Comparative Corporate Law

Marco Ventoruzzo
NLS of India University, Bangalore
Spring 2009
ROSS A. WILSON v. LOUISIANA-PACIFIC RESOURCES, INC.
(138 Cal. App. 3d 216)
ROSS A. WILSON v. LOUISIANA-PACIFIC
RESOURCES, INC.
(138 Cal. App. 3d 216)
 Limited
Limitedliability
liabilitycompanies
companies

type of minimum
country setup costs
company capital
Austria GesmbH 35,000 3,500

France SARL 1 450

Germany GmbH 25,000 1,000

Italy Srl 10,000 2,750

Luxemburg SARL 12,500 2,300

Netherlands BV 18,000 1,750

Spain SL 3,010 600

UK Ltd 2 425

Source: Becht et alt., 2006

Source: Becht et alt., 2006
1000
1000

other EU

germany

1999
1999 2001
2001 2003
2003

Centros
Centros Uberseering
Uberseering Inspire
InspireArt
Art
Source: Becht et alt., 2006
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Par. 23(5) “Aktiengesetz”: “The
articles of incorporation may opt
out of specific provisions of this
Statute only if the Statute
explicitly so permits. The articles
may contain additional
provisions, except as to matters
that are conclusively dealt with in
this Act.
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 Some elements looked at to disregard the
corporate structure
(DeWitt test – 540 F.2d 681 (4th Cir.1976)

• Undercapitalization
• Failure to observe corporate formalities (including
absence of corporate records, accounting, etc.)
• Non-payment of dividends
• Siphoning of corporate funds by dominant shareholder
(more generally, commingling of funds and assets
between individual sh. and corporation)
• Non-functioning of officers and directors beside
defendant
• Passivity of other sh. other than defendant
• …
Piercing
Piercing: different approaches
Incorporating and Piercing
USA vs.
Some Civil Law Countries
Practical Implications?
Your attempts are just
mildly annoying…
Incorporation Process
(in some civil law countries)

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Articles of association
Name

Period (duration)

Purpose
Capital

Internal org.

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Articles of association
Name

Period (duration)

Purpose
Capital

Internal org.

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Capital

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Capital

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Capital: different approaches

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Eligible contributions

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Contributions in kind (property): different
approaches

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 Maximum
Dividend
Profit/Loss of Distributable to
Business Unit Profit/Loss of the
Corporation A Each Business
Of A Business Unit
as a Whole Unit (all other
variables being
equal)

B 10 10
Situatio
110
n1
C 100 100

B -5 0
Situatio
95
n3
C 100 95

B 20 5
Situatio
5
n4
C - 15
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0 32
(c) Marco Ventoruzzo 33
No stockholder shall sell to third parties
his stock or any portion thereof without
first having given written notice of such
intention to this Corporation and to each
other stockholder.
During the fifteen days succeeding the
announcement each other stockholder
shall have the right to purchase such
stock at the same conditions offered by
third parties.
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No stockholder shall sell or otherwise
transfer his stock or any portion thereof
without first having given written notice of
such intention to this Corporation and to
each other stockholder. Upon such notice
the Corporation shall promptly evaluate
the stock…
During the fifteen days succeeding the
announcement each other stockholder
shall have the right to purchase such
stock at the price set forth by the
Corporation… (c) Marco Ventoruzzo 35
Share transfer restrictions: different
approaches

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The problem of the choice

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 Major Sources and their Evolution
• Legislative Decree n. 58 of 1998 (new governance
rules for listed corporations);
• Legislative Decree n. 5 of 2003 (reform of the general
corporate law contained in the Civil Code);
• Corporate Governance Code, March 2006 version,
adopted by the Italian Stock Exchange (comply or
explain, but…);
• Law n. 262 of 2005 (reaction to financial scandals);
• Ledislative Decree n. 303 of 2006 (corrects the Law
n. 262 of 2005).
A Closer Look at the Governance of a
Listed Corporation

non-executive independent appointed by the minority

Board Committees
Alternative Governance Systems: Two-tier
System

non-executive independent appointed by the minority

Alternative Governance Systems: One-Tier
System

non-executive independent appointed by the minority

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Absolute prohibition Permissible any
of any conflicted transaction conflicted transaction

Disclosure

Procedural rules

Substantive fairness
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Suing the directors

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57
Directors’ Liability

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cash

shares
shares

s
a re
sh
shares
shares
Merger vs. Consolidation
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 Takeover of EDF-Transalpina over Edison
euro (October 2005)

shares
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 Average largest shareholder (%)

51,98
48,14
46,13

37,91

18,26

France Germany Italy Spain U.K.

Source: Van der Elst (2004)
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