European Business Organization Law Review 15: 443-445 443

© 2014 T.M.C.ASSER PRESS

Book Review
Günther H. Roth and Peter Kindler, The Spirit of Corporate Law – Core Princi-
ples of Corporate Law in Continental Europe (Beck – Hart – Nomos 2013), 190
pp., ISBN: 978-3-406-65511-11 (Beck), 978-1-84946-588-5 (Hart), 978-3-
8487-0474-3 (Nomos)
doi:10.1017/S1566752914001219

The title puts in clear words the authors’ ambition to describe corporate law in uni-
versal terms. The subtitle, however, seems contradictory, for it exclusively focuses
on Continental European law. Yet, this contradiction reveals much of the real cul-
tural ambitions of the book: to put Continental European tradition once again at the
centre of the stage in the corporate law debate, after years of ‘Anglo-American’
dominance. To a certain extent, it seems that the authors’ goal is to counterbalance
the cultural influence of the Anatomy of Corporate Law, which nowadays is the
standard reference work for comparative corporate law.1 Furthermore, the authors
deal only with closely held companies, while listed and widely held companies are
intentionally left out of the scope of the book.
The book rests upon a fundamental criticism of what the authors hold as the
core tenet of both UK and American corporate law, namely the ‘freedom of con-
tract theory’, according to which company law is a mechanism aimed at facilitating
contractual relations among shareholders.2 By contrast, Continental European cor-
porate law is described as a ‘regulatory policy model’, for it tries to protect a
broader range of stakeholders, in particular minority shareholders and creditors,
through mandatory rules.3 Methodologically, the authors neither follow the eco-
nomic or ‘functional’ approach to comparative law,4 nor adventure into the case-
based method applied by recent works.5 Instead, they offer a careful and very de-
tailed comparative analysis of corporate law by distinguishing four main regulatory
areas: the legal capital mechanism, corporate governance, minority protection
strategies, and external control (such as annual audit and disclosure requirement).
Regarding corporate governance issues, the book analytically addresses the dif-
ferent alternative options offered by Continental European laws, namely the ‘one

1 Reinier Kraakman, John Armour, Paul Davies, Luca Enriques, Henry B. Hansmann, Gérard

Hertig, Klaus J. Hopt Hideki Kanda and Edward B. Rock, The Anatomy of Corporate Law (Ox-
ford, Oxford University Press 2009).
2 Pp. 4-5.
3 Pp. 7-12.
4 The standard reference is: Konrad Zweigert and Hein Kötz, Einführung in die Rechtsver-

gleichung (Tübingen, Mohr Siebeck 1996), p. 33 et seq., yet this approach is also followed by the
Anatomy of Corporate Law.
5 See Mathias M. Siems and David A. Cabrelli, Comparative Company Law – A Case-based

Approach (Oxford, Hart 2013).

444 Book Review EBOR 15 (2014)

tier’ model (where the board of directors appoints an internal supervisory or audit
committee) and the ‘two tier’ model German-style (where the supervisory board
appoints the board of directors) and Italian-style (where shareholders appoint both
the supervisory board and the board of directors). Interestingly, the authors, consid-
ering no system per se superior, suggest that Germany and Austria should also
allow their companies to opt for different models, according to their individual
needs, like Italy or France.6 The fourth chapter addresses minority protection by
analytically discussing all alternative regulatory solutions aimed at balancing the
majority principle with minority protection, while the fifth chapter deals with all
forms of external controls, including the proceedings and formalities to form a
company, and disclosure duties.
The most interesting part of the book, however, is the first one, which addresses
creditor protection mechanisms and capital requirements. Most Continental European
legal systems, indeed, traditionally aim at protecting creditors through ex ante corpo-
rate law rules, while UK company law and, to a much higher degree, American law
tend to rely more on ex post insolvency law mechanisms.7 Traditionally, Continental
European models are based upon minimum capital requirements, strict rules on ex-
cessive and concealed distribution, and subordination of shareholders’ loans.
However, a closer view reveals that the distance between the UK and Continen-
tal Europe is narrower than usually described. UK companies also have a fixed
capital,8 so the most controversial topics are the minimum capital requirements and
capital maintenance rules. Regarding the former, today many (if not most) Conti-
nental European states allow the formation of private companies without a mini-
mum capital requirement, although this choice is often linked to stricter rules on
mandatory reserves aimed at protecting creditors (as is the case in Germany and
Italy 9). In this regard, the authors acknowledge that the minimum legal capital is
.

just a ‘seriousness’ threshold that counterweighs the ‘privilege’ of limited liability,

not a real creditor protection mechanism. Therefore, what matters most are the
mechanisms to prevent opportunistic decisions at creditors’ expense. In this respect,
Continental European states do not follow one and the same strategy; this becomes
clear by looking at the rules against concealed distribution, which are more effec-
tive in Germany and Austria than in France or Italy.10

6 Pp. 95-96.
7 This does not mean, however, that UK and American creditor protection is weaker than
Continental European protection (p. 6). For an overview see Federico Mucciarelli, ‘The Function
of Corporate Law and the Effects of Reincorporations in the U.S. and the EU’, 20 Tulane Journal
of International and Comparative Law (2012) p. 423 et seq.
8 Paul Davies and Sarah Worthington, Gower & Davies: Principles of Modern Company Law

(London, Sweet & Maxwell 2012), at pp. 173-174.

9 In Italy, following the reforms of 2012 and 2013, limited liability companies (società a re-

sponsabilità limitata – s.r.l.) can be incorporated even with €1 of legal capital, yet stricter rules
on accumulation of mandatory reserves apply (Arts. 2463 and 2463-bis Italian Civil Code).
10 P. 60.
Book Review 445

To get a full picture, however, it is worth stressing that on the other side of the
English Channel creditors are not neglected. It is true that subordination of share-
holder loans is unknown and that veil piercing is rare (as in most Continental Euro-
pean states though), yet concealed distribution mechanisms are not ineffective 11 .

(although they are not as strict as the German ones) and creditors are, to a certain
extent, protected from opportunistic shareholders’ and directors’ decisions, al-
though this protection is pursued mainly through ex post insolvency law strategies,
such as fraudulent and wrongful trading rules.12

Federico M. Mucciarelli

11 See Eva Micheler, ‘Disguised Returns of Capital – An Arm’s Length Approach’, 69 Cam-

bridge Law Journal (2010) p. 151.

12 Insolvency Act 1986, Sections 213 and 214. See Thomas Bachner, Creditor Protection in

Private Companies. Anglo-German Perspectives for a European Legal Discourse (Cambridge,

Cambridge University Press 2009), at p. 115 et seq.
School of Oriental and African Studies (University of London); University of Modena and
Reggio Emilia.