1. European Business Law Lesson 8 April 17 th, 2013

2. Todays lesson Week 8: Lecture 1EU Fifth Company Law Directive proposal Lecture 2The EU company (Council regulation (EC) 2157/2001 of 8.10.2001 on the Statute for a European company (SE)) Lecture 3Involvement of employees (Directive 2001/86/EC of 8.10.2001 supplementing the Statute for a European company with regard to the involvement of employees)

3. Corporate governance What is corporate governance? CG involves regulatory and market mechanisms, and the roles and relationships between a companys management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed Corporate governance main areas of interest: Shareholders vs. creditors Shareholders vs. workers Shareholders vs. managers Managers vs. investors CG key words Shareholders value (welfare) Corporate social responsibility Interest of the company as a whole Conflicts of interests (related parties; disclose or abstain) Business judgment rule

4. Management & Control Systems One-tier board (US, France A, UK, Italy, Spain, Belgium) Board of directors (committees, independent directors) Two-tier board (Germany, France B, Netherlands, Portugal, Finland) Supervisory board: Aufsichtsrat, Conseil de surveillance, Raad van Kommissarien, Conselho fiscal Managing board: Vorstand, Directoire, Raad von Bestuur, Conselho de administraçao Three-tier board (Soviet union after perestroika) Supervisory board, Executive Board, Audit

5. One tier board General meeting Board of directors

6. Italys collegio sindacale General meeting (Assemblea ordinaria) Audit committee (collegio sindacale) Board of directors (consiglio di amministrazione)

7. Two tier board General meeting Supervisory boardBoard of directors

8. Germanys co-determination General meeting (Hauptversammlung) Workers (Betriebsrat)Supervisory board (Aufsichtsrat)Board of directors (Vorstand)Audit firm (Abschlußprüfer)

9. Proposal of V Company Diractive and Regulation on SE Proposal of V Company law directive (1972) and of a Societas Europaea Mandatory two-tier board system Mandatory co-determination (within the supervisory board) New Proposal of V Company law directive (1983) and of a Societas Europaea Optional two-tier board system Optional co-determination (various systems) Regulation of SE Reg. 2157/2001 (optional 2TB) Directive 2001/86/EC (optional co-determination)

10. The SE main features Formation By merger of national companies from different member states By the creation of a joint venture between companies (or other entities) in different member states By the creation of an SE subsidiary of a national company (or an SE subsidiary of another SE) By the conversion of a national company into an SE Minimum capital: 120.000 Registered office: the place where it has its central administration, that is to say its true centre of operations Applicable law Does SE have any success? Why choosing an SE? Some figures follow…

11. Overall numbers

12. Distribution

13. Board structure

15. Interpretation of data (1.4.2013) Why an SE? No worker participation shelf-companies for foreign investors How was the SE created? SE incubator of other SE subsidiaries; no workers participation arrangement Which CG model? Two-tier system in 80% of the cases Both in Germany, Austria and Czech Republic 2t is mandatory and traditional However, the majority of Austrian SE prefer one-tier and 40% of the German SE also do

16. Issues of CG Who drives the car? Business judgment rule Fiduciary duties Conflicts of interests prevention (the case for increasing shareholders powers? Babchuk) Who controls the driver? The law... or the market? Does the ownership of enterprises interfere (Hansmann)?

17. Corporate governance and efficiency Where does the driver lead? Shareholders value vs. social corporate responsibility Team Production Theory and other Challenges to Shareholder Primacy (Blair, Stout) The end of history for corporate law (Hansmann, Kraakman) (you may react on this paper) Is there a GC model which may be considered more efficient? Can efficiency be measured with a linear regression? Law and finance doctrine Legal origins doctrine