bluuebunny/crossref_metadata_2025 huggingface dataset:
Legal Ignorance in the Netherlands
Authors: Verheij Albert J. , F. Verheul Emil , T. De Jong Grietje
Published: April 2022

This contribution considers the role of legal ignorance in Dutch private law. After a short description of the debate on legal ignorance by Dutch scholars, the article focuses on three areas: contract law, tort law and limitation periods.

With respect to contract law, this article shows that courts allow for the nullification of a contract due to mistake of law in special circumstances: when the mistaken party was a foreigner or illiterate or when the other party was an expert who gave misinformation about relevant legal provisions.

In the field of tort law, the article first examines case law in which public bodies were held liable for unforeseeable case law by the highest administrative court. It is argued that these decisions should be viewed as a manifestation of the fact that court decisions on liability have retroactive effect. Second, in relation to survival of claims for non-pecuniary losses, it is submitted that the Supreme Court seems to interpret notifications by relatives of the deceased victim generously in order to protect them against their legal ignorance.

The article then examines case law by the Supreme Court that holds that legal ignorance does not preclude the commencement of prescription periods. However, when wrongful (legal) advice results in a loss, the Supreme Court ruled that the prescription period governing the client’s claim does not start running immediately because he will initially rely on the correctness of the advice. Regarding expiration periods and legal ignorance, the Supreme Courts seems to make a distinction between contractual and statutory expiration periods.

The article concludes by considering the prospects for legal development in this area. It is argued the question who should bear the costs of legal ignorance is a matter of risk distribution. Where the risk lies, should depend on the weighing of various factors by the courts, notably the nature of the respective parties and of the interests involved and whether or not the legally ignorant person can claim compensation from a third party such as an attorney or an insurer.
Rethinking the Need for Commercial Trusts in Civil Law Jurisdictions
Authors: Kurtulan Güner Gökçe
Published: April 2022

In this article, the need for the adoption of trusts into civilian jurisdictions has been analysed by placing a special focus on commercial trusts. It has been argued that, the trust may offer an added value for these legal systems as it is more advantageous in terms of asset management, investment and financing purposes. In the context of asset management and investment, the trust is compared with the fiduciary contract and even though both legal instruments serve the purpose of separating management and beneficial ownership; it has been concluded that the trust fulfils this function more successfully thanks to both the property dimension and the obligation dimension that are incorporated into it. In the context of traditional financing, the advantage of the trust manifests itself in case of multi-source financing – more clearly, in case of loans acquired by multiple lenders. Here, the added value of the trust is apparent with regard to the composition of common security packages, which constitutes a significant advantage from various perspectives for both borrowers and creditors.
Ownership Of Databases: Personal Data Protection And Intellectual Property Rights On Databases
Authors: Alejandre Gemma Minero
Published: April 2022

When we think on initiatives on access to and reuse of data, we must consider both the European Intellectual Property Law and the General Data Protection Regulation (GDPR). The first one provides a special intellectual property (IP) right – the sui generis right – for those makers that made a substantial investment when creating the database, whether it contains personal or non-personal data. That substantial investment can be made by just one person, but, in many cases, it is the result of the activities of many people and/or some undertakings processing and aggregating data. In the modern digital economy, data are being dubbed the ‘new oil’ and the sui generis right might be considered a right to control any access to the database, thus having an undeniable relevance. Besides, there are still important inconsistences between IP Law and the GDPR, which must be removed by the European legislator. The genuine and free consent of the data subject for the use of his/her data must remain the first step of the legal analysis.
Regulation and the Role of Law in Economic Crisis
Authors: Glinavos Ioannis
Published: April 2022

This paper contributes to the current debate on responses to the financial crisis and the role of law in paving a way out of recession, by highlighting the persistence of market-centred theories that defined the state-market relationship before the crisis. The paper begins by discussing the concept of regulation itself and discusses the extent to which the ‘credit crunch’ has shaken belief in modern capitalism. The paper then offers a discussion on the relationship of deregulation to financial crisis, arguing that there is a direct link between the receding reach of the state and market instability, drawing analogies with previous instances of market failure, like the Great Depression. On the basis of this connection, a theoretical portrayal of perceptions of the role of law in modern capitalism is attempted, where the main message is that dominant, modern perceptions of the state-market relationship allow a role for regulation but still do not recognise the state as the legitimate author of such regulation, showing a preference for market-led solutions. The paper then tests these findings against state actions in response to the ‘credit crunch’ and concludes by offering the suggestion that while the current financial crisis has shown the limitations of modern capitalism, and while it is possible that a fundamental rethink of the role of the state in the market may take place as a consequence, this rethink has yet to materialise in policy proclamations and government aspirations on a global scale.

“This financial system is no more! It has ceased to be! ‘It’s expired and gone to meet its maker! ‘It’s a stiff! Bereft of life, it rests in peace! If you hadn’t nailed ‘it to the tax payer’s perch it’d be pushing up the daisies! ‘Its metabolic processes are now ‘istory! ‘It’s off the twig! It’s kicked the bucket, it’s shuffled off its mortal coil, run down the curtain and joined the bleedin’ choir invisible!! THIS IS AN EX-FINANCIAL SYSTEM!!”

(Willem Buiter, 26 November 2008)
Reinforcing the Market for Corporate Control
Authors: Clarke Blanaid
Published: April 2022

The market for corporate control forms part of the basis of Directive 2004/25/EC on Takeover Bids. Article 20 of the Directive provides that the European Commission in 2011 must examine the Directive "in the light of the experience acquired in applying" it and, if necessary, propose its revision. The paper considers whether in revising the Directive, greater support should be given for the market for corporate control by counteracting the existing barriers to takeovers. In particular, the paper focuses on the barriers to takeovers which are introduced by the boards of the target companies ("offerees"), by shareholders and by derivative holders.
The Magnitude of EU Fundamental Freedoms: Application of the Freedom of Establishment to the Cross-Border Mergers Directive
Authors: Papadopoulos Thomas
Published: April 2022

This article will examine the 10th Company Law Directive on Cross-Border Mergers in the light of the EU fundamental freedom of establishment. The provisions of the Cross-Border Mergers Directive must comply with the fundamental freedom of establishment. This article argues that the contribution of some provisions of this Directive to freedom of establishment is questioned. It is argued that some provisions of this Directive do not fully comply with freedom of establishment and that the choices of the European legislature are definitely open to criticism. The EU fundamental freedoms could impose certain safeguards which derive directly from the Treaty on the Functioning of the European Union. The European Court of Justice (ECJ) had interpreted the freedom of establishment with regard to crossborder mergers. According to the ECJ's case law (SEVIC), cross-border mergers constitute an exercise of the freedom of establishment. This article scrutinizes the main provisions of the Cross-Border Mergers Directive and analyses their relationship with the fundamental freedom of establishment, as interpreted by the ECJ. The relationship between SEVIC and the Cross-Border Mergers Directive will also be discussed and some conclusions would be drawn. The EU Mergers and Acquisitions market is a fragment of the internal market and as such all the corporate financial mechanisms of this market must comply with the EU fundamental freedoms.
A Promising Solution? Changing the Current Russian Business Climate by Amending the Criminal Code
Authors: Orlova Alexandra V.
Published: April 2022

This article aims to explore a question of whether the situation of Russian large as well as small and medium size businesses would be improved by the introduction of the current set of economic reforms by way of the 2010 Russian Criminal Code amendments. The article concludes that the amendments are unlikely to make any difference when it comes to large enterprises given the current extra-legal relationship between big business and the state. In terms of small and medium businesses, the 2010 amendments may make it more difficult to lay criminal charges against business owners and thus reduce some of the pressure facing small and medium businesses. However, the 2010 amendments are unlikely to cause a radical shift in the overall plight of small and medium businesses.
Class Action and Class Settlement in a European Perspective
Authors: Werlauff Erik
Published: April 2022

This article analyses the options for introducing common European rules on class action lawsuits with an opt-out-model in individual cases. An analysis is made of how the risks of misuse of class actions can be prevented. The article considers the Dutch rules on class settlements and the advantage of integrating equivalent rules into a European rule set. The Danish rules, which have now been in effect for some years, are then considered.
Intergenerational Ownership Succession- A Stakeholder Perspective
Authors: Melin Leif , Sund Lars-Göran
Published: April 2022

The key to a successful transfer, of ownership of family-owned and headed businesses, to the younger generation is in most cases the incumbent. However, there are close and non-close stakeholders who wish to protect their interests. The main purpose of this article is to map the stakeholders in two models, as well as to analyze their interests and possible legal tools when intervening in an ownership succession process. Our reasoning is supported by descriptive data from a recent empirical study. Incumbents are presumed to be aware of the conflicting interests and their potential impacts. It is no wonder, that they hesitate to take the necessary initiative in a succession process! We analyze how consultants can provide a helping hand.
Vertical Price Fixing in Europe and the U.S.- The Way to a Uniform Approach for Both Markets
Authors: Hofmann Christian
Published: April 2022

The United States (US) and the European Union (EU) rely on different regimes for vertical price fixing. At first glance, this is hardly surprising. There are similar discrepancies in other fields of business law, e.g. securities regulation and corporate law. However, the fact that differences are common does not necessarily mean that they are justified. The US and the EU (as a whole as well as its member countries) are based on comparable market regimes and consumer needs. Globalization has assimilated both markets. US companies operate on the European market as actively as on their domestic turf and vice versa. They usually even use the same labels (e.g. iPad, Aspirin, Playmobil). This leads to the core question: if the markets are alike, should not the antitrust regime be as well, and if so, how should this shared regime treat vertical price fixing?
Integrating Corporate Social Responsibility in Corporate Governance Codes in the EU
Authors: Szabó Dániel Gergely , Szabó Dániel Gergely
Published: April 2022

While having different starting points, corporate social responsibility (CSR) and corporate governance have developed along similar paths and today they are linked in many different ways. As a consequence of this development, CSR is becoming an integral part of corporate governance codes in the EU, and the aim of this article is to analyse the extent of this integration. It is concluded that stakeholder-related issues in particular are now part of most codes in the EU, whereas corporate governance recommendations refer less frequently to specific CSR issues. However, specific CSR recommendations are still common, so it seems that in most codes it is recognised that there is a strong link between CSR and corporate governance. Even though this link may be widely recognised, it is also clear that the existing codes show a great variety of solutions to the integration of CSR and corporate governance codes. It is shown that for CSR the codes mostly contain specific recommendations related to transparency and that other recommendations are less specific. The vagueness of the recommendations on CSR issues seems to be common to all the codes examined. This general vagueness makes CSR recommendations 'soft' and frequently open to interpretation. It is also shown that the countries whose codes are most dominant in the field of corporate governance do not seem to be at the forefront of integration of CSR in their corporate governance codes. Furthermore, an analysis of two examples of the reporting on CSR recommendations under the comply-or-explain principle shows that the adoption of this principle for CSR disclosure may not work without measures to overcome some of the shortcomings seen hitherto in the application of the comply-or-explain principle.
The Application of EU Competition Law in the Pharmaceutical Sector: The Case of Parallel Trade
Authors: Grigoriadis Lazaros G.
Published: April 2022

Parallel trade traditionally enjoys a significant protection from European Institutions, in the belief that it fosters competition and encourages trade. However, pharmaceutical companies claim that this form of competition undermines their incentive to innovate and threatens the competitiveness of the European pharmaceutical sector. This Article analyses a) the arguments put forward in favour of and against the freedom of the parallel trade of pharmaceuticals between the EU Member States and b) the case-law relating to the parallel trade of pharmaceuticals developed by the EU courts and, more specifically, by the Court of Justice ("CJ") (former Court of Justice of the European Communities/"ECJ") and by the General Court ("GC") (former Court of First Instance of the European Communities/"CFI") in the light of EU competition law (Arts 101-102 of the TFEU).
The Risk of Ratings in Bank Capital Regulation
Authors: Alexander Kern
Published: April 2022

The article analyses the rationale of credit ratings in financial market regulation with a specific focus on bank capital regulation. Specifically, it traces the development of external credit ratings in bank capital regulation and in particular how they became a major component of Basel II. In doing so, it reviews how ratings were used in the structured finance markets before the global financial crisis began in 2007 and how their misuse contributed to the crisis. Because ratings had become an integrated feature in banking and securities market regulation, risk management in financial firms became excessively dependent on their use thereby creating agency problems and increased systemic risks in financial markets. The paper also considers the implications of the use of credit ratings in bank capital regulation for macro-prudential supervision and the control of systemic risks. It highlights the different approaches to the use of credit ratings in bank capital regulation between the European Union and the United States and suggests that the lack of harmonisation in this area could lead to market distortions and systemic risks. Finally the article concludes that credit ratings are inappropriate in prudential bank regulation especially in determining bank regulatory capital and their use should be reconsidered in the Basel III agreement.
European Bank Recovery and Resolution Directive: Recovery Proceedings for Cross-Border Banking Groups
Authors: Babis Valia SG
Published: April 2022

The EU bank recovery and resolution directive includes mechanisms for recovery (or "early intervention") for groups. These are: group recovery plans, intra-group financial assistance and coordination of early intervention measures regarding groups.

But do these group provisions ensure a consistent recovery procedure for the entire banking group across borders? While recovery tools applicable to more than one group affiliate are part of the EU regulatory framework, use of such tools across borders depends on the discretion of supervisors of group affiliates. Recovery tools can only apply across group affiliates if supervisors reach joint decisions and make use of recovery tools in a consistent, cooperative and coordinated manner across the group. This means that the effectiveness of group recovery depends greatly on the institutional architecture of supervision in the EU, and in particular, the relationships between supervisors within and beyond the SSM.
The English System of Costs: Life after the Jackson Reforms (April 2013)
Authors: Hurst Peter
Published: April 2022

Following Sir Rupert Jackson's report on the costs regime (Reforming Civil Litigation Funding and Costs in England and Wales-Implementation of Lord Justice Jackson's Recommendations: The Government Response (Cm 8041, 2011)), many procedural changes, notably affecting costs, were introduced on 1 April 2013. These include: introduction of qualified one way costs shifting, damages based agreements, increased damages and the changes to CPR Part 36 (costs implications of rejected settlement offers). The problems and uncertainties generated by this new set of costs rules will probably occupy the courts, notably the higher courts, for at least ten years.
International Tax Planning and Corporate Social Responsibility (CSR): Crucial Issues and a Proposed Assessment in the European Union Context
Authors: Cerioni Luca
Published: April 2022

The paper analyses whether international tax planning strategies which are being carried out especially by multinational groups must always be regarded as incompatible with corporate social responsibility (CSR), described as requiring companies to take into consideration the interests of the stakeholders' community, on a voluntary bases, beyond the minimum legal requirements. It discusses whether a national or a universal benchmark can be used to assess their incompatibility with CSR and whether a specific assessment would be appropriate when these corporate tax strategies are implemented within the EU and involve the exercise of fundamental freedoms.
Corporate Law and the Vermoegensordnung (Order of Assets)
Authors: Luttermann Claus
Published: April 2022

The core element of Corporate Governance is the valuation and financing of a corporation's assets. Standards and norms for financial reporting are not global but vary worldwide. Given that valuation of assets determines profits and losses for corporations, and also liability to creditors, how that valuation is carried out is critical and useful knowledge. For this reason truth is important in the accounting context, this is not merely an accounting requirement, but a legal concept. This paper looks at the attempts that have been made to provide norms and standard for financial reporting. It considers the standards developed by the International Accounting Standards Board (IASB) and the international reaction to attempts to make these standards global. German company rules demonstrate the importance of assets to the legal order. Particular attention is given to the question of 'fair value', which raises important questions when companies operate internationally. Accounting becomes a question of competition for nations looking to attract investment. The attempted monopoly of the International Financial Reporting Standards (IFRS) are contemplated in light of the question 'what is fair value?' and alternative international accounting standards.
Sticking the Landing: Making the Most of the Stakeholder Moment
Authors: Greenfield Kent
Published: April 2022

This paper illustrates that the shareholder primacy model is still the prevailing model especially as the proponents of the stakeholder model have not come up with a theoretically sound alternative. It is argued that all corporations' principal stakeholders should be protected by the imposition of fiduciary duties on managerial decision makers. Homogeneity on corporate boards can reinforce thinking that leads to bad decision making. The findings of various researchers into behavioural economics are considered. It is pointed out that the interests of the shareholders are rarely, if ever, the same as those of other stakeholders. This supports the idea that a shift away from shareholder primacy is needed. The trade-offs that are often made in managerial decision making are represented graphically and discussed as an analytical tool supporting the central thesis that fiduciary duties with a broader range are the way to ensure that decisions take account of all relevant interests.
Single Rulebook for Prudential Regulation of EU Banks: Mission Accomplished?
Authors: Babis Valia SG
Published: April 2022

This article examines the prudential aspects of the harmonised EU regulatory framework for banks, more specifically the CRR/ CRD4 package. The article examines whether the CRR/ CRD 4 framework has created a truly “single rulebook”, and identifies possible threats to the uniformity of the rulebook. The article sheds light on certain areas which have not been adequately discussed in the relevant literature and examines the EBA’s fundamental role in the harmonisation process. The article concludes with proposals for a more robust rulebook along with reinforcement of the EBA.
Punitive Damages in Europe and Plea for the Recognition of Legal Pluralism
Authors: Quarta Francesco , Büyüksagis Erdem , Ebert Ina , Meurkens Renée Charlotte
Published: April 2022

This multi-author article aims to demonstrate that, despite the traditional understanding that tort law should serve the sole purpose of remedying the harm caused as precisely as possible, there are growing indications in several continental European legal systems that damages awards are not entirely immune from extra-compensatory, punitive features. This is evident particularly with regard to moral damages, to ‘compensation’ for the violation of privacy rights and of intellectual property rights. Moreover, statutory civil sanctions, conceived of as alternatives to criminal and administrative penalties, are increasingly being adopted by national legislatures to deter anti-social behaviour. Based upon scholarly work and case law from different European jurisdictions, the authors argue that extra-compensatory damages are frequently applied by national judges, albeit not always in an overt manner, and that such a phenomenon should not be deemed a priori in conflict with the principles of European law.
Directors Duties and Liability in Corporate Groups: A Japanese Perspective
Authors: Ueda Junko
Published: April 2022

This article examines the issue of directors’ duties and civil liability from a Japanese perspective, particularly in the group context. Regulation of group companies has been widely discussed in the company law debates of Japan, but the article focuses on the reform initiative that resulted in the amendment of the Japanese Companies Act in 2014. Directors’ duties and civil liability have always been central in company law. However, when we place it in the group context, multiple difficulties arise and the facts that may require special protection could vary. The article analyses how the past and present Japanese company law, including the 2014 amendments, has attempted to cope with the multiple difficulties surrounding regulation of parentsubsidiary companies and protection of stakeholders of either company, in some typical patterns of the facts, and consider the remaining issues towards future.
Shareholder Rights and Responsibilities in the Context of Corporate Social Responsibility
Authors: Houben Robby
Published: April 2022

In this article the authors reflect in more detail on shareholder rights and responsibilities, highlighting two recent developments that could give rise to further debate, namely: shareholder’s activist conduct in the general meetings of systemic enterprises and shareholder responsibility as to voting without having an economic interest in the company in which the votes are casted (“empty voting”). Empty voting is problematic in that it allows parties to vote who do not or to a small extent bear the ultimate risk of a company. In doing so, it blurs the traditional ratio along the lines of which the shareholders are the ultimate risk bearers in a company and best placed to assess what is in the interest of the company. More in general, shareholder activism may have negative consequences for the target company, for example when activism leads to a higher risk profile of the target company. Rather than curtailing the shareholder rights, the authors plea for greater shareholder involvement in the decision-making of a (systemic) company as a counterbalance against aggressive activists.
Recognition and Legal Forms of Social Enterprise in Europe: A Critical Analysis from a Comparative Law Perspective
Authors: Fici Antonio
Published: April 2022

Social enterprise lawmaking is a growth industry. In the United States alone, over the last few years, there has been a proliferation of state laws establishing specific legal forms for social enterprises. The situation is not different in Europe, where the process began much earlier than in the United States and today at least fifteen European Union member states have specific laws for social enterprise. This article will describe the current state of the legislation on social enterprise in Europe, inquiring into its fundamental role in the development of the social economy and its particular logics as distinct from those of the for-profit capitalistic economy. It will explore the models of social enterprise regulation that seem more consistent with the economic growth inspired by the paradigms of the social economy. It will finally explain why, in regulating and shaping social enterprise, the model of the social enterprise in the cooperative form is to be preferred to that of the social enterprise in the company form.
Investment Disputes under CETA: From Gold Standards to Best Practices?
Authors: Pantaleo Luca
Published: April 2022

This article examines the dispute settlement mechanism established under the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada. The mechanism in question is compared to other existing arbitral tribunals, such as those established under national BITs of EU Member States, and those adopted by the United States and Canada in their respective model BIT. NAFTA is also used as a term of comparison. The paper argues that in light of the innovations introduced by CETA, the latter creates a very advanced and carefully drafted system.
The Allocation of International Responsibility in the Context of Investor-State Dispute Settlement Mechanisms Established by EU International Agreements
Authors: Palchetti Paolo
Published: April 2022

The present paper addresses the problem of determining who, between the EU and its member states, must bear international responsibility for the treatment afforded to a foreign investor. The main issue in this respect appears to be whether, under international law, the way in which competences are distributed between the organization and member states may be a criterion for the allocation of international responsibility. It is submitted that the view that international responsibility should correspond to competence is not generally accepted in international practice. The existence of a special rule of attribution applicable to the EU is also doubtful. Whatever the solution to be given to such problem under general international law, however, the allocation of international responsibility between the EU and its member states will mainly depend on the legal regime established by future investment treaties, or by trade agreements with investment chapters, that the EU will conclude with third states. In this respect, by leaving to the EU the decision as to who will act as the respondent, the investor-state dispute settlement mechanism established under the draft text of CETA will permit to the EU to foster a competence-based approach to the problem of allocating international responsibility.
The Robustness of EU Financial Crimes Legislation: A Critical Review of the EU and UK Anti-Fraud and Money Laundering Scheme
Authors: Herlin-Karnell Ester
Published: April 2022

The paper investigates the European Union’s (EU) fight against crime as partly one of establishing the EU as an “Area of Freedom, Security and Justice” (AFSJ) and partly one of facilitating the EU internal market. We discuss the EU law on the fight against fraud and money laundering by zooming in on some recent and pertinent legal measures such as the Fourth Money Laundering Directive and the recent proposal for a Directive on Fraud. In addition, we address the key challenges in the United Kingdom when complying with the EU guidelines and possible consequences of Brexit.
Equity Release, Reverse Mortgage and Home Equity Conversion: Perspectives in Different Law Systems and Questions for Harmonization at EU Level
Authors: Settanni Giuseppe
Published: April 2022

In developed countries, elderly are often homeowners, but sometimes they face with problems of liquidity since their pension incomes do not always provide them with adequate revenues. For this reason, some solutions have been studied in different law systems to grant such people the necessary income for their needs by using their householders’ rights.

For the purposes of this analysis, the reference is to home equity conversion mechanisms, among which equity release instruments are probably the most common ones. Using such instruments, householders’ rights can become liquid and be of great benefit for both homeowners and the market in general.

Reverse mortgage is one of the equity release instruments which are popular in the market. However, reverse mortgage is regulated in different ways in many law systems. This paper analyses how EU (with the addition of some extra-EU) law systems regulate reverse mortgage, highlighting the main legal differences among them, peculiarities and problems. A specific analysis is carried out with regard to new legislation recently adopted in Italy about reverse mortgage (c.d. prestito vitalizio ipotecario).

The final reflections will regard the possibility – or, better, the need – of a wide harmonization at EU level in relation to legal provisions regarding reverse mortgage. This would create a clearer framework for all Member States, in which homeowners of different law countries could easily profit of an instrument regulated at high level and take advantage – with no doubt and uncertainty for them – of their householders’ rights in order to make them liquid, with the final objective of giving a practical answer to the crisis we are facing with.
Striking a Fair Balance in UK Takeover Law: Market Interests, Power of Regulation, and Enforcement
Authors: Lee Joseph
Published: April 2022

In this article, the author identifies the main characteristics of the UK takeover regulatory regime, which is unique compared to other models in advanced capital markets. The principal values of the Takeover Code, the functional constitution of the Takeover Panel, the expertise-based approach to enforcement, and the minimal intervention of the judiciary help strike a fair balance among various market interests. With this model, minority shareholder’s engagement, employee’s participation, and public interest in market integrity have been addressed within the principle-based investor primacy while not destabilising the UK market for corporate control because of incumbent shareholder litigation and other regulatory actions. Of many rules, the disclosure requirement is being used to target various areas prone to abuse such as stake-building, virtual bid, deal protection arrangement, and post-takeover behaviour. The UK market has faced many cross-border takeovers and is competing with other major financial markets for corporate listings, this model has so far proven to be a resilient best market standard for takeovers.
Zone of Insolvency, Directors Duties and Creditors Protection in U.S.
Authors: Scarlino Danilo
Published: April 2022

When a company is navigating in the “zone of insolvency” – usually defined as the extent of the risk that creditors will not be paid – its directors face the dilemma related to their managerial decisions in the light of the foreseeable effects and risks for shareholders and for creditors. It is a generally accepted principle in U.S. that when a company is approaching such “zone of insolvency” or is in the “vicinity of insolvency” no fiduciary duties are owned to the creditors as expression of the shareholder primacy rule. 

The aim of this article is to demonstrate the existence of provisions of law together with important policy reasons that impose the duties shifting to creditors in the zone of insolvency and that allow to create a presumption of directors’ knowledge of when their duties shift, which means when the company is getting closer to insolvency. Accordingly, this article seeks to demonstrate that directors’ duties toward creditors should shift on the ground of two reasons: Firstly, the directors’ and shareholders’ opportunistic behavior – together with the opportunistic behavior of well-informed creditors–. Secondly, the need to preserve value for creditors. By comparing U.S. principles with UK insolvency system the conclusion is in the sense that in the zone of insolvency directors should have a clear duty to take every reasonable step in order to minimize the risk of potential losses for creditors.

Moreover, this article shows that in U.S. from the interconnection of the MD&A provisions with the law of avoidable preferences, a general principle accordingly can be inferred. It brings that directors have the duty to know when the company is in trouble and therefore that insolvency is looming at the horizon, with a presumption that covers the period of time starting from the last financial statements release until the day of the bankruptcy filing. Specifically, the law of preferences as section 547 of the Bankruptcy Code – by striking down last-minute grabs – conceptually admits the principle that directors together with control shareholders and strong creditors know longer time in advance that the company will face a liquidation proceeding than other creditors and outsiders. As a consequence, the Delaware approach of allowing full discretion to the board of directors even at the “end game” stage with its actual risk of opportunistic behavior (asset dilution, asset substitution, debt dilution, conflicts among creditors) is incongruent with the retrospective approach of both state creditors’ remedies and federal bankruptcy law that after insolvency challenges distributions to shareholders and favors creditors and seeks recoupment. Therefore, this article argues for a pre-insolvency, “end stage” rule of constraint by demonstrating that the UK wrongful trading liability of directors is more coherent and congruent with majority legal systems’ post-bankruptcy recapture approaches than the U.S. one found in the Delaware jurisprudence.
Supervision and Audit of the Greek Agricultural Cooperatives: A Critical Approach on Legislation
Authors: Douvitsa Ifigeneia
Published: April 2022

The supervision and audit of agricultural cooperatives in Greece are neither defined nor used with a clear content in the Greek legal texts. Nevertheless, it has been argued that supervision is mainly associated with broad monitoring duties, including advice and guidance, whereas audit is usually limited to a financial and legal control of the enterprise.

 The aforementioned institutions have not been adequately prescribed by law and effectively applied in practice, in order to address the cooperatives’ needs and protect the members’, the minority’s and the public interest. The recent legal reforms, since the outbreak of the crisis, brought to the fore the topic of cooperative supervision and audit. Thus, a question is posed of whether they have been a positive step forward.

The present article, therefore, aiming to analyze relevant past and recent laws, concluded that despite minor innovations the shortcoming of the above institutions are yet to be resolved. Thus, a politically independent supervisory authority, a cooperative- oriented audit examining the cooperative’s impact to its members, the environment and the local community, as well as the formation of a scientific committee to monitor the cooperative laws’ implementation are suggested as necessary changes for the improvement of the existing regime.
General Remarks on Civil Liability in the European Context
Authors: Alpa Guido
Published: April 2022

When contemplating the evolution of the civil liability system in the European context, we should consider at least three different perspectives: (i) the establishment and application of rules governing civil liability laid down directly by the Treaty on the Functioning the European Union (TFEU ) for harm caused by its institutions or by its agents in the exercise of their functions (Art. 340); (ii) the establishment and application of rules regarding Member States’ liability for infringement of EU rules, in accordance with the general rules of the Treaty (Art. 4) and the principles developed by the Court of Justice; (iii) the establishment and application of rules deriving from European sources that define special type of torts.

 

The rules may be provided either by regulations or directives. However, rules, in these cases, are not always “complete”: in other words, neither the EU rules nor the principles developed by the Court of Justice always identify all the necessary components of the tortious act, namely the criterion of imputation (wilfulness, fault, risk), the interest harmed, the link of causation between the act and the harmful effect, the injury.
The Three Shades of Tax Avoidance of Corporate Groups: Company Law, Ethics and the Multiplicity of Jurisdictions Involved
Authors: Dine Janet , Dine Janet
Published: April 2022

In 2011 Apple’s Irish subsidiary had a profit of 16 billion Euros but only 50 million of them were charged as tax in Ireland. Apple ended up paying a tax rate of only 0.005% in 2014 on the profits of its Irish subsidiary down from an anyway low 1% in 2003. This is but one example of so-called “jurisdiction arbitrage” by which large companies avoid or evade liabilities. Company law provides the multinationals with the legal tools which enable tax avoidance. MNEs, which are a series of inter-linked companies formed in various national legal systems, incorporate subsidiaries in jurisdictions which provide them with legal yet unethical tax loopholes. Basic company law principles such as the principle of separate legal personality and limited liability have evolved into a veil which protects multinationals from external control on their tax affairs at multiple levels. Each member of the group is deemed as of independent from each other in most instances. Yet, taxing its profits within the jurisdiction where they were actually produced could prove impossible. The article argues that the principles of separate legal personality and limited liability in their current form are unfit for corporate groups when issues of taxation are at stake. They should be significantly reformed, so that each member of the group is viewed as established in the member state where it operates with its revenues shielded and – most importantly – taxed in that jurisdiction. When this proves to be too difficult or complicated, the corporate veil should be lifted altogether and the mother company of the group should be taxed for the entire set of profits made by all the members of the group in the EU.
Boards and Sustainable Value Creation: The Legal Entity, Co-Determination and Other Means
Authors: Veldman Jeroen
Published: April 2022

Boards of directors face growing pressures to engage with systemic risks and sustainable value creation. In this article I explore how an entity view in company law provides a consideration of the status, architecture and purpose of the modern corporation that theoretically offers the capacity to integrate such issues in corporate strategy. I also explore how specific models of corporate architecture such as co-determination relate to such an entity view. Exploring different perspectives on the VW case I show how a dominant view of corporate governance conflicts with the assumptions underlying co-determination. In relation to these issues I argue that the entity view and co-determination do not provide panacea for the reform of corporate governance theory and practice, but provide conceptual building blocks that may be used to engage in a creative way with notions of status, architecture and purpose in order to enhance the capacity for company directors to engage with systemic risks and sustainable value creation in corporate strategy.
How Single is the Single Resolution Mechanism?
Authors: Busch Danny , Louisse Marije , van Rijn Mirik B.J.
Published: April 2022

Since the first of January 2016, the Single Resolution Mechanism (SRM) has become fully operational. For the Member States of the European Banking Union the new regime entails a transferral of the decision-making on failing banks to the European level, specifically the Single Resolution Board (SRB). The political sensitivity hereof is illustrated by the European and Italian reaction to the mounting troubles in some parts of the Italian banking sector. The new European regime raises the question if, and if so to what degree, Member States participating in the European Banking Union (EBU Member States) retain discretion in determining the course of action for, and future of, a troubled bank. This question is explored along three lines of inquiry. First, we analyse the degree of harmonisation provided for by the BBRD and SRM. The second line of inquiry analyses EBU Member States’ influence in the SRB’s decisionmaking process. The third line of inquiry considers the possibilities (if any) for a public recapitalisation of troubled banks without applying the new general bail-in standard.

 Our first line of inquiry leads us to conclude that the EBU Member States have surrendered the decision-making on bank resolution to the EBU level, specifically to the SRB. The SRM regulation, consequently, provides for maximum harmonisation, leaving no room for national resolution tools. National resolution powers which operate and compete in the same area as the SRM, such as the Dutch nationalisation law, must thus be held as inapplicable.

In the second line of inquiry we found that the SRM has both a supranational and an intergovernmental dimension. While the SRB in its executive session has a strong supranational character Member State influence in bank resolution decision remains present through the involvement of the Council and the SRB in plenary session in key decisions.

In the third line we conclude that the rules imposed by the BRRD and SRM Regulation in combination with the State aid regime have rendered public recapitalisation without a bail-in virtually impossible.
Assessing Conduct Risk: A New Challenge for Sustainable Corporate Governance
Authors: Manes Paola
Published: April 2022

This paper addresses the topic of the assessment and management of conduct risk within financial institutions. The research also focuses on some of the new major governance topics on the board’s agenda, stressing the value of corporate reputation within the company’s culture. Attention is also drawn to the need to introduce a new dynamic, system-wide perspective on culture within financial organizations, attempting to align formal and informal aspects and to focus on individuals. The topic of conduct is thus explored from the point of view of individuals within the organization, analysing different factors which might influence their behaviour, such as incentives, peer influence and other psychological factors. The attention is then focused on the importance for people at any level of the organizational structure to spread the values set from the top. Finally, possible solutions are suggested, such as the introduction of internal models tailored to assess the organizational conduct.

Conduct risk, financial institutions, company’s culture, individuals, board’s agenda, behaviour, incentives, values, internal models, organization.
Who Pays When Things Go Wrong? Online Financial Fraud and Consumer Protection in Scandinavia and Europe
Authors: Kjørven Marte Eidsand
Published: April 2022

Online financial fraud targeted at consumers through phishing attacks and identity theft, for example, is a growing problem. Because it can be difficult to recover losses from the person who committed the fraud, the loss will often remain with either the financial institution or the consumer. This paper’s research question relates to how losses following online financial fraud are and should be allocated between these two parties according to relevant Scandinavian and European law. For payment-transaction fraud, questions of loss allocation are regulated by national rules implementing the liability regime for unauthorised payment transactions under the payment services directive. For other financial services, these questions are resolved according to general rules on contract and tort. The analysis shows that consumers are often left to deal with the losses caused by online financial fraud. It is argued that the digitalisation of the financial services industry has in practice led to a shift in who bears the risk for attacks against financial institutions. This conflicts with the EU’s stated policy goals to provide strong consumer protection in the field of cybercrime. The paper concludes that a larger portion of the losses incurred from online financial fraud should be allocated to financial institutions.

financial services, digitalisation, fraud, consumer protection, payment services, liability, unauthorised payment transactions, electronic signatures, cyber security
Legal Challenges in the Realm of InsurTech
Authors: Manes Paola
Published: April 2022

The paper addresses the topic of digital innovation in the insurance field and the challenges it poses for both companies and regulators. The paper starts with showing how data-driven technologies represent a priceless resource for insurers, allowing new and revolutionary methods to classify policyholders in different merit categories according to risk. The paper then turns to the analysis of new tools at the centre of the recent technological development (i.e. Blockchain and smart contracts) and focuses on the role of Big Data in the insurance sector. The paper thus concludes with some considerations on why access to more types of personal data should be allowed to insurers by regulators, presenting potential advantages not only for the companies themselves, but also for customers and the financial system in general.

FinTech, InsurTech, Innovation, BigData, Blockchain, Technology, Personal Data, Insurance, Credit Scoring, Risk.