This paper discusses new data on regulatory competition in European company law and the impact of national law reforms, using the example of English company law forms being used by German start-ups. Since 1999, entrepreneurs have been allowed to select foreign legal forms to govern their affairs. The data show that English limited companies have been very popular with German entrepreneurs in the first years of the last decade, but also document a sharp decline from early 2006 onwards. This decline casts doubt over the claim that the German company law reform from November 2008 had ‘successfully fought off’ the use of foreign company forms. Moreover, by contrasting the German data with the corresponding developments in Austria, the paper further demonstrates that the latter jurisdiction sees a similar decline without having reformed its company law. Instead of exclusively relying on law reform as the causal reason for declining foreign incorporation numbers, the paper offers a number of alternative or complementary explanations for the striking developments. The findings are important for our understanding of (defensive) regulatory competition and successful lawmaking.

The recent conflict between Canadian telecommunications provider Telus and US-based hedge fund Mason Capital is the most recent illustration of ‘empty voting’ – a strategy whereby activist investors eliminate their risk exposure to shares in target companies to pursue idiosyncratic motives. As courts are struggling to find adequate solutions, regulators worldwide are called upon to provide reliable tools to this threat to shareholder voting.

Since 2000, a growing proportion of lawsuits against directors of public companies incorporated in Delaware have been filed outside Delaware. There has also been a large increase in the likelihood of litigation challenging M&A transactions involving Delaware targets, and the likelihood that suits involving the same transaction will be filed both in Delaware and elsewhere. In this Article we explore one potential cause for these trends—intensified competition between plaintiffs’ law firms. We trace the development of the plaintiffs’ bar from the 1970s to the present and identify three changes that plausibly contributed to the out-of-Delaware trend and a higher litigation rate: (1) stronger competition among plaintiffs’ lawyers specializing in securities litigation also affected the corporate law side of the plaintiffs’ bar; (2) changes in how the Delaware courts selected lead counsel encouraged non-Delaware filing by firms who were unlikely to win lead counsel status in Delaware; (3) potential obstacles associated with launching a suit in a jurisdiction other than Delaware become less of a concern to the plaintiffs’ bar. This Article draws upon data and insights developed more fully in a related policy-oriented paper: “Delaware’s Balancing Act”, 87 Indiana Law Review 1345 ( 2012), and a related empirical paper (“Is Delaware Losing its Cases”, Journal of Empirical Legal Studies (forthcoming 2012)).

ISBN: 08980721

Delaware’s courts and well-developed case law are widely seen as integral elements of Delaware’s success in attracting incorporations. However, as we show using empirical evidence involving reported judicial decisions and filed cases concerning large mergers and acquisitions, leveraged buyouts, and options backdating, Delaware’s popularity as a venue for corporate litigation is under threat. Today, a majority of shareholder suits involving Delaware companies are being brought and decided elsewhere. We examine in this Article the implications of this “out-of-Delaware” trend, emphasizing a difficult balancing act that Delaware faces. If Delaware accommodates litigation too readily, companies, fearful of lawsuits, may incorporate elsewhere. But if plaintiffs’ attorneys find the Delaware courts unwelcoming, they can often file cases in other courts. Delaware could risk losing its status as the de facto national corporate law court, as well as the case flow that lets it provide the rich body of precedent that is part of Delaware’s overall corporate law “brand.” We assess how the Delaware courts and legislature, and Delaware companies, might respond to this threat to Delaware’s pre-eminence as the leading forum for corporate cases, as well as incorporations.

ISBN: 00196665

European corporate law has enjoyed a renaissance in the past decade. Fifteen years ago, this would have seemed most implausible. In the mid-1990s, the early integration strategy of seeking to harmonise substantive company law seemed to have been stalled by the need to reconcile fundamental differences in approaches to corporate governance. Little was happening, and the grand vision of the early pioneers appeared more dream than ambition. Yet since then, a combination of adventurous decisions by the Court of Justice, innovative approaches to legislation by the Commission, and disastrous crises in capital markets has produced a headlong rush of reform activity. The volume and pace of change has been such that few have had time to digest it: not least policymakers, with the consequence that the developments have not always been well coordinated. The recent 2007/08 financial crisis has yet again thrown many - quite fundamental - issues into question. In this article, we offer an overview that puts the most significant developments of this decade into context, alongside each other and the changing patterns of corporate structure in European countries.

The financial crisis has brought about a revival of state protectionism across the globe. Most Western leaders have made a virtue of big government and state intervention; bail-outs and Sovereign Wealth Funds have been among the first responses to the economic contraction. Company law rules are one of the instruments frequently used to restrict or to discourage integration or to deter foreign investment. Examples for the new protectionism can be seen in a wide range of legislative and regulatory measures, for instance state measures preventing foreign takeovers, 'golden shares' or laws on foreign direct investment targeting Sovereign Wealth Funds, mainly from Asia. This book presents timely research by a number of company law and EU law experts into this field of law. The chapters cover a broad range of topics, spanning from takeovers/mergers over the one share-one vote debate through to the foreclosure of markets against Sovereign Wealth Funds.

This book explains in detail how and why the principal European jurisdictions, Japan, and the United States sometimes select identical legal strategies to address a given corporate law problem, and sometimes make divergent choices. After an introductory discussion of agency issues and legal strategies, the book addresses the basic governance structure of the corporation, including the powers of the board of directors and the shareholders meeting. It proceeds to creditor protection measures, related-party transactions, and fundamental corporate actions such as mergers and charter amendments. Finally, it concludes with an examination of friendly acquisitions, hostile takeovers, and the regulation of the capital markets

ISBN: 978-0-19-956584-9

With the introduction of the new legal form of the European Company Statute ('Societas Europaea') at the end of 2004, European Community lawmakers have created an instrument which enables large European firms to choose a corporate structure which is based on the same standards in all of the European Community. One special advantage of this new legal form is the simplification of cross-border restructuring, in particular the transfer of the corporation's registered office to another country. However, the statutory provisions for this transfer are relatively restrictive and do take the creditors' and shareholders' request for protection into consideration. The book studies the extent to which these newly-created regulations for the transfer of a European Company’s seat comply with the requirements of an authentic legal form of European Community law, and in particular whether or not they are compatible with the basic freedoms stipulated in the EC Treaty.

ISBN: 978-3-16-149102-3

DOI: http://dx.doi.org/10.2139/ssrn.1554616

When the European Commission first proposed a harmonised legal framework for takeovers in the EU, its aim was to facilitate takeover bids in order to create a more effi cient and competitive corporate landscape and to further the single market. In the view of the Commission, a functioning market of corporate control required rebalancing the division of powers between shareholders and management in companies facing a takeover bid. Taking the UK, EU’s most active takeover market, as a model, the Commission proposed to assign the sole decisionmaking power regarding the bid to the shareholders, with management primarily playing an advisory role. This so-called board neutrality rule, however, caused much controversy among the member states, and it was one of the main reasons for the Takeover Directive’s notoriously long adoption history. Failing to achieve consensus on this topic, the Takeover Directive was finally adopted in a “watered down” version, without a mandatory board neutrality rule. Instead, a rather complicated system of “options” was introduced, both at member state and at company level. Although it was clear that this approach would not create the same barrier-free market for corporate control the Commission originally had in mind, it was still hoped that it would be a step in this direction. At the very least, it was certainly expected that this approach would retain the status quo. This paper examines how the implementation of the Directive changed the takeover rules applicable to European companies. To that end, we analyse the pre-implementation rules regarding management’s role in takeovers in all member states, and compare them with the current legal framework. We find that, instead of facilitating the Commission’s ideal of a comprehensive, mandatory board neutrality rule, the Directive has, in aggregate, likely had an opposite effect. We argue that there are signs of protectionist motives driving member states’ choices regarding board neutrality, and we fi nd that the system of company-level choices is ineffective in its current form. We propose a simplifi ed and more coherent board neutrality rule, solely based on shareholder decision making. Acknowledging that a system allowing management to prevent unwanted bids might have advantages over a pure board neutrality rule in certain circumstances, we argue that shareholders are in a better position to decide on the optimal rules for a particular company than legislators.

ISBN: 978-0-19-959145

In the wake of the economic crisis of 2008/09 the debate about the desirability of control-enhancing mechanisms that deviate from the traditional one-share-one-vote standard has been reinvigorated. This debate can be seen in the discourse of policy makers and academics that advocate the introduction of multiple voting rights in an attempt to curb the short-termism that is perceived by many to have provided the prevalent business incentive prior to the financial crisis. Alongside such discourse there buds a renaissance in the use of golden shares, in the hope, inter alia, of protecting European industries against Sovereign Wealth Funds from the Middle and Far East. Most of these proposals appear to be ill-advised. In the continental European context, they would reinforce the existing blockholder-dominated share structures to the detriment of minority shareholders. But even in the UK, where the possible introduction of deviations from OSOV has been advanced, these suggestions have to be greeted with reservations. The current discussion seems to leave well-established legal and economic ground actively to support protectionist market forces.

Annotated guide on the European Company Statute

In 2008 the European Commission put forward proposals for a European Private Company (SPE), following up on the adoption of the European Public Company legislation of 2001. Although speedy adoption of the SPE proposals was initially hoped for, subsequent negotiations among the member states have stalled, despite at least two revised drafts of the proposals having been produced by the Presidency of the European Council. This article seeks to identify the challenges posed to the national company laws of the member states by the Commission’s proposals for a ‘simple and flexible’ Community form of incorporation. It seeks to argue that the discussions among the member states have revolved mainly around the question of the appropriate role for mandatory rules in modern company law. Member states have been reluctant to see the SPE freed from mandatory rules to which their national companies are subject, because of the competition to their national laws which the SPE would generate. On the other hand, member states with few mandatory rules in their domestic law have been reluctant to see the SPE burdened with mandatory rules which do not apply to domestic companies, because otherwise their businesses will be deterred from taking up the new European form and obtaining its advantages. The article predicts that, of the possible legislative solutions to this confl ict, referring more of the rules applicable to the SPE to the national law of the state in which the SPE is registered is likely to be the dominant one, even though this will undermine both the uniformity and flexibility goals of the proposed legislation. It also considers how effective the ‘national law’ strategy is likely to be in the light of the Treaty provisions on freedom of establishment