Wolf-Georg Ringe

The law of assignments is one of the most controversial areas of European contract law. In recent scholarship - and in political reality - attempts have been made to (i) harmonise private international law rules and to (ii) reach agreement on substantive rules. This contribution evaluates the conceptual underpinnings of both approaches and proposes a way forward to create an effective framework for assignments in Europe.

Collective litigation against issuer fraud appears increasingly in an international context. In times of financial crises, this brings one question into the centre of attention which had not been discussed exhaustively before: In the situation of a securities liability towards investors in an international context, which is the applicable law to the liability claim? The harmonisation of private international law rules in Europe gives rise to new reflections on the problem of international issuer liability. In the United States, on the other hand, the Supreme Court has just ruled for the first time on matters relating to the international application of the US securities regulation thereby overruling the settled case-law of decades. This paper understands the role of issuer liability in a broader context as a ‘corporate governance’ device and, from this starting point, develops a new approach to the legal problem of cross-border securities class actions.

Il existe un conflit entre les objectifs de l’UE visant à établir un marché intérieur intégré et à assurer son bon fonctionnement et les ambitions de (certains) E´ tats membres à stimuler les champions nationaux ou à maintenir le contrôle économique national dans les entreprises (anciennement) publiques. Ces derniers temps, en raison de la crise financière mondiale, les dirigeants européens ont fait une vertu de l’intervention étatique ; sortir d’affaire les fonds souverains fait partie des premières réponses à la contraction économique. La crise a revivifié l’ancien outil protectionniste, qui était censé être surmonté dans l’UE. Le renouveau du protectionnisme peut être vu dans un large éventail de mesures législatives et réglementaires : mesures empêchant les rachats étrangers incluant l’octroi d’aides d’E´tat ou de droits spéciaux dans les sociétés privatisées, les « golden shares », qui conduisent à restreindre le marché européen du contrôle des entreprises privées et des investissements directs. Sans doute, des outils du droit société comme les droits de vote multiples ou d’autres mécanismes de renforcement de contrôle peuvent également être réanimés pour poursuivre les objectifs nationalistes. Cette contribution reprend certains des aspects du débat sur « une action – une voix » (OSOV) à l’aune de la crise financière et ses craintes protectionnistes.

Annotated guide on the European Company Statute

The project of creating a Banking Union is designed to overcome the fatal link between sovereigns and their banks in the Eurozone. As part of this project, political agreement for a common supervision framework and a common resolution scheme has been reached with difficulty. However, the resolution framework is weak, underfunded and exhibits some serious flaws. Further, Member States’ disagreements appear to rule out a federalized deposit insurance scheme, commonly regarded as the necessary third pillar of a successful Banking Union. This paper argues for an organizational and capital structure substitute for these two shortcomings that can minimize the systemic distress costs of the failure of a large financial institution. We borrow from the approach the Federal Deposit Insurance Corporation (FDIC) has devised in the implementation of the “Orderly Liquidation Authority” under the Dodd Frank Act. The FDIC’s experience teaches us three important lessons: first, systemically important institutions need to have in their liability structure sufficient unsecured (or otherwise subordinated) term debt so that in the event of bank failure, the conversion of debt into equity will be sufficient to absorb asset losses without impairing deposits and other short term credit; second, the organizational structure of the financial institution needs to permit such a debt conversion without putting core financial constituents through a bankruptcy, and third, a federal funding mechanism deployable at the discretion of the resolution authority must be available to supply liquidity to a reorganizing bank. On these conditions, a viable and realistic Banking Union would be within reach—and the resolution of global financial institutions would be greatly facilitated, not least in a transatlantic perspective.

German corporate governance and corporate law are currently undergoing a major change. The old “Deutschland AG”, a nationwide network of firms, banks, and directors, is eroding, ownership is diffusing and the shareholder body is becoming more international than ever. This paper presents new data to support this development and explores the consequences in governance and in law that have been taken or that need to be drawn from this finding. Consistent with market-based theoretical accounts on corporate law, it finds that the changes currently underway are mainly a response to global market pressure: German banks divested their equity stakes mainly as a consequence of increased international competition. The paper extends the model of market-led change by two important observations: first, market pressure is not the only driver of legal change, but the law itself in this case contributed to facilitating competition. Notably, a taxation law reform enabled and accelerated the competition process already underway. Legal rules and market competition may thus be understood as not operating in isolation, but as forces that can be working in dialog. Secondly, the paper highlights the importance of ownership structure as an important intermediate condition in the logical order between market competition and legal change.

This paper explores the benefit of using menu structures for regulatory purposes in private law. Menus have been used rarely by regulators and lawmakers in the past. Insofar as they are used, they address situations where market participants have relatively heterogeneous preferences, where the subject matter of regulation itself is heterogeneous, or where a political consensus appears difficult. This paper addresses a number of benefits that reach beyond the traditional perception of menu lawmaking. Benefiting from insights from economics and behavioural science, several benefits can be identified that exploit the full potential of menu lamaking. Central to these benefits is the notion of endowment effect (or status quo bias) involved with traditional default rules: where the law provides just one default rule, market participants will mostly stick to this rule out of pure convenience. This means that simple default rules are frequently inappropriate to identify the preference of market participants. This problem can be overcome by using menus, giving consumers a choice between different options, each of which is endorsed by the authority and impartiality of the parliamentary lawmaker. But menus have many other advantages than traditional black-or-white legal rules.

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.

This paper re-evaluates the corporate governance concept of ‘board independence’ against the disappointing experiences during the 2007-08 financial crisis. Independent or outside directors had long been seen as an essential tool to improve the monitoring role of the board. Yet the crisis revealed that they did not prevent firms’ excessive risk-taking; further, these directors sometimes showed serious deficits in understanding the business they were supposed to control, and remained passive in addressing structural problems. A closer look reveals that under the surface of seemingly unanimous consensus about board independence in Western jurisdictions, a surprising disharmony prevails about the justification, extent and purpose of independence requirements. These considerations lead me to question the benefits of the current system. Instead, this paper proposes a new, ‘functional’ concept of board independence. This would redefine independence to include those directors that are independent of the firm’s controller, but at the same time it would require them to be more accountable to (minority) shareholders.

In capital markets around the world, calls for greater transparency regarding holdings of cash-settled equity derivatives (in particular Contracts for Difference, CfDs) have arisen due to the increased use of CfDs to gain control or to influence the management of prominent companies on all major European stock exchanges. They have been used in this manner due to an emerging practice that permits a CfD holder to capture the shares to which the CfD arrangement relates (without entering into any further express or implied agreements to do so), thereby acquiring a de facto control position in the target company. The UK was among the first countries to extend its shareholder disclosure regime to cover CfDs. Positions above the trigger threshold of 3 per cent must be disclosed as if they were shares enti-tling the holder to voting rights in the target company. Two alternatives were considered when pre-paring this new regulation: firstly, a general disclosure obligation of all economic long positions and secondly, a safe harbour regulation with exemptions from the requirement to disclose certain CfD transactions. Ultimately, the first option was preferred, yet not on the basis of its own merits but be-cause the safe harbour alternative was considered too complicated and difficult to enforce. This paper evaluates disclosure regulation of cash-settled equity derivatives and assesses the ef-fectiveness and suitability of the disclosure regulation under chapter 5 of Disclosure and Transparency Rules (DTR) in the UK with comparison to the relevant US rules and case law. We argue that the UK made the wrong choice of disclosure regime for CfDs. It fundamentally misunderstood the nature of the underlying problem relating to CfDs. As this article explains, the key problem related to CfDs is not the economic interest which CfDs convey per se, but rather the hedging structures that market participants have developed to facilitate the use of CfDs to acquire control of companies by stealth. This particular mischief would have been better targeted by an intentions-based disclosure regulation requiring disclosure of CfD positions only in cases where the CfD holder intends to launch a takeover or to otherwise influence the target company’s strategy and operations. Instead, the UK market is saddled with a general disclosure obligation with only very limited exceptions. This disclosure obligation is too wide in scope, places an undue burden on market partici-pants and ultimately acts as a deterrent to CfD transactions. This article argues that the UK should move away from the current general disclosure obligation towards intentions-based disclosure to re-move the current fetter on the CfD market, while still tackling the underlying mischief.

The integration of the European capital markets makes progress and has led both issuers and investors being active on various markets on both sides of the Atlantic. In times of financial crises, this brings one question into the centre of attention which had not been discussed exhaustively before: In the situation of a securities liability towards investors in an international context, which is the applicable law to the liability claim? The harmonisation of private international law rules in Europe gives rise to new reflections on the problem of international issuer liability. In the United States, on the other hand, the Supreme Court has just granted certiorari in a ‘foreign-cubed’ securi-ties class action case and will thus rule for the first time on matters relating to the inter-national application of the US securities regulation soon. This paper understands the role of issuer liability in a broader context as a ‘corporate governance’ device and, from this starting point, develops a new approach to the legal problem of cross-border securities liability.

One of the key features of the new Europe-wide legal form "European Company" ("Societas Europaea" or "SE") is the possibility of transferring the company’s seat from one Member State to another without having to be wound up or to re-register. As this possibility does not exist for companies formed under national law, the formation of an SE will often present the only possibility for companies to transfer their incorporation and corporate headquarters between Member States. This is a big advantage and a milestone towards the European Internal Market. However, some doubts remain as to the practicability of the system. The mandatory linkage of the head office to the registered office within the same Member State according to Article 7 of the SE Regulation is very problematic and, in light of recent ECJ decisions such as Centros, Überseering and Inspire Art, may violate EC primary legislation. Why should companies that are formed under national law be allowed to have the head office in a Member State different from their registration state, while an SE—as an instrument of Community law and a symbol of the Internal Market—is not? Furthermore, the detailed procedural rules laid down in the Regulation are sometimes overprotective and may significantly reduce the attractiveness of the SE’s mobility. It is argued that Article 7 of the SE Regulation is secondary law that itself is inconsistent with the (primary) EC Treaty. Furthermore, the Member States also tend to be overprotective when enacting safeguard measures for the benefit of creditors, minority shareholders and employees. Here again, freedom of establishment does not allow protectionist measures that contravene the gist of the SE’s mobility.

The volume traces back to a symposium held at the Max Planck Institute for Comparative and International Private Law in Hamburg and offers a broad comparative analysis of company and capital markets law in Germany and the Nordic states. It details the special elements of company law in Scandinavia that developed amid the twin forces of innovative experimentation and the drive for harmonization, contrasting them with the distinctive features of German company law. Further contributions deal with the newly created entrepreneur company in Germany and Denmark, as well as the role of shareholders and boards in public companies. It also contains detailed analyses of the law of company groups in Germany and the Nordic states. the volume is further rounded out with contributions on capital markets law and takeover law, including issues involving acting in concert, ownership disclosure and the interaction between the legislator and the takeover panel in Sweden.

Das Werk behandelt - sehr praxisorientiert und zugleich wissenschaftlich fundiert - die im täglichen Rechtsverkehr mit England auftretenden Fragen. Dazu gehören z. B. die Besonderheiten des englischen Vertragsrechts, Warenkauf, Arbeitsrecht, Gesellschaftsrecht, Insolvenzrecht, Wettbewerbsrecht, internationales Zivilprozess- und Privatrecht einschließlich Schiedsverfahrensrecht u.v.m. Das Buch ist nicht nur für Geschäftsverbindungen mit England eine unerlässliche Hilfe. Da englisches (Handels-)Recht in vielen wirtschaftlich bedeutenden Ländern zur Anwendung kommt, genießt es Weltgeltung. Zudem wird im internationalen Handelsverkehr sehr häufig ein englischer Gerichtsstand oder Schiedsort und englisches Recht als "neutrales Recht" vereinbart, wenn sich die Parteien nicht auf das Recht einer der Vertragsparteien einigen können.