Band 8, Heft 2

A specter is haunting Corporate America – the specter of Directors' Dictatorship. In the last few years, also in the light of the financial crisis in which the world has plummeted, the concern for self-referential and unaccountable boards has gained momentum and prompted several important reforms aimed at enhancing shareholders' democracy. The reforms recently implemented or currently under consideration both at the state and federal levels might however prove to be too timid to exorcise this specter. This Article discusses the limits of the latest legislative and regulatory initiatives and advances a new, bold if not heterodox, proposal to empower shareholders and better align the composition of the board to the interests of all the owners of the corporation.

This article examines the shareholder-centric model of takeover regulation in the UK, and explores two recent developments that potentially impact on this model. The first is the rise of schemes of arrangement as an alternative mechanism for effecting takeovers. Schemes have become the mechanism of choice for recommended bids in the UK, and yet they offer significantly less protection to minority shareholders than traditional bids. The justifications for this discrepancy are explored and it is suggested that the lower level of minority protection is explicable, and acceptable, once the different reasons for minority protection in a traditional bid and in a scheme are understood. The second development follows the successful takeover of Cadbury by Kraft in 2010, and comprises various suggestions for the reform of the UK takeover regime put forward by the Code Committee of the Takeover Panel. This article concentrates on a number of recommendations which, if accepted, would impact on the existing shareholder-centric nature of the UK model. In particular the position of non-shareholder stakeholders in a takeover is examined, as is the role of short term shareholders in the target, and the position of the bidder shareholders is also considered. The Code Committee's proposals in relation to these matters are assessed, but it is suggested that no reform of UK takeover law is required to deal with these issues at the present time.

This article contributes to the ongoing discussion on the normative efficiency of strategic control and the operational oversight of business in public limited companies from the Eastern European point of view, especially since some Polish regulation could be seen as an example of best practice for international shareholders. The article will attempt to answer the question: Using the appropriate legal tools and instruments available under Polish company law, is a balance of power possible within a corporation's bodies? It will consider various aspects of company law such as: the composition, powers and functioning of management boards as well as; the specific position and related duties of supervisors, their conflicts of interest, the role of external auditors, liability, the expected behavior of shareholders and the use of business judgment rules. There are certain factors and underlying forces which determine a divergence of the Polish regulation from that of the celebrated theories in Western Europe. The evidence of empirical observation regarding the type of ownership structure leads to an exceptional legal diversification of the monitoring and enforcement of corporate governance and subsequently allows us to see the advantages and disadvantages of such a system. More than three years after the begin of the economic crisis, it is necessary to review recent evidence and the possible impacts of the forthcoming EC measures on ‘crisis management’.

This article argues that a mandatory rule of at will revocability of company directors is typical of European civil law. The article shows that the rule is widely spread on the European continent, but not as a result of harmonization efforts of the European Union. Instead, the rule has its historical foundations in the early development of French law. It first appeared as a general rule in Napoleon's codification of commercial law and subsequently extended to the other major jurisdictions in the French and German civil law family. Despite some tempering of the rule, especially in the German legal tradition, it still plays an important role in European civil law jurisdictions. In traditional common law, in contrast, the rule is extraneous. It did not appear in old common law, was merely a default rule when first introduced in the United Kingdom, and is still not mandatory in the United States. These novel findings shed important light on some other differences in company law, and possibly also in prevailing stock ownership structures, between civil law and common law jurisdictions, and thus lay a promising basis for further research.

The complex business structure of corporate groups has many legislative challenges. One such issue is the operation of avoidance provisions in the bankruptcy context. The paper investigates this matter focusing on the recent recommendations made by UNCITRAL in this area. The paper unearths the underlying principles of the new proposals against the backdrop of the “entity law” versus “enterprise law” debate (regarding groups regulation) and the general goals of bankruptcy laws, as well as considers the extent to which these proposals are desirable. The paper also discusses the relationship between avoidance provisions and other solutions for the bankruptcy of groups and the problems which arise where multiple jurisdictions are affected by voidable transactions.

The financial crisis of 2007–2009 now lies sufficiently far behind us to allow a first appraisal of the regulatory consequences that followed. As distinguished from asset managers, regulators cannot act countercyclically. Regulatory windows of opportunity remain open only for very brief periods and close quickly. It is not realistic to expect that banks can be prevented from once again taking on increasing risk. The pressure on them to show profitability is simply to great. Regulators are thus best advised to concentrate on imposing appropriate prudential requirements. The distribution of authority among the various supervisory agencies and the means of coordinating their activities need to be reassessed; in particular, the role that should properly be assigned to the central banks has not yet been clarified.