Volume 22, Issue 2

129 The Corporate Sustainability Due Diligence Directive applies to certain corporate groups and furthermore require the companies that are within the scope of the Directive to conduct due diligence throughout the group. Therefore, the Directive is likely to affect not just the operation of groups but also potentially the structure of groups. The operation of groups may be affected by the fact that parent companies have a duty to conduct due diligence (and thereby oversee) the subsidiaries, but the parent company also has a duty to interfere in the subsidiary to prevent, mitigate or end adverse impacts in the subsidiary. Parent companies must also extend their code of conduct to subsidiaries. The operation of groups may further be affected by transfer of obligations under the Directive between group companies, as well as duties to share information and resources. All these rules will probably affect the operation of groups subject to the Directive and is likely to have an implication for the duties of the companies and their directors. Finally, the way the competent Member State is defined in the Directive may make it attractive for the group to consider changing its structure to be allowed to comply with a more attractive national implementation of the Directive.

165 Virtual shareholder meetings may be disrupted or even hampered by technical issues. How should the chair of the meeting deal with this? And what consequences should such issues have for resolutions affected by them? This article draws from Dutch, German and Swiss law to analyse these questions and to advise legislators around Europe when implementing (or courts applying) a regulatory framework regarding virtual-only shareholder meetings. It is argued that suspension of the meeting may soon be legitimate, whereas reforms of the law on defective resolutions are necessary to avoid the risk of null or voidable resolutions.

195 Austria’s legislative architecture has been enhanced by a new corporate form: Since 1 st January 2024, entrepreneurs have had at their disposal the so-called Flexible Capital company, or FlexCo, in addition to the LLC (“Gesellschaft mit beschränkter Haftung”, “GmbH”) and the PLC (“Aktiengesellschaft”, “AG”). Whilst, traditionally, the GmbH and the AG are derivates of the German legal system, FlexCo is a unique innovation in Austrian legislation. The initial euphoria having now subsided and in light of international developments since its introduction a year ago, a review and classification of this new legal institution appear timely.

214 The definition of inside information in the EU Market abuse regulation is a well-discussed (but nevertheless difficult) topic. However, almost all case law and literature relate to what constitutes inside information with regards to equities, and not most other types of securities. The topic of this article is to analyse what constitutes inside information for a corporate bond issuer according to Article 7 in the EU Market Abuse Regulation, and a bond issuers duty to disclose said information according to Article 17. The article presents five important factors generally influencing the pricing of bonds as financial instruments: the terms of the bond, credit risk (broken down into probability of default and loss given default), events affecting the economic rights of bondholders such as mandatory redemption, mandatory exchange of securities and changes in bond terms (call risk), interest rate risk and liquidity risk. Based on these factors, a number of concrete examples of situations when inside information may generally be assumed to arise is then discussed, namely in the event of changes in credit risk, changes in credit ratings, bond buy-backs and offers of voluntary exchanges of securities, mandatory exchanges of securities, changes of bond terms, breach of the terms, changes in bond seniority, and finally changes in ownership and delisting. Hopefully, the article contributes to clarifying the application of MAR for bond issuers, both in terms of how Articles 7 and 17 should generally be applied and understood, and in terms of how the rules should be applied in a number of specific situations as a starting point. The article also shows that the requirement for a bond issuer to disclose inside information is likely more far-reaching than is sometimes assumed.

241 MiCAR, just like MAR, uses the concept of reasonable market participant as a requirement (not alone) for the emergence of inside information. Creating the concept of idealistic market participants is inadequate in both the financial instruments market and the crypto-assets market, although it is particularly unfortunate in the latter. Crypto-assets are characterized by tremendous diversity, high price volatility, the market is speculative, and the ‘investors’ in it themselves have a high tendency for risk and frequent change of assets in their portfolio. Given the above problems, instead of the current vague definition, the categories of information that are subject to disclosure could be explicitly settled, thereby eliminating excessive costs and regulatory risks for obliged entities. We should strongly consider the enactment of separate rules and ad-hoc disclosure requirements for different crypto-assets. Moreover, contrary to MAR, ad-hoc disclosure obligation in MiCAR is addressed to three categories of entities. This can result in the actualization of disclosure obligation with regard to the same inside information parallel to more than one entity. The increasing use of crypto-assets, in some cases, may also lead to the parallel applicability of MAR and MiCAR to the same issuer, which may cause huge practical problems.

267 The key policy objective of the post-financial crisis is to ban bailouts, especially for solvent banks. Precautionary recapitalization is an instrument of flexibility in the post-financial crisis regulatory framework that allows solvent but undercapitalized banks to receive capital aids under strict conditions, including the temporary nature of the aid. However, this instrument confronts a credibility issue as the public ownership of financial institutions persists several years after the use of precautionary recapitalizations.We analyze the legal and economic reasons that make the temporary nature of precautionary recapitalizations de facto unenforceable, proposing an analytical framework to approach the matter. In so doing, we challenge the consensus approach to the design of public interventions in banking, which focuses on the trade-offs between minimizing ex-ante moral hazard of bankers, preserving financial stability, and protecting taxpayers. We show that this approach is incomplete as it overlooks the ex-post effects of the intervention, jeopardizing its ex-ante credibility as well. Against this backdrop, we examine the implementation of precautionary recapitalization in the cases of National Bank of Greece, Piraeus Bank, and Monte dei Paschi di Siena. The analysis identifies the key factors undermining the temporary nature of the recapitalizations; specifically, the assessment of the bank’s solvency, the timing of recapitalization, the type of instruments employed, and the political economy of the recapitalization process. Finally, we briefly confront our findings with the Commission’s Crisis Management and Deposit Insurance (CMDI) proposal. We show that the CMDI wants to address the symptoms rather than the causes when reforming precautionary recapitalization, proposing an overly rigid system that is prone to abuses and political distortions.