Volume 5, Issue 1

This article explores the Italian reform of corporate law of 2003, which, for the first time, allowed corporations to choose among three different models of corporate governance. In addition to the traditional model, which has been significantly modernized by the reform, two other “alternative” systems of governance were introduced: the two-tier system, which owes its basic structure to the German tradition, and the one-tier system which derives from the Anglo-American tradition. Taking into account the initial goals of the Italian legislature in designing the reform, we describe how the alternative board structures have been implemented in Italian practice, and provide an overview of the initial predictions about their advantages and disadvantages. We argue that Italy has taken an innovative approach to corporate governance that may be useful for other European countries interested in granting corporations the power to choose between board structures. However, analyzing some empirical evidence on the first effects of the reform, we also recognize that, even if courageous, the reform so far was not particularly successful in attracting corporations to the new models.

This is the first part of a two part article describing the new UK Companies Act, which reforms and/or restates substantially the whole of the existing legislation for the UK and codifies significant areas of case law, including fiduciary duties and derivative actions. The new Act is being brought into force progressively over the period December 2006 to October 2009. The article concentrates on the main changes and areas of controversy.

Conflicts of interest are a fundamental and pervasive issue of the modern service-oriented society. Current developments in the regulation of capital markets and elsewhere demonstrate the need for commonly accepted rules for dealing with conflicts of interest. Taking the conflicts of interest of financial intermediaries in securities offerings as a paradigm, the article sets out a definition of conflicts of interest and analyses the possible and appropriate legal strategies to address them. A conflict of interest arises when a person who has a duty to act in another party's interest has to decide how to act in the interest of that party and another interest interferes with his ability to decide according to his duty. Conflicts of interest can be addressed by organizational duties, disclosure duties or a duty to refrain from acting. Within groups of companies a group wide compliance structure and a policy of addressing conflicts facilitate the management of conflicts of interest. The findings of this article constitute a globally accepted common core of rules on conflicts of interest of financial intermediaries and hence provide a foundation for reliable transaction design, consistent supervisory standards and convergence in judicial application.

After recent years of stagnancy, the number of cross-border takeover offers within Europe has rapidly increased since 2003. Mittal Steel's (UK) takeover offer for Arcelor (Luxembourg), Linde's (Germany) takeover offer for BOC (UK) and E.on's (Germany) takeover offer for Endesa (Spain) are just a few examples of European cross-border takeover offers. In 2006, 47 % of all M&A transactions worldwide (which came to an all-time high) took place in Europe, totalling to a transaction volume of 1,200 billion EUR. In some cases, the bidder offers own shares as offer consideration (“Consideration Shares”). This allows the bidder not only to limit the debt-financing of the offer consideration, but also to attract strategic investors who are interested in a stake in the new company. Although the EU-regulators intended to create a sound legal framework for this situation with the adoption of the Prospectus Directive together with the Prospectus Regulation and the Takeover Directive, it nevertheless remains unclear if and – as the case may be – under what circumstances the offering of Consideration Shares requires the issuance or passporting of a Securities Prospectus in addition to the takeover offer document and which procedure in the single member states has to be followed in the event the bidder/issuer intends to make use of an exemption from a potential prospectus requirement. These questions arise in every European cross-border takeover offer when shares are offered as consideration (“Exchange Offer”) and are therefore of utmost practical importance.

By maintaining in force the provisions of the Volkswagen Law concerning the capping of voting rights at 20 % and the fixing of the blocking minority at 20 %, and the right of the Federal State and the Land of Lower Saxony each to appoint two representatives to the supervisory board, Germany has failed to fulfil its obligations under Article 56(1) EC, which prohibits, in short, restrictions on movements of capital. In this contribution, the Court's ruling will be analysed and the issue of possible broader implications of the judgment with regard to general company law will be addressed.