Carsten Gerner-Beuerle

Email: C.Gerner-Beuerle@lse.ac.uk
Administrative support: Gosia Brown
Room: New Academic Building 5.08
Tel. 020-7955-7250

Carsten is an Associate Professor of Law at the London School of Economics and Political Science. His research focuses on corporate governance, securities regulation, and law and economics. He studied law and economics at Humboldt University Berlin, the University of Minnesota, and the University of London. He worked or held visiting positions at a number of universities in Europe and the United States, including King’s College London, the University of California at Berkeley, and Duke University. Carsten is also admitted to the bar in Germany, regularly advises a German law firm on matters of corporate law and corporate insolvency, and has prepared reports on corporate governance and financial regulation for the European Commission and the European Parliament.

Research Interests

My research focuses on corporate law and securities regulation, generally using a comparative and interdisciplinary approach. One strand of my research deals with the legal and non-legal determinants of regulatory reform, the international diffusion of legal innovations, and the interrelationship between the regulatory environment and economic variables. In other research projects, I analyse the European harmonisation programme in company law and capital markets regulation and discuss how regulatory authority should be allocated between the EU and the Member States to promote integrated markets and ensure efficient regulatory outcomes. I am also working on a comprehensive treatise on comparative company law that examines in-depth some of the main legal traditions of the world, compares the regulatory strategies employed, and explains the observed differences in historical perspective.

 
External Activities
  • Consultant to the European Parliament and the European Commission

  • Of counsel for a German corporate and insolvency law firm

  • Member of the American Law and Economics Association

  • Member of the European Association of Law and Economics
     


Books  

Gore-Browne on EU Company Law (general editor), Bristol: Jordans 2010-2013

Die Haftung von Emissionskonsortien [Liability of Underwriting Syndicates in Public Offerings], Berlin, New York: de Gruyter 2009

Die Auβenhaftung von Emissionskonsortien - coverThe 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.

Challenges of the Law in a Permeable World (ed. with David A. Frenkel), Athens: Athens Institute of Education and Research (ATINER) 2009

Selected Essays on Current Legal Issues (ed. with David A. Frenkel), Athens: Athens Institute of Education and Research (ATINER) 2008

 
Selected articles
and chapters in books
 

(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.

(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.

(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.

‘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.

‘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.

‘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.

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.

'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.

'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.

'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.

'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.

'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).

'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.

'Accounting Law of the German Closely Held Corporation (GmbH)' in H. Heybrock (ed.) Praxiskommentar zum GmbH-Recht, Münster: ZAP-Verlag 2008, pp. 1032-1130

A commentary on ss. §§ 239-263 of the German Commercial Code (HGB) on corporate books and records.