'The Contractual Structure of Executive Remuneration in the UK' in Christoph Van
der Elst (ed.) Executive Directors’ Remuneration in Comparative Corporate
Perspective: The Regulatory Framework (Kluwer Law International 2015) pp.
73-98
(with Edmund-Philipp Schuster) ‘The Evolving Structure of Directors' Duties in
Europe’ (2014) 15 European Business Organization Law Review pp.191-233
Corporate mobility in Europe continues to be on the rise, both
creating space for regulatory arbitrage by companies and influencing legislative
decisions in corporate law and related fields. This has triggered debates in
European company law that centre on questions of harmonisation,
cross-jurisdictional convergence and the superiority of certain regulatory
approaches and legal families. This article uses a large cross-country sample of
EU Member States to classify legal strategies in corporate governance and assess
claims of convergence and the superiority of legal families. We analyse board
structure, the most important duties of directors, namely the duties of care and
loyalty, questions of enforcement, and the position of directors in the vicinity
of insolvency, and develop a taxonomy of legal strategies across the Member
States. We find that, in spite of differences in regulatory technique and legal
tradition, the effect of the legal strategies employed by the Member States is
often remarkably similar and legal systems exhibit interconnections in the form
of mutual learning across borders. In addition, we show that, in contrast to
claims by parts of the literature, judicial innovation is not restricted to
particular legal families. We argue that all legal families are, in principle,
well equipped to react to new developments and draw on general or unwritten
principles of law to fill regulatory gaps. However, a precondition for the
emergence of effective rules seems to be a sufficiently large body of case law
and, accordingly, access to the courts and an efficiently functioning judicial
system. Consequently, we submit that questions of enforcement are of greater
importance than a particular legislative or regulatory style.
click here for full text via OUP [ON CAMPUS]
click here for full text via OUP [OFF CAMPUS]
(with Esin Küçük and Edmund Schuster) ‘Law Meets Economics in the German
Federal Constitutional Court: Outright Monetary Transactions on Trial’ (2014) 15
German Law Journal pp.281-320
The Eurozone banking and sovereign debt crisis has brought the
fragility of the European monetary union into sharp focus and exposed the lack
of effective instruments at the European level to maintain financial stability.
As a response to the crisis, the Member States and the institutions of the Union
adopted in short succession several financial assistance measures that have
given rise to much political and legal controversy. The European Central Bank (ECB)
played an active role in the institutions’ efforts to contain the crisis and
prevent the disintegration of the Eurozone by deploying a number of so-called
non-standard or unconventional monetary policy measures, namely its Securities
Markets Programme, Long-Term Refinancing Operations, and in September 2012 the
Outright Monetary Transactions Programme (OMT Programme). The OMT Decision
envisages unlimited purchases by the ECB of specific types of sovereign bonds
issued by Member States participating in an EFSF/ESM macroeconomic adjustment or
precautionary program in the secondary market. Without the program having been
activated, i.e. without the ECB actually implementing the decision and without
any purchases of government bonds, yields on bonds of the affected Eurozone
countries decreased markedly after the announcement of the OMT Decision. The OMT
Programme has accordingly been credited with having been instrumental in
restoring financial stability and preventing a breakup of the Euro area and with
being one of the most effective announcements any central bank has ever made.
click here for full text
(with Edmund Schuster) ‘The Costs of Separation: Friction between Company and
Insolvency Law in the Single Market’ Journal of Corporate Law Studies
2014, 14(2), 301-346; working paper published in LSE Law Society and Economy Working Paper Series,
06-2014
Corporate mobility and choice of law within the EU
has dominated much of the academic writing in European company law
over the last decades. What has not yet received much attention is
the way in which national company law interacts with and depends on
features of the national legal system outside of company law. In
this article we explore this interaction and its relevance for
coherent national regulatory systems. Using the regulatory framework
for companies in the ‘vicinity of insolvency’ as an example, we show
how choice of company law can create both regulatory gaps and
multiplication of legal requirements, as private international law
rules are applied inconsistently across Europe. More importantly,
however, we show that even consistent application of conflicts rules
would fail to resolve these problems due to cross-doctrinal
interdependence within any national legal system. We conclude that
this is a design flaw in the way EU law deals with the increasingly
international reach of corporations, and discuss possible paths for
resolving or mitigating this issue.
CLICK HERE TO DOWNLOAD WORKING PAPER [SSRN] | [LSE
COPY]
‘Determinants of Corporate Governance Codes’ LSE Law Society and Economy
Working Paper Series, 05-2014
Corporate governance codes are an increasingly
prominent feature of the regulatory landscape in many countries, yet
remarkably little is known about the determinants of corporate
governance reform. Potential determinants include: (1) the diffusion
of an international benchmark model of good governance; (2) a
country’s legal system; (3) the desire to attract foreign investors;
and (4) the influence of interest groups. I construct a proxy for
the investor-friendliness of 52 corporate governance codes of
different jurisdictions and collect data on the code issuers. I find
strong evidence that the drafters of codes emulate international
benchmark models and that jurisdictions belonging to different legal
traditions use different regulatory strategies, some evidence that
portfolio equity inflows are associated with the
investor-friendliness of codes, and no evidence that interest groups
succeed in affecting rules. The article suggests a method for the
modeling of legal evolution, convergence, and the political economy
of corporate governance codes.
CLICK HERE TO DOWNLOAD FULL TEXT [SSRN] | [LSE
COPY]
‘Mapping Directors’ Duties: The European Landscape’ (with Edmund-Philipp
Schuster), in: Hanne Birkmose, Mette Neville & Karsten Engsig Sørensen (eds.),
Boards of Directors in European Companies, Kluwer Law International 2013,
pp. 13-55
This paper analyses the rules on directors' duties in all EU Member States,
identifies regulatory philosophies and trends, highlights differences, and
discusses enforcement strategies, particularly minority shareholder suits.
click here for full text [SSRN]
‘Study on Directors’ Duties and Liability in Europe’ (2013), prepared for the
European Commission (with Philipp Paech and Edmund-Philipp Schuster)
This comparative study analyses directors' duties and liabilities in all EU
Member States, identifying regulatory strategies and trends across Europe and
discussing enforcement strategies. The report has been prepared for the European
Commission.
click here for full report
United in Diversity. Maximum vs. minimum harmonisation in EU securities
regulation' Capital Markets Law Journal 2012, 7(3), 317-342
This articles uses the recent drive in the UK to abolish
gold-plating as a starting point to analyse whether EU legislation on prospectus
disclosure, transparency requirements, and market abuse provides for maximum
harmonisation or allows Member States to adopt super-equivalent implementing
measure. In addition, the article develops a number of general criteria to
identify situations where maximum harmonisation may be beneficial, and cases
where the setting of minimum standards, or merely the removal of obstacles to
crossborder mobility, is advantageous. The article argues that prospectus
disclosure entails largely maximum harmonisation. The character of the
Transparency and Market Abuse Directives, on the other hand, is ambivalent.
Recent case law calls into question the permissibility of the super-equivalent
implementation of the Market Abuse Directive by UK law. As far as the benefits
of harmonisation are concerned, the article distinguishes between disclosure
obligations and liability provisions. It is submitted that harmonisation is
beneficial with respect to the latter, but should be scrutinised carefully in
case of the former.
click here for full text via OUP [ON CAMPUS]
click here for full text via OUP [OFF CAMPUS]
'Shareholders between the market and the State. The VW law and other
interventions in the market economy' Common Market Law Review 49 (1)
(2012) pp.97-143
This article takes the VW case as a starting point for a systematic examination
of the golden shares jurisprudence of the Court of Justice. The golden shares
decisions have received much attention, but a coherent test to establish whether
a national measures constitutes a restriction of the free movement of capital
has not yet emerged. The Court uses the notion of “derogation from ordinary
company law”, whereas commentators propose to focus on the effects of
potentially restrictive measures. The article seeks to rationalise the golden
shares decisions and question the delimiting criteria developed by the Court. In
order to do so, it distinguishes between different types of state intervention
in the market economy and derives four arguments from the case law that help
explain the Court’s interpretation of the Treaty. The article shows that the
argument with the highest explanatory power is a genuinely political one that
concerns the internal governance structure of companies, an area not regulated
by European company law. The Court’s approach has implications for the different
models of corporate governance and of the market economy prevalent in the Member
States. The article submits that the free movement of capital is the wrong tool
to level these differences. Accordingly, it recommends to exercise constraint
when reviewing golden shares.
click here for full
text [SSRN]
'Is the Board Neutrality Principle Rule Trivial? Amnesia about Corporate Law in
European Takeover Regulation' (with D.Kershaw and M. Solinas)
European Business Law Review
(2011) 22(5), pp.559-622; working paper published as WPS03-2011 in LSE Law,
Society and Economy Working Paper Series (May 2011).
Whether the European Union's Takeover Directive should have
adopted a mandatory neutrality rule has been the subject of much debate. As the
European Commission commences its review of the Directive this debate is being
reignited. A view is crystallising that the success and failure of the Directive
can, in large part, be measured by the number of Member States that have
opted-in, or out of the neutrality principle, or have opted-in subject to the
reciprocity option. The contestability of European corporations is viewed
through this lens as a function of the extent to which EU Member States have
adopted an unqualified neutrality rule. This article takes issue with this
viewpoint. It argues that the pre-Directive debate and the post-Directive
assessment have failed to consider the core lesson of takeover defences in the
United States, namely that the construction of defences and their potency are a
function of basic corporate law rules. If corporate law rules do not enable the
construction of takeover defences, or undermine the extent to which they can be
potently deployed, then the adoption or rejection of the neutrality principle in
Member States is of trivial significance. This article explores the triviality
hypothesis in three central EU jurisdictions: the United Kingdom, Germany, and
Italy. It concludes that, although there is variable scope to construct and
deploy takeover defences in these jurisdictions, the triviality thesis is well
founded.
full text of working paper available via SSRN
'In search of rationality in company law' Modern Law Review,
73 (6). pp. 1048-1075 (2010)
'The Mysteries of Right of Establishment after Cartesio' (with
Michael Schillig) International & Comparative Law Quarterly 2010, 59(2),
303-323
The judgement of the European Court of Justice in Cartesio was eagerly awaited
as a clarification of the questions concerning the scope of the right of
establishment (Articles 43, 48 EC) that remained after previous landmark
decisions such as Centros, Überseering, and Inspire Art. The article analyses
the implications of Cartesio in light of different scenarios of transfer of the
registered and the real seat within the European Union. It assesses the
interrelations of right of establishment and private international law rules for
the determination of the law applicable to companies and concludes that the case
law of the European Court of Justice after Cartesio, rather than providing for a
coherent system of European company law, leads to arbitrary distinctions and
significantly impedes the free movement of companies.
click here
for full text via OUP [ON CAMPUS]
click here for full text via OUP [OFF CAMPUS]
'Underwriters, Auditors, and Other Usual Suspects: Elements of
Third Party Enforcement in US and European Securities Law' European Company
and Financial Law Review 2009, 6(4), 476-515.
The financial scandals of the last decade have called into question the
effectiveness of the system of securities regulation in many countries. Articles
that have examined the origins of the regulatory crisis have concluded that the
classical tools of corporate governance for the supervision of management have
lost their force as a result of new incentive structures in the financial
markets. They see as the solution to the regulatory lacunae the utilisation of
financial intermediaries as gatekeepers, i.e. as agents that ensure compliance
of the primary market actor (the issuer) with applicable rules by reviewing its
disclosures and withholding their participation in transactions if violations
occur. The article analyses the most important liability provisions of US and
European securities regulation in light of the gatekeeper theory. It identifies
deficiencies in the current regulatory regime, suggests that some aspects of US
securities regulation may serve as an example for a development of the European
system, and highlights the dangers that a lack of legislative attention and a
reorientation of the judiciary towards general principles of tort law create. It
concludes by advancing a tentative explanation of certain trends of convergence
between US and European regulatory mechanisms that can be observed.
The market for securities and its regulation through
gatekeepers. Temple International & Comparative Law Journal 23 (2). pp.
317-377
This article constitutes an extended version of ‘Underwriters, Auditors, and
Other Usual Suspects’ (see above). It includes a more detailed discussion of US
law, an analysis of competitiveness, transparency and informational asymmetries
in the market for financial intermediaries, and an examination of risk shifting
as a tool to allocate liability risks more efficiently.
click here for access via Westlaw [ON CAMPUS]
click here for access via Westlaw [OFF CAMPUS]
[choose Directory ; All Westlaw Databases;
search for 'Temple International & Comparative Law Journal', then article title]
'General Disclosure Requirements – European Framework',
'Quoted Companies – European Framework', 'Europe and Takeovers', chapters 32, 38
and 44 of Gore-Browne on Companies (Bristol: Jordans 2009/10)
An analysis of the EC Directives with
a bearing on corporate reporting (Fourth and Seventh Company Law Directives,
Statutory Audits Directive, IAS Regulation), general disclosure requirements
(First, Second, and Eleventh Company Law Directives), primary and secondary
market disclosure (Prospectus Directive, Transparency Directive, Market Abuse
Directive, MiFID), and cross-border restructuring (Takeovers Directive,
Cross-Border Mergers Directive).
click here for publisher's site
'Recht, Effizienz und Calabresis Trugschluss' [Law,
Efficiency, and Calabresi’s Fallacy] in S. Grundmann et al. (eds.)
Unternehmensrecht zu Beginn des 21. Jahrhunderts: Liber Amicorum in honour of
Eberhard Schwark, München: C.H. Beck 2009, pp. 3-20
The article explores the relationship between economics and
moral philosophy. Starting point of the analysis is the question of whether
legal policy should be guided purely by considerations of efficiency (as, for
example, Richard Posner argues) or also (or exclusively) by considerations of
fairness. The article discusses the two main philosophical movements underlying
this question: the Kantian rights-based approach and the utilitarian
(consequentialist) view. It concludes that neither approach succeeds in
substantiating the claim that certain values (individual liberties vs. the
greatest good for the greatest number) can be accorded exclusivity or absolute
truth. The views can, therefore, not predetermine the issue of whether
efficiency considerations should govern the legislative process and the
application of the law. Rather, depending on the circumstances of the case,
different interests have to be balanced. These general considerations are then
applied to specific problems involving, inter alia, the value of human life, the
Learned-Hand formula, and the concept of cheapest cost avoider.
click here for publisher's site
'Accounting Law of the German Closely Held Corporation (GmbH)'
in H. Heybrock (ed.) Praxiskommentar zum GmbH-Recht, Münster: ZAP-Verlag
2008, pp. 1032-1130
The
book examines the liability of underwriting banks for misstatements in the
registration statement or public offering prospectus according to US-American
and European (in particular German) law. This issue has come to the fore in the
wake of the recent accounting scandals in the US and Europe. The issuers will
often be insolvent and investors will seek to claim damages from the investment
banks that have underwritten the offering. The book discusses the factual
background of the public offering process (underwriting techniques, allotment of
securities, clearing, agreements among underwriters, between underwriters and
issuer etc.), the extensive US case-law on ss. 11 and 12 of the Securities Act
of 1933 and s. 10(b) of the Securities Exchange Act of 1934 in conjunction with
Exchange Act Rule 10b-5, and the corresponding legislative measures under
European and German law. Additional issues are the legal nature of the
underwriting syndicate (prevailing opinion in Germany qualifies it as a general
partnership), relevant conflict of law rules, and the economic implications of
different systems of underwriter liability.