);

• Corporate Governance Code, March 2006 version, adopted by the Italian Stock Exchange (comply or explain, but…);

• Law n. 262 of 2005 (reaction to financial scandals);

• Ledislative Decree n. 303 of 2006 (corrects the Law n. 262 of 2005).

A Closer Look at the Governance of a Listed Corporation

independent appointed by the minoritynon-executive

Board Committees

Alternative Governance Systems: Two-tier System

Alternative Governance Systems: One-Tier System

Absolute prohibitionof any conflicted transaction

Permissible any conflicted transaction

Disclosure

Procedural rules

Substantive fairness

Suing the directors

Directors’ Liability

shares

Merger vs. Consolidation

shares

Takeover of EDF-Transalpina over Edison (October 2005)

Average largest shareholder (%)

46,1348,14

Source: Van der Elst (2004)

France Germany Italy Spain U.K.

Comparative Corporate Law

Documents