Constraining Dominant Shareholders\u27 Self-dealing: The Legal Framework in France, Germany, and Italy

All jurisdictions supply corporations with legal tools to prevent or punish asset diversion by those, whether managers or dominant shareholders, who are in control. As previous research has shown, these rules, doctrines and remedies are far from uniform across jurisdictions, possibly leading to significant differences in the degree of investor protection they provide. Comparative research in this field is wrought with difficulty. It is tempting to compare corporate laws by taking one benchmark jurisdiction, typically the US, and to assess the quality of other corporate law systems depending on how much they replicate some prominent features. We take a different perspective and describe how three major continental European countries (France, Germany, andItaly) regulate dominant shareholders\u27 self-dealing by looking at all the possible rules, doctrines and remedies available there. While the doctrines and remedies reviewed in this article are familiar enough to corporate lawyers and legal scholars from the respective countries, this is less true for many participants in the international discussion, which remains dominated by Anglo- phone legal scholars and economists. We suggest that some of these doctrines and remedies, namely the German prohibition against concealed distributions, the role of minority shareholders in the prosecution of abus de biens sociaux in France, and nullification suits in all three countries have not received the attention they deserve

Report on cross-border use of company information by The Informal Expert Group on Company Law and Corporate Governance (ICLEG)

Summary of recommendations 1. Once-only principle: When a company registered in one Member State (A) wants to set up a branch or a subsidiary in another Member State (B), it should not be required to file data which is already available in the register of Member State A via BRIS again with the register of Member State B. Instead, the register in Member State B should simply retrieve the data regarding the company which is available in the relevant national registers via BRIS. 2. Scrutiny of information before it is entered into the register a) Horizontal extension: Mandatory formation checks should be extended to the formation and online filing of all companies covered by the CLD. b) Vertical extension: It should be considered to extend the items to be checked. It is recommended to require mandatory checks in particular also of: legality of the objects of the company, legality of the name of the company, legality of the company instru- ments of constitution, including verifying the correct use of templates, disqualification of a director, payment of contributions. c) EU minimum standard for checking procedures: A reasonable approach could be a modular system which provides different options for Member States to choose from (e.g. control by judicial authority, administrative authority, notary) and also allows the relevant control authority to use automatic systems. 3. Reliance on registered information by private parties: It is proposed to expressly provide for “positive publicity” by adding the following provision to the CLD: “As against the com- pany concerned, third parties may rely on documents and information made publicly avail- able in the register unless the company proves that they knew that what is disclosed is incorrect.” 4. Mutual recognition of register data: Register data should be mutually recognised in all Member States. A provision to that effect should be added to the CLD (see options pre- sented in Part 4.2). 5. Further supporting measures a) It should be possible to obtain a certified copy (in electronic form) from BRIS of infor- mation stored in the company register of a Member State. b) There should be a clear rule in the CLD that all national courts and authorities of the Member States must recognise certified BRIS copies and certified copies from national registers of other Member States. c) It is recommended to develop a standard Companies European Key Information Document (CEKID