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Comparative Corporate Law
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
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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…
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Incorporation Process(in some civil law countries)
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Articles of association
Name
Period (duration)
Purpose
Capital
Internal org.
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Articles of association
Name
Period (duration)
Purpose
Capital
Internal org.
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Capital
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Capital
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Capital: different approaches
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Eligible contributions
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Contributions in kind (property): different approaches
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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
10
C 100 100
Situation 3
B - 595
0
C 100 95
Situation 4
B 205
5
C - 15 0
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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.
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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…
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Share transfer restrictions: different approaches
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The problem of the choice
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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
independent appointed by the minoritynon-executive
Alternative Governance Systems: One-Tier System
independent appointed by the minoritynon-executive
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Absolute prohibitionof any conflicted transaction
Permissible any conflicted transaction
Disclosure
Procedural rules
Substantive fairness
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Suing the directors
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57
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Directors’ Liability
shares
cash
shares
shares
shares
shares
Merger vs. Consolidation
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shares
euro
Takeover of EDF-Transalpina over Edison (October 2005)
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Average largest shareholder (%)
51,98
18,26
46,1348,14
37,91
Source: Van der Elst (2004)
France Germany Italy Spain U.K.
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