Volume 4, Issue 3

Recently, a number of articles in the ECFR have considered various national group laws (e.g. Paola Fasciani, Groups of Companies: The Italian Approach, ECFR 2007, 195; Pablo Girgado, Legislative Situation of Corporate Groups in Spanish Law, ECFR 2006, 363; Eiji Takahashi; Japanese Corporate Groups under the New Legislation; cf. further the Italian case note by Vincenzo Cariello, ECFR 2006, 330 and the part on Portuguese group law by José Engrácia Antunes, ECFR 2005, 323, 367 et seq.). In these articles, frequent reference was made to the French Rozenblum concept of the compensation of damages with advantages from belonging to a corporate group. In the following article, Maggy Pariente introduces in depth the French approach, thereby illuminating one of the leading regulatory concepts in the world for addressing corporate groups which might also serve as model for future European harmonization measures.

The article analyses a number of characteristic cases of target company's directors and shareholders conflicts of interest in leveraged buy-outs, noting that such cases have not been extensively studied by European researchers and addressed by the judiciary of the European countries. There is reason to believe that, on the basis of an interpretation applying general legal principles, the possibility that the directors and shareholders of the target will use the operation to achieve extra-company interests is potentially high. As a consequence, the article proposes a different, more rigorous interpretation of the laws on conflict of interest of directors and shareholders.

The concept of Better Regulation is on the agenda of the European Union since 15 years. Whereas the first steps were small and slow, the Members States have meanwhile recognized the necessity of the improvement of the quality and effectiveness of the acquis communautaire as a condition to fostering the European economy by creating further opportunities for business and removing obstacles to innovation. Although much has been done in the last few years, there is still a long way to go before we can claim to have done everything we can to remove the legislative and other obstacles to the implementation of the revised Lisbon Strategy.

Less than four years have passed by now since President Bush on July 30, 2002 signed the Sarbanes-Oxley Act. US Congress with this Act reacted to serious failures that had come to light in Corporate America. I mention as examples the break-down of Enron with billions of US dollar liabilities in unconsolidated special purpose companies, the doubts relating to the independence of Enron auditor Andersen, billions of dollars pingpong sales of World Com and other telecommunication companies, six billion dollars artificial profits over five years of Xerox, and lastly the Merrill Lynch analysts who recommended to investors as “attractive investment” a public offering underwritten by their employer which they described internally as “peace of shit”.

The law of takeovers is a specific field of securities law. A very recent branch of the law, it is primarily designed to protect minority shareholders from takeover bids for the securities they hold of a specific company. Increasingly, takeovers are characterized by transnational elements: in a globalized economy, the bidder, the target, and the investors may all have a different ‘nationality’. National financial regulators are in a conundrum then: when should they apply their laws to the takeover, and when should they defer to other regulators, in order for international regulatory conflict not to arise?