Volume 19, Issue 5

685This article argues that the general location of the registered office of a company without a physical business address in a Member State, accompanied by a digital business address, should qualify a corporate seat as “virtual”. Moreover, the concept of the virtual corporate seat should essentially be seen as a modernized version of the model developed under the substantive company law of some Member States when two separate concepts – the general location of the company’s registered office in that Member State and the domestic business address – are used to determine a fully fledged notion of the corporate seat. The article further addresses the key functions that the virtual corporate seat should perform on an EU-wide, cross-border basis that are typically delivered by the traditional (physical) registered office. It also considers the major challenges that lie ahead of the innovative concept of the virtual corporate seat, chief among which is ensuring proper communication with the company while maintaining a virtual corporate seat.686

701 Related party transactions have gained significant importance in Europe as a result of the reformed Shareholders’ Rights Directive (SRD). Previously, only a few Member States had created regulatory regimes governing such transactions, yet as of the reform of 2019, detailed procedural and disclosure requirements are compulsory in the European Union today. The Directive’s specifications in Article 9 c grant national legislators substantial discretion to implement new safeguards into national law. This article compares the implementations chosen by Member States and assesses the degree of harmonisation that countries have achieved. It advocates for a more balanced approach and increased coordination with accounting laws. Furthermore, it argues that the new legal regime should be regarded as a significant part of European Corporate Group Law. 702

749 Amidst the COVID-19 outbreak, Italy as well as a number of other European states, including Austria, Germany and Spain, enacted emergency legislation suspending subordination of shareholders and intragroup loans in order to help companies stay afloat. While this measure was clearly prompted by extraordinary circumstances, it should be noted, however, that unlike jurisdictions which adopt automatic subordination, such as Germany and Spain, or where subordination is also based on quantitative criteria, such as Austria, subordination in Italy is based on flexible standards that may not strictly call for an emergency suspension. The COVID-19-related suspension of subordination provides the momentum for reassessing the scope of application of the subordination of shareholder and intragroup loans under Italian law. Although substantially unexplored in the international legal literature, subordination was introduced in Italy in 2003 and has now been applied for nearly twenty years. The system is quite sophisticated and also recognizes a variety of restructuring exemptions allowing priority to the loans. This paper examines subordination of shareholder and intragroup loans under Italian law, seeking to establish a workable construction of the standards of the excessive imbalance between debt and equity and of the reasonableness of a capital contribution on which the application of the remedy is predicated. Building also on relevant economic studies, the paper argues that the Italian subordination system has the potential to distinguish between desirable and undesirable shareholder and intragroup loans based on whether the loan is intended to finance positive net present value projects, restricting the latter while not deterring the former, so as to guarantee the goal of increasing the expected total value of the company and producing better satisfaction of creditors’ claims. 750

782The article analyzes the impact of the Regulation (EU) 2019/2088 on the dialogue policies in listed companies. Starting from the new obligations of sustainability‐related disclosure in the financial services sector, the essay envisages governance solutions which are able to grant interim information flows between the board of directors and the institutional investors about sustainability performances, also in light of the recent Directive (EU) 2022/2464. The essay deals more specifically with the following topics: a) the division of power between directors and supervisory board, and then the directors who are entitled to intervene in the hypothesized ESG-dialogues; b) the modality of the dialogue, if one-way or two-way, and the impact that such ESG-dialogues have on the company’s governance, especially on the relationship between the directors and the supervisory board; c) the possibility of selecting shareholders who are entitled to attend the meeting; d) the relation between the board of directors and the general meeting of shareholders; e) the possibility of involving investors who are not shareholders, particularly a bidder, in ESG-dialogues with institutional investors.783

828 The use of digital platforms in the financial sector requires automated processes in order to collect the large volumes of data which will allow firms to create a shared understanding around rules through technological applications. The UK Financial Conduct Authority launched innovation programmes, i. e. a regulatory sandbox, to assess technologies and expedite the delivery of fintech products. This initiative has been followed by the European Digital Finance Package, which introduced the Pilot Regime for market infrastructure based on distributed ledger technology. Albeit a laudable initiative, the EU sandbox model may face obstacles on account of the different approaches taken by Member States in relieving regulatory requirements which can create a perverse incentive to circumvent prudential rules in the context of risk assessment. This article examines the impact of sandboxes on the operation of digital platforms and considers the extent to which decision-making processes are amenable to digital treatment, and what will be the implications for the quality of regulation and the exercise of judgement by the supervisory authority. It argues that the application of regulatory sandboxes can promote more effective compliance processes, while ensuring transparency and accuracy of enforcement actions. 829

854 Despite a pandemic, crowdfunding continues to be a growing source of finance for small businesses across the EU. This article discusses nature and business typology of digital platforms that raise funds from the crowd. In the effort to support the ongoing uptake of new technologies in financial services, the first harmonised regime for the intermediation of financial instruments and loans to businesses via digital crowdfunding platforms has recently entered into application and promises to change the landscape of this financial service in the years to come. The new policy framework creates a robust EU-wide license, with requirements that support integration with social media, as well as the progressive creation of pan-European one-stop-shop platforms that offer multiple funding tools. Moreover, the regime also tests new boundaries in investor protection and behavioural finance, with the introduction of a system of warnings, targeted transparency on multiple levels and a conflict-of-interest framework to ensure that the platform acts as a risk neutral gatekeeper. The jury is still out and there are a number of unknowns, as this new framework will have to face the reality of well-established legal and supervisory national obstacles in its implementation.