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Article

Access_open The Norm of Integrity in Corporate Governance Codes: Could It Be Made Enforceable?

Journal The Dovenschmidt Quarterly, Issue 2 2015
Keywords corporate governance, integrity, legal strategies, Goldman Sachs
Authors B.T.M. Steins Bisschop
AbstractAuthor's information

    The faring of Goldman Sachs during the financial crisis of 2008 is discussed against the background of legal instruments that were employed to avoid its failure. This discussion leads to the conclusion that in this case, the limits of classical legal instruments were reached. To further good corporate governance, the legal relevance of the term ‘integrity’ is explored. It is concluded that the legal term of integrity is used universally in corporate governance codes, but is not operational and therefore not enforceable. An attempt is made to redefine this general principle into a more operational term. This is tested in the case of Goldman Sachs’ executive Jon Winkelried. It is assumed that he has violated the standard of integrity but also that there were no enforceable legal means to sanction his behaviour. The conclusion is that the more operational interpretation of the term integrity could, in this case, have resulted in an enforceable legal instrument to sanction behaviour that is contrary to the norm of integrity. This operational term of integrity could aid in the debate on furthering good corporate governance through enforceable legal strategies.


B.T.M. Steins Bisschop
Prof. Dr. Bas T.M. Steins Bisschop holds a chair Corporate Law and Governance at the Faculty of Law of Maastricht University and a chair Corporate Law at Nyenrode Business University. He is partner of a boutique law firm in The Hague, The Netherlands.
Article

Access_open From Individuals to Organizations: The Puzzle of Organizational Liability in Tort Law

Journal The Dovenschmidt Quarterly, Issue 2 2015
Keywords organizational liability, tort law, organizational design, organizational wrongdoing, law and economics
Authors Klaus Heine and Kateryna Grabovets
AbstractAuthor's information

    Organizational accidents have two generic sources: individual wrongdoings and organizational failures. Economic analysis of tort law is methodologically based on the “fiction” (Gordon 2013) of a rational individual, from which “simple rules for a complex world” (Epstein 1995) are derived. As a result, organizational wrongdoing boils down to a simple principal-agent problem, neglecting the complexity of organizational reality. We shed more light on organizational factors as a separate trigger of organizational wrongdoing. We take an interdisciplinary perspective on the problem, which challenges traditional economic analysis of tort law with insights drawn from organizational science. Moreover, we demonstrate how tort law and economic analysis can be enriched with these insights.


Klaus Heine
Prof. Dr. Klaus Heine (Corresponding author), Jean Monnet Chair of Economic Analysis of European Law, Erasmus School of Law – RILE, Erasmus University Rotterdam, Burgemeester Oudlaan 50, Room J6-59, Postbus 1738, NL-3000 DR Rotterdam, The Netherlands. Tel: 0031 (0)10 4082691; Fax: 0031 (0)10 4089191.

Kateryna Grabovets
Dr. Kateryna Grabovets, Rotterdam Business School (RBS), Rotterdam University of​Applied‍ Sci‍ences,‍ Kralingse Zoom 91, Room C3.121, 3063 ND Rotterdam; P.O. Box 25035, 3001 HA Rotterdam, The Netherlands.​Tel:‍ 0031‍ (0)10‍ 7946243. k.a.grabovets@hr.nl
Article

Access_open The 2015 Proposal for an EU Directive on the Societas Unius Personae (SUP)

Another Attempt to Square the Circle?

Journal The Dovenschmidt Quarterly, Issue 2 2015
Keywords EU law harmonisation, single member private companies, Proposed SUP Directive, European ‘trade mark’
Authors Stephan Rammeloo
AbstractAuthor's information

    Stimulating business throughout the Single Market, not in the least for Small- and Medium-Sized Enterprises (SMEs), is one of the key priorities of the EU’s ten-year growth strategy, ‘Europe 2020’. One of the strategies to achieve this goal is the recently developed legal concept of a ‘European trademark’ for single member private limited liability companies duly established under the laws of any EU Member State and complying with preconditions required by a draft Proposal for a Directive on the Societas Unius Personae (SUP). The 2015 Compromising text, having replaced the initial 2014 Draft for a Directive requires to be analysed in view of its ‘scope’ (functional and geographical reach). Furthermore, attention is given to matters of formation and ‘long distance’ registration, share capital, internal organization and functioning of company organs, the functioning of SUP’s as stand alone companies or SUP’s embedded in company group or chain structures. Critical observations inter alia focus on relinquished provisions on the SUP’s seat as well as the powers of SUP organs and on ‘national law’ creeping in the Proposed Directive more and more at the cost of legal certainty and legal coherence between EU law instruments relevant to private limited liability companies.


Stephan Rammeloo
Associate Professor EU Company Law, Private International Law and Comparative Law, Maastricht University.
Article

Access_open Directors’ Disqualification in the Netherlands

An International Comparative Re-Evaluation of an Amended Disqualification Proposal

Journal The Dovenschmidt Quarterly, Issue 1 2015
Keywords directors’ disqualification, directors’ liability, fraud, company law, insolvency law
Authors Tom Reker
AbstractAuthor's information

    In response to the effects of the global financial crisis on bankruptcy tendencies and the role of fraudulent company directors within that context, the Dutch government has introduced a proposal for a civil law directors’ disqualification instrument. This proposal aims to prevent both fraudulent conduct (by barring directors) and financial harm to corporate stakeholders, as well as to safeguard competitiveness and the trust which is necessary for effective trade. The fact that Dutch criminal law already allows for disqualification of directors in certain circumstances, which are partly similar to those in the proposal, raises doubts about the necessity of a civil law equivalent. This article concludes that the current proposal seems to have lost value vis-à-vis an earlier draft due to alterations to the disqualification and exculpation criteria, which may result in an overlap of the civil law and criminal law instruments. Consequently, there is a more pressing need for demarcation and reallocation of certain aspects of the proposal. By comparing the proposal with foreign (UK, US, Australian and German) counterparts, several suggestions are formulated to both counteract the overlap which the proposal may cause in Dutch law and to contribute to a model of effective disqualification instruments in general.


Tom Reker
Tom Reker recently graduated from the Leiden Law School, Leiden University, Leiden, The Netherlands. Email: tomreker_1@hotmail.com.
Article

Access_open Corporate Social Responsibility via Shareholders’ Proposals

Journal The Dovenschmidt Quarterly, Issue 1 2015
Keywords corporate social responsibility, shareholders, Rule 14a-8, social proposals, strategy
Authors Maria Paz Godoy Uson
AbstractAuthor's information

    Can shareholders’ proposals be considered as a mainstream alternative to incorporate social and environmental policies into the core businesses strategy? Proposing non-financial resolutions at the general meeting of shareholders is a form of shareholders’ activism that is shaping company’s direction. The American court case Lovenheim v. Iroquois Brands, Ltd. confirms that social and environmental issues, when significantly related to the core business, can give rise to new business directions firmly promoted by shareholders, resting authorial power to the board of directors in conducting the company’s direction. The US SEC Rule 14a-8 is widely used by social activists and institutional investors to influence the direction of business in becoming more sustainable. In virtue of the American Rule 14a-8, shareholders may include proposals in the company’s proxy materials and, thereby, compel a vote on the issue at the annual shareholders’ meeting. The result is that American shareholders’ proposals are being considered as an effective gateway to improve corporations’ social and environmental behaviour. This article examines, from a comparative perspective, the further developments of shareholders’ social proposals with the attempt to incorporate social and environmental policies into the core business. The article also suggests that the increasing demand of social proposals promoted by American shareholders versus the limited activity of shareholders’ proposals in Continental European jurisdictions is precipitating the process of converge between the main corporate governance models; the shareholder-oriented model and the stakeholder-oriented model, respectively. The issue of CSR via shareholders’ proposals as presented here is primarily based on literature and various cases related to SEC 14a-8, more in particular on lessons drawn from Lovenheim v. Iroquois Brands, Ltd.


Maria Paz Godoy Uson
PhD Fellow Maastricht University.
Article

Access_open Independent Supervisory Directors in Family-Controlled Publicly Listed Corporations

Is There a Need to Revisit the EU Independence Standards?

Journal The Dovenschmidt Quarterly, Issue 1 2015
Keywords corporate governance, board independence, independent non-executive or supervisory directors, listed family businesses, minority expropriation problem
Authors Fabian Imach
AbstractAuthor's information

    This contribution analyzes whether the current focus of the EU regulator on empowering independent directors is effective in corporations with a concentrated (family) ownership structure. The basic hypothesis of this contribution is that, contrary to the excessively optimistic expectations of the EU regulator, there are serious inefficiencies in the concept of independent directors when it comes to concentrated (family) ownership structures. The contribution relies on a series of empirical studies indicating a positive correlation between operating performance and family influence in European stock corporations.


Fabian Imach
Fabian Imach is management consultant at Societaet CHORVS AG, Gesellschaft für disruptive Wettbewerbsgestaltung in Düsseldorf. He has previously worked for BMW AG, JAFFÉ Rechtsanwälte Insolvenzverwalter (Lawyers and Insolvency Administrators) and Porsche Consulting GmbH. He holds a Master degree from Maastricht University, Faculty of Law.
Editorial

Access_open Guest Editorial

Special Issue on Cooperatives

Journal The Dovenschmidt Quarterly, Issue 4 2014
Authors Ger J.H. van der Sangen
Author's information

Ger J.H. van der Sangen
Dr Ger J.H. van der Sangen is Associate Professor Company Law and Securities Law at Tilburg Law School, Department of Business Law, and senior fellow of the Tilburg Center for Company Law.
Article

Access_open The Essential Role of Cooperative Law

Journal The Dovenschmidt Quarterly, Issue 4 2014
Keywords comparative cooperative law, organizational law, mutual purpose, cooperative identity, social function
Authors Antonio Fici
AbstractAuthor's information

    The idea that cooperative law is essential for the development of cooperatives is not new, but only lately is it spreading rapidly within cooperative circles and urging representative entities of the cooperative movement to take concrete actions. Also in light of this renewed interest towards the cooperative legal theory, this article will seek to demonstrate that recognizing and protecting a distinct identity based on a specific purpose constitute the essential role of cooperative law. The article will subsequently discuss, also from a comparative legal perspective, the nature and essence of the cooperative purpose and some related regulation issues.


Antonio Fici
Professor of Private Law at the University of Molise and of Comparative Cooperative Law at the L.U.M.S.A. of Rome.
Article

Access_open Ownership, Governance and Related Trade-Offs in Agricultural Cooperatives

Journal The Dovenschmidt Quarterly, Issue 4 2014
Keywords investment constraints, collective decision-making, organizational complexity, agricultural cooperative, residual ownership rights
Authors Constantine Iliopoulos
AbstractAuthor's information

    Agricultural cooperatives represent a key institutional arrangement in the world food and agriculture industries. Understanding these business organizations by adopting multi-disciplinary perspectives serves both scholarly and societal needs. This article addresses two issues: (1) how agricultural cooperatives choose from a plethora of ownership and governance features and (2) what are the main trade-offs cooperatives face in making these choices. Both issues have important implications for the efficiency of collective entrepreneurship organizations in food supply chains and thus for food nutrition security and food quality. The article proffers observations based on the extant literature and the author’s field experience. It is concluded that agricultural cooperatives choose ownership and governance features in an attempt to attract risk capital for investments while optimizing collective decision-making efficiency. The main trade-offs that cooperatives address while making these choices are between (1) investor mentality and member-patron control, (2) organizational complexity and vagueness of ownership rights, (3) the need for risk capital and member control, (4) organizational complexity and member control and (5) management monitoring costs and the costs of collective decision-making. These observations are highly relevant for organizational scholars, cooperative practitioners and policymakers as they inform decision-making in cooperatives in more than one way.


Constantine Iliopoulos
Dr. Iliopoulos is the Director of the Agricultural Economics Research Institute and Adjunct Professor at the Agricultural University of Athens, Athens, Greece. E-mail: iliopoulosC@agreri.gr.
Article

Access_open Transnationalization of Agricultural Cooperatives in Europe

Journal The Dovenschmidt Quarterly, Issue 4 2014
Keywords agriculture, agrifood, cooperatives, internationalization, transnationalization
Authors Jos Bijman, Perttu Pyykkönen and Petri Ollila
AbstractAuthor's information

    Agricultural cooperatives in Europe are increasingly expanding beyond their home countries. A number of these cooperatives have become transnational cooperatives, which means that they have members in more than one country. Examples can be found particularly in the dairy and fruit and vegetables industry. This article presents an overview of the recent internationalization and transnationalization processes among agricultural cooperatives in Europe and is the first academic publication that provides empirical data on cross-border membership. The article discusses the pros and cons of having members in several countries, as well as the different trajectories along which cooperatives may become transnational. Transnationalization entails substantial challenges for the member-cooperative relationship due to differences in culture, language, legislation and business practices. The professional management usually prefers an internationalization strategy above a transnationalization strategy. While further internationalization of agricultural cooperatives is expected, foreign membership will continue to be a major challenge for boards of directors.


Jos Bijman
Dr. Jos Bijman, Management Studies Group, Wageningen University.

Perttu Pyykkönen
Dr. Perttu Pyykkönen, Pellervo Economic Research PTT, Helsinki.

Petri Ollila
Dr. Petri Ollila, Department of Economics and Management, University of Helsinki.
Article

Access_open How to Regulate Cooperatives in the EU?

A Theory of Path Dependency

Journal The Dovenschmidt Quarterly, Issue 4 2014
Keywords cooperative law, company law, EU harmonization, business form, governance
Authors Ger J.H. van der Sangen
AbstractAuthor's information

    In this article, the phenomenon of path dependency has been addressed in view of the harmonization of cooperative law in the EU. The question is raised whether and how the legislative harmonization has an impact on co-operators in their efforts of setting up and maintaining efficient cooperative organizations and whether in this respect the Statute for the European Cooperative Society (hereinafter: SCE) is a helpful tool to facilitate the enhancement of national statutes on cooperatives as well as to provide the legal infrastructure to facilitate cross-border cooperation amongst and reorganizations of cooperatives in the EU.
    The case for the cooperative as a viable business form gained momentum in the EU policy debate with the development of the SCE Statute in 2003, the outbreak of the financial and economic crisis in 2008 and with the endorsement of the cooperative business concept by the United Nations and the International Labour Organization in 2012. If the sound development of cooperatives as an alternative legal business form vis-à-vis investor-owned firms is considered a policy instrument to enhance societal business activities – notably in the field of agriculture and social economy – it raises the question how cooperatives should be regulated to fulfil their function in this respect.
    The key argument presented in this article is that due to strong tendencies of path dependency a top-down approach of EU law-making was and is not a feasible option. The cooperative as a multifaceted institution requires a multifaceted approach taking into account the historical legislative developments of distinctive jurisdictions as well as the historical economic development of cooperative organizations in their specific jurisdiction. However, the existence of path dependency and the lack of regulatory arbitrage as well as regulatory competition prevent the market from generating efficient model statutes for cooperatives taking into account the specific needs of cooperatives and their co-operators.


Ger J.H. van der Sangen
Dr Ger J.H. van der Sangen is Associate Professor Company Law and Securities Law at Tilburg Law School, Department Business Law. He was part of the research team of the EU-funded project Support for Farmers’ Cooperatives. He would like to express his gratitude to all the members of the research team for sharing their insights and discussions during conference meetings in Brussels (November 2011 and 2012) and in Helsinki (June 2012), in particular J. Bijman, C. Gijselinckx, G. Hendrikse, C. Iliopoulos and K. Poppe.
Article

Access_open Can Corporate Law on Groups Assist Groups to Effectively Address Climate Change?

A Cross-Jurisdictional Analysis of Barriers and Useful Domestic Corporate Law Approaches Concerning Group Identification and Managing a Common Climate Change Policy

Journal The Dovenschmidt Quarterly, Issue 3 2014
Authors Tineke Lambooy and Jelena Stamenkova van Rumpt
Author's information

Tineke Lambooy
Tineke Lambooy is Professor Corporate Law at Nyenrode Business University and Associate Professor Corporate Social Responsibility at Utrecht University.

Jelena Stamenkova van Rumpt
Jelena Stamenkova van Rumpt, LLM, is Advisor Responsible Investment at PGGM (Dutch Asset Manager for Pension Funds).
Article

Access_open The Consolidation of Assets and Liabilities within Company Groups

Can South African Company Law Learn from New Zealand’s Company Law?

Journal The Dovenschmidt Quarterly, Issue 3 2014
Keywords groups, limited liability, veil piercing, consolidation, pooling
Authors Richard Stevens
AbstractAuthor's information

    Limited liability is one of the cornerstones of company law. This is also the case where companies form part of a group of companies with one controlling holding company. In South African law, as in most jurisdictions, there are exceptions to limited liability. These exceptions usually lead to the piercing of the veil between the company and its shareholders. In New Zealand company law the legislature has introduced measures to enable courts to consolidate or pool together the assets and liabilities of companies within a group in cases of liquidation of one/all of the companies in the group of companies. This article investigates whether South African company law should consider introducing these New Zealand measures into South African company law to better protect creditors of the liquidated company. The article concludes that the New Zealand measures could serve as a useful presumption to enable courts to consolidate assets and liabilities within a group of companies in cases of liquidation of one or all the companies in the group.


Richard Stevens
Senior lecturer, University of Stellenbosch; BA LLB (Stellenbosch), LLM (Tübingen) and LLD (Stellenbosch). Attorney of the High Court of South Africa.
Article

Access_open Parental Liability for Externalities of Subsidiaries

Domestic and Extraterritorial Approaches

Journal The Dovenschmidt Quarterly, Issue 3 2014
Keywords company law, group liability, comparative approach, liability matrix, statutory/judicial approaches
Authors Linn Anker-Sørensen
AbstractAuthor's information

    This paper offers a structural tool for examining various parental liability approaches for the externalities of its subsidiaries, meaning in the context of this paper, the negative environmental impact of their operations. In order to conclude that the parent is liable for externalities of subsidiaries, one must be able to bypass the corporate privileges of separate legal personality and limited liability, either within traditional company law or within alternative approaches offered by notably tort and environmental law. The overall acceptance of companies within groups as single entities, instead of recognition of their factual, often closely interlinked economic relationship, is a well-known barrier within traditional company law. The situation is exacerbated by the general lack of an extraterritorial liability approach and of enforcement of the rare occurrences of such liability within the traditional company law context. This paper explores various liability approaches found in jurisdictions worldwide mainly based on mapping papers from the international Sustainable Companies Project. The author introduces a matrix in order to systemize the different approaches, distinguishing between three levels: domestic and extraterritorial, statutory and judicial and indirect and direct liability. A proper distinction between the different liability approaches can be valuable in order to identify the main barriers to group liability in regulation and in jurisprudence.


Linn Anker-Sørensen
Research assistant in the Research Group Companies, Markets, Society and the Environment and its Sustainable Companies Project, Faculty of Law, University of Oslo (jus.uio.no/companies under Projects).
Article

Access_open EU Law Reform: Cross-Border Civil and Commercial Procedural Law and Cross-Border Insolvency Law

Journal The Dovenschmidt Quarterly, Issue 2 2014
Keywords Private International Law, Commercial and Insolvency Law, EU Law reforms
Authors S.F.G. Rammeloo
AbstractAuthor's information

    Business contractors increasingly find themselves involved in a private or commercial law relationship with cross-border elements. In case commercial disputes have to be adjudicated in court proceedings questions to be answered are: the court of which legal order has competence, the law of which country shall be applied, and is a court order from a foreign legal order enforceable or not? The strive for a (European) Single Market presupposes the breaking down of (procedural as well as substantive) legal barriers emanating from the cross-border nature of private law relationships, notably business transactions.
    This contribution, concentrating on tomorrow’s European PIL in notably the area of civil procedural law, highlights the first and the third question from the perspective of the upcoming entry into force (10 January 2015) of EU Regulation No. 1215/2012 concerning jurisdiction and recognition and enforcement of judgments in civil and commercial matters and the proposed amendments to EU Regulation No. 1346/2000 on cross-border Insolvency Proceedings.


S.F.G. Rammeloo
Associate Professor EU Private International Law and Comparative Company Law – Faculty of Law, Maastricht University, the Netherlands.

Michel Kallipetis
Michel Kallipetis QC FCIArb is the former Head of Littleton Chambers, and has 40 years’ experience as a practising barrister in the field of general commercial, professional negligence and employment work.
Article

Access_open Contracts for the International Sale of Goods

Recent Developments at the International and European Level

Journal The Dovenschmidt Quarterly, Issue 2 2014
Keywords CISG, CESL, contract for the international sale of goods, jurisdiction, standard terms
Authors Dr. S.A. Kruisinga
AbstractAuthor's information

    In the globalizing economy, national borders seem to have disappeared. However, when determining which law will apply to a commercial transaction, the opposite seems true. In 1980, the UN Convention on Contracts for the International Sale of Goods (hereafter the CISG) was specifically drafted to apply to contracts for the international sale of goods. Recently, the European Commission also published a document containing provisions that can apply to contracts for the international sale of goods: the Proposal for a Regulation on a Common European Sales Law. This paper compares the scope of application of these legal regimes, it compares the regulation of standard terms in both regimes and addresses the provisions in the EU Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I), which are of relevance for contracts for the international sale of goods which do not contain a valid dispute settlement clause.


Dr. S.A. Kruisinga
Dr. S.A. Kruisinga is Associate Professor at the Molengraaff Institute of Private Law, Utrecht University, the Netherlands.
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