HOW CAN SHAREHOLDERS’ AGREEMENTS SHAPE CORPORATE GOVERNANCE AND DIRECTORS’ LIABILITY?

The interplay between contract and state corporate law in shaping corporate governance is not a novelty. In this article author questions the impact of private ordering through the shareholders’ agreement (further in text: SA) on corporate governance and possibly on the director’s duties and liabilities. The author argues that the SA might have far-reaching consequences for all the stakeholders and third persons as there are only a few limitations to its content, mainly referring to the mandatory rules of corporate law and general limitations of contract law. It means shareholders can impose additional rules for governance to directors, for transfer of shares, employment policy, and others. The author shall question whether SA can modify the articles of association. This article aims to reassess the balance between corporate and contract law instruments for the companies’ governance. The author argues that analyzing corporate governance without considering contractual tools, such as SA, becomes incomplete and seriously undermines rethinking fundamental principles of corporate governance, such as the issue of directors’ liability

LIABILITY OF A PARENT CORPORATION FOR OBLIGATIONS OF ITS SUBSIDIARY

U ovome je radu obrađeno pitanje proboja pravne osobnosti, točnije odgovornosti društva majke za obveze društva kćeri prema pravu SAD-a, u sudskoj praksi Europskog suda, te u hrvatskom pravu. Pitanje proboja pravne osobnosti posebice se pojavljuje u grupama društava, gdje u pravilo društvo majka ima kontrolu nad društvom kćeri. Posebno pitanje koje se obrađuje u radu je standard za proboj pravne osobnosti, gdje se ispituje traže li u odabranim komparativnim sustavima sudovi kao temelj proboja pravne osobnosti da društvo majka zloupotrebljava činjenicu da kao član društva kćeri ne odgovara za obveze društva kćeri ili je sama činjenica da društvo majka ostvaruje kontrolu nad društvom kćeri dostatna. Pitanje proboja pravne osobnosti posebno je važno jer se putem proboja dolazi do odgovornosti društva majke za obveze društva kćeri prema trećima, što je vjerovnicima ključno imajući na umu da društva majke u pravilu imaju veću platežnu moć.The author in this article discusses the issue of piercing the veil of corporate entity, more precisely the liability of a parent corporation for obligations of its subsidiary according to the law of the United States of America, case law of the European Court of Justice and the Croatian law. The issue concerning the disregard of the separate corporate existence of the subsidiary is particularly raised in case of corporate groups where the parent generally exercises control over the subsidiary. The author pays a special attention to standards which have to be satisfied to pierce the veil. She examines the selected comparative systems to establish basis for courts’ decision to break through the legal entity of the subsidiary, i.e. is the mare fact that the parent exercises control over the subsidiary sufficient for such decision or courts have to establish that the parent misuses the fact that as a member of the subsidiary is not liable for obligations of the subsidiary. The veil piercing issue is highly important due to the fact that according to it the parent can be held liable for obligations of its subsidiary towards third parties. Having in mind that in most cases the parent corporations are more financially solvent than the subsidiaries, for creditors piercing the veil is a key issue

Specific Features Governing Family Businesses

Obiteljska su društva važan gospodarstveni čimbenik na domaćem tržištu i komparativnim tržištima. Unatoč tomu, nisu uređena kao izdvojeni tip trgovačkog društva te nisu predmet zakonske regulacije ni druge klasifikacije. U tim društvima obitelj ima prevladavajući utjecaj na vođenje društva, kroz vlasničku ili upravljačku strukturu. Specifičnost korporativnopravnog upravljanja u obiteljskim društvima jest to što počiva na preklapanju obitelji, vlasništva (članstva u društvu) i upravljanja društvom. Obiteljsko upravljanje (family governance) postaje jednako važno kao i upravljanje društvom jer obiteljska kohezija i skladni odnosi postaju uvjetom uspješnog poslovanja društva. U ovome se radu analiziraju instrumenti za postavljanje dobre obiteljske strategije, kao što su izrada obiteljskog ustava, te uspostava posebnih tijela kao što su obiteljsko vijeće i obiteljski ured, koji se bave isključivo raznim pitanjima od važnosti za obitelj. S obzirom na to da su hrvatska društva mahom upravo u trenutku prijenosa posla na iduću generaciju, takvi mehanizmi mogu pomoći u očuvanju obiteljskog sklada i uspješnog nastavka poslovanja društva.Family businesses have an important impact on a country’s economy, and Croatia is no exception. In spite of that, family businesses are not subject to any legal regulation or part of any national classification. Family businesses can be formed as any type of company under the Croatian Companies Act. However, regardless of their form, family businesses have unique features which distinguish them from any other type of business. In these businesses families have the prevailing influence, either through ownership or management. They are mostly long-term oriented and ultimately aim to transfer the business to the next generation within the family. Family tradition and values are embodied in the family business, and they often serve as both the business motto and a way to preserve family identity through generations. Specific dynamics of corporate governance in family businesses stem from the overlapping of family, ownership and business. In order to fully comprehend the governance of family businesses the role of the family in the business must be taken into account. Family governance becomes equally important as business governance, as family cohesion and good family relations become the condition sine qua non for the success of the business. Family governance is in fact a strategy for managing family matters which might have an influence on the family business. However, all measures taken to establish a family strategy are completely voluntary – their establishment depends on the will of family members as well as their conformity with the adopted strategy. Practice clearly shows that if family matters are not coordinated, especially if there are conflicts between the family members or a lack of a common business vision, the company’s future existence is at stake. This article analyses possible instruments for devising a good family strategy, as is the writing of a family constitution and forming special bodies within the company, such as the Family Council and the Family Office. Their only role is to govern different aspects of family needs in order to maintain family cohesion. As Croatian companies face the challenge of transferring a large number of family businesses, these instruments can help preserve family cohesion while ensuring the continuity of the family business

FOUNDATION AS A (MAJORITY) SHAREHOLDER

U komparativnoj praksi sve je prisutniji novi fenomen u korporativnom upravljanju trgovačkim društvima – zaklade kao članovi društava. Tradicionalno se zaklade shvaća kao pravne subjekte koji djeluju za općekorisnu svrhu. no, u poslovnoj praksi sve su prisutnije zaklade koje su osnovane kako bi kontrolirale neko trgovačko društvo ili koje ulažu u društvo te time postaju njegovi članovi. Danska, nizozemska, njemačka, ali i države izvan europske unije, bilježe velika uspješna društva koja su pod kontrolom zaklade. U tom novom obliku korporativnog upravljanja, ključan je odnos između upravljačkih tijela zaklade i društva, posebice u kojoj je mjeri zaklada aktivno uključena u rad društva, kao i preklapaju li se članovi upravljačkih tijela zaklade i društva. Cilj je ovog rada istražiti specifičnosti korporativnog upravljanja u društvima u kojima su zaklade većinski ili manjinski članovi. istražit će se jesu li hrvatske zaklade članovi trgovačkih društava. U tu svrhu provest će se istraživanje o sastavu imovine hrvatskih zaklada na temelju javno dostupnih podataka. Cilj je ovog rada i pridonijeti raspravi o važnosti zaklada i njihovoj ulozi u razvoju ekonomije država pored njihove tradicionalne uloge djelovanja za općekorisnu svrhu.There is a new phenomenon in corporate governance of companies – foundations as shareholders. Foundations are traditionally held as legal entities which strive to accomplish a public or charitable purpose. However, modern practice highlights foundations which control companies (foundation-owned companies) or invest in them, thus becoming shareholders. Denmark, the Netherlands, Germany and many other countries both in the European Union and outside are a home to big successful companies under the control of foundations. In this new form of corporate governance, relation between management of foundations and companies becomes crucial, especially the extent to which a foundation is actively involved in operating the company, and possible overlapping between managers of the foundation and the company. The goal of this article is to analyze corporate governance of companies which have foundations as their major or minority members/shareholders. This article shall also research into the Croatian foundations and their involvement in companies. The research is based on the publicly available data on portfolio of foundations, which shows if Croatian foundations invest in companies, and thus act as shareholders. This article contributes to the discussion on the importance of foundations in economic development of countries through both corporate and charitable activism

Specific Features Governing Family Businesses

Obiteljska su društva važan gospodarstveni čimbenik na domaćem tržištu i komparativnim tržištima. Unatoč tomu, nisu uređena kao izdvojeni tip trgovačkog društva te nisu predmet zakonske regulacije ni druge klasifikacije. U tim društvima obitelj ima prevladavajući utjecaj na vođenje društva, kroz vlasničku ili upravljačku strukturu. Specifičnost korporativnopravnog upravljanja u obiteljskim društvima jest to što počiva na preklapanju obitelji, vlasništva (članstva u društvu) i upravljanja društvom. Obiteljsko upravljanje (family governance) postaje jednako važno kao i upravljanje društvom jer obiteljska kohezija i skladni odnosi postaju uvjetom uspješnog poslovanja društva. U ovome se radu analiziraju instrumenti za postavljanje dobre obiteljske strategije, kao što su izrada obiteljskog ustava, te uspostava posebnih tijela kao što su obiteljsko vijeće i obiteljski ured, koji se bave isključivo raznim pitanjima od važnosti za obitelj. S obzirom na to da su hrvatska društva mahom upravo u trenutku prijenosa posla na iduću generaciju, takvi mehanizmi mogu pomoći u očuvanju obiteljskog sklada i uspješnog nastavka poslovanja društva.Family businesses have an important impact on a country’s economy, and Croatia is no exception. In spite of that, family businesses are not subject to any legal regulation or part of any national classification. Family businesses can be formed as any type of company under the Croatian Companies Act. However, regardless of their form, family businesses have unique features which distinguish them from any other type of business. In these businesses families have the prevailing influence, either through ownership or management. They are mostly long-term oriented and ultimately aim to transfer the business to the next generation within the family. Family tradition and values are embodied in the family business, and they often serve as both the business motto and a way to preserve family identity through generations. Specific dynamics of corporate governance in family businesses stem from the overlapping of family, ownership and business. In order to fully comprehend the governance of family businesses the role of the family in the business must be taken into account. Family governance becomes equally important as business governance, as family cohesion and good family relations become the condition sine qua non for the success of the business. Family governance is in fact a strategy for managing family matters which might have an influence on the family business. However, all measures taken to establish a family strategy are completely voluntary – their establishment depends on the will of family members as well as their conformity with the adopted strategy. Practice clearly shows that if family matters are not coordinated, especially if there are conflicts between the family members or a lack of a common business vision, the company’s future existence is at stake. This article analyses possible instruments for devising a good family strategy, as is the writing of a family constitution and forming special bodies within the company, such as the Family Council and the Family Office. Their only role is to govern different aspects of family needs in order to maintain family cohesion. As Croatian companies face the challenge of transferring a large number of family businesses, these instruments can help preserve family cohesion while ensuring the continuity of the family business

Position von Leitungsmitglieder einer Aktiengesellschaft bei Vertragsschliessung in Name der Gesellschaft, aber mit Persönlichen Interesse in der Rechtsgeschäft

U ovome je radu obrađena dopustivost self-dealing transakcija članova uprave dioničkih društava u slučajevima kada sklapaju ugovor sa samima sobom i kada sklapaju ugovor u ime društva, ali u kojemu imaju i osobni interes. Dan je pregled komparativnih rješenja, što uključuje i europsko pravo, o preventivnim mjerama kojima se nastoji onemogućiti da članovi uprave dioničkog društva ulaze u self-dealing transakcije koje su štetne za društvo. Bez ikakve je sumnje u hrvatskom i komparativnom pravu da su članovi uprave dioničkog društva dužni djelovati u interesu društva, no izostanak apsolutne zabrane self-dealing transakcija članova uprave otvara pitanje granica u kojima se mogu dopustiti takvi pravni poslovi te kako uspostaviti što učinkovitiji sustav kontrole nad njima. U članku su posebno izložene mogućnosti korištenja statuta i skupnog zastupanja radi kontrole nad self-dealing transakcijama članova uprave.This paper deals with the permissibility of self-dealing transactions of corporation board members when entering into contracts with themselves or concluding contracts on behalf of the corporation, but with a personal interest. An overview of comparative solutions is presented, including those from European law, regarding measures aimed at preventing board members from entering into self-dealing transactions damaging to the corporation. There is no doubt, in both Croatian and comparative law, about the fact that corporation board members must act in the interest of the corporation. However, the absence of an absolute ban on self-dealing transactions for board members raises the issue of limits within which such legal transactions may be permissible. The question of establishing an efficient system to control such transactions is also raised. The article further presents possibilities of using the articles of association and group representation for the purpose of exerting control over self-dealing transactions entered into by board members.In dieser Arbeit wurde die Zulässigkeit von self-dealing (Eigengeschäft-) Transaktionen von Leitungsmitglieder von Aktiengesellschaften in Fälle, wenn sie Verträge mit sich selbst schließen und wenn sie Vertrag in Name der Gesellschaft schließen, aber auch persönliches Interesse haben. Ein Überblick von komparativer Lösungen wurde gegeben, was auch europäische Recht einschaltet,über Präventionsmaßnahmen die benutzt werden, um zu verhindern, dass Leitungsmitglieder von Aktiengesellschaften Eigengeschäftstransaktionen machen, die der Gesellschaft schaden. Es ist ohne Zweifel in dem kroatischen und komparativen Recht, dass die Leitungsmitglieder einer Aktiengesellschaft Pflicht haben, im Interesse der Gesellschaft zu arbeiten, aber Ausfall einer gesamten Verbot von Eignegeschäfttransaktion öffnet die Frage der Grenzen in denen solche Rechtsgeschäfte erlaubt werden können, und wie eine effektivere Kontrollsystem über ihnen einzurichten. In Artikel sind besonders die Möglichkeiten de Benutzung von Statut und der gemeinsamen Vertretung wegen Kontrolle über Eigengeschäftstransaktionen von Leitungsmitglieder geschildert

Optional or Unilateral Arbitration Clauses in Croatian Law With a Special Focus on Capital Markets

Opcijske ili jednostrane arbitražne klauzule daju pravo jednoj ugovornoj strani da nakon što spor već nastane bira hoće li pokrenuti postupak pred nacionalnim ili arbitražnim sudom. Ratio ovih klauzula jest dati jednoj strani prednost pri biranju načina rješavanja sporova, i to nakon što je već došlo do spora, da na taj način olakša ostvarenje svojih potraživanja prema drugoj strani. U radu se analizira njihov položaj u anglosaksonskim jurisdikcijama, kao i odabrana sudska praksa država članica EU kontinentalnog pravnog kruga, gdje se sučeljava načelo stranačke autonomije s načelom ravnopravnosti stranaka. Istaknuti argumenti testiraju se iz aspekta hrvatskog prava, slijedom čega se opredjeljuje za položaj opcijskih arbitražnih klauzula u hrvatskome pravu. Ispituje se prisutnost ovih klauzula u sporovima iz tržišta kapitala, u okviru čega se ističu rješenja hrvatskog zakonodavca vezano uz UCITS fondove.Optional or unilateral arbitration clauses give the option to one contractual party to choose whether to commence proceedings before a national or arbitral court after the dispute between the parties has already arisen. The party with the option is at an advantage considering that choosing the more favorable dispute resolution method enhances her chances for a successful settlement. This article focuses on the basic features of optional or unilateral arbitration clauses and their position in comparative and domestic law. It analyses American and English court practice, as well as selected German and French cases. It finds that most EU Member States have a positive attitude towards optional arbitration clauses. The author emphasizes the position of German courts which invalidate these clauses if a party with the option wishes to utilize it after the other party has already commenced arbitral or judicial proceedings. Conversely, the author advocates the view that the Croatian courts should give advantage to party autonomy, where it recommends that parties provide for a special procedure when constructing optional arbitration clauses. This procedure should provide for communication between the parties before any proceedings are commenced in order to avoid parallel proceedings. Also, this article finds that, although optional arbitration clauses are rare in the field of capital markets, the Croatian legislature has provided for obligatory use of this type of clauses for disputes between management companies and investors of UCITS funds. Finally, in spite of the fact that there have been no cases before the Croatian courts regarding the validity of optional arbitration clauses, the author is of the opinion that the Croatian courts would take a positive attitude towards these clauses

Specific Features Governing Family Businesses

Obiteljska su društva važan gospodarstveni čimbenik na domaćem tržištu i komparativnim tržištima. Unatoč tomu, nisu uređena kao izdvojeni tip trgovačkog društva te nisu predmet zakonske regulacije ni druge klasifikacije. U tim društvima obitelj ima prevladavajući utjecaj na vođenje društva, kroz vlasničku ili upravljačku strukturu. Specifičnost korporativnopravnog upravljanja u obiteljskim društvima jest to što počiva na preklapanju obitelji, vlasništva (članstva u društvu) i upravljanja društvom. Obiteljsko upravljanje (family governance) postaje jednako važno kao i upravljanje društvom jer obiteljska kohezija i skladni odnosi postaju uvjetom uspješnog poslovanja društva. U ovome se radu analiziraju instrumenti za postavljanje dobre obiteljske strategije, kao što su izrada obiteljskog ustava, te uspostava posebnih tijela kao što su obiteljsko vijeće i obiteljski ured, koji se bave isključivo raznim pitanjima od važnosti za obitelj. S obzirom na to da su hrvatska društva mahom upravo u trenutku prijenosa posla na iduću generaciju, takvi mehanizmi mogu pomoći u očuvanju obiteljskog sklada i uspješnog nastavka poslovanja društva.Family businesses have an important impact on a country’s economy, and Croatia is no exception. In spite of that, family businesses are not subject to any legal regulation or part of any national classification. Family businesses can be formed as any type of company under the Croatian Companies Act. However, regardless of their form, family businesses have unique features which distinguish them from any other type of business. In these businesses families have the prevailing influence, either through ownership or management. They are mostly long-term oriented and ultimately aim to transfer the business to the next generation within the family. Family tradition and values are embodied in the family business, and they often serve as both the business motto and a way to preserve family identity through generations. Specific dynamics of corporate governance in family businesses stem from the overlapping of family, ownership and business. In order to fully comprehend the governance of family businesses the role of the family in the business must be taken into account. Family governance becomes equally important as business governance, as family cohesion and good family relations become the condition sine qua non for the success of the business. Family governance is in fact a strategy for managing family matters which might have an influence on the family business. However, all measures taken to establish a family strategy are completely voluntary – their establishment depends on the will of family members as well as their conformity with the adopted strategy. Practice clearly shows that if family matters are not coordinated, especially if there are conflicts between the family members or a lack of a common business vision, the company’s future existence is at stake. This article analyses possible instruments for devising a good family strategy, as is the writing of a family constitution and forming special bodies within the company, such as the Family Council and the Family Office. Their only role is to govern different aspects of family needs in order to maintain family cohesion. As Croatian companies face the challenge of transferring a large number of family businesses, these instruments can help preserve family cohesion while ensuring the continuity of the family business

Optional or Unilateral Arbitration Clauses in Croatian Law With a Special Focus on Capital Markets

Opcijske ili jednostrane arbitražne klauzule daju pravo jednoj ugovornoj strani da nakon što spor već nastane bira hoće li pokrenuti postupak pred nacionalnim ili arbitražnim sudom. Ratio ovih klauzula jest dati jednoj strani prednost pri biranju načina rješavanja sporova, i to nakon što je već došlo do spora, da na taj način olakša ostvarenje svojih potraživanja prema drugoj strani. U radu se analizira njihov položaj u anglosaksonskim jurisdikcijama, kao i odabrana sudska praksa država članica EU kontinentalnog pravnog kruga, gdje se sučeljava načelo stranačke autonomije s načelom ravnopravnosti stranaka. Istaknuti argumenti testiraju se iz aspekta hrvatskog prava, slijedom čega se opredjeljuje za položaj opcijskih arbitražnih klauzula u hrvatskome pravu. Ispituje se prisutnost ovih klauzula u sporovima iz tržišta kapitala, u okviru čega se ističu rješenja hrvatskog zakonodavca vezano uz UCITS fondove.Optional or unilateral arbitration clauses give the option to one contractual party to choose whether to commence proceedings before a national or arbitral court after the dispute between the parties has already arisen. The party with the option is at an advantage considering that choosing the more favorable dispute resolution method enhances her chances for a successful settlement. This article focuses on the basic features of optional or unilateral arbitration clauses and their position in comparative and domestic law. It analyses American and English court practice, as well as selected German and French cases. It finds that most EU Member States have a positive attitude towards optional arbitration clauses. The author emphasizes the position of German courts which invalidate these clauses if a party with the option wishes to utilize it after the other party has already commenced arbitral or judicial proceedings. Conversely, the author advocates the view that the Croatian courts should give advantage to party autonomy, where it recommends that parties provide for a special procedure when constructing optional arbitration clauses. This procedure should provide for communication between the parties before any proceedings are commenced in order to avoid parallel proceedings. Also, this article finds that, although optional arbitration clauses are rare in the field of capital markets, the Croatian legislature has provided for obligatory use of this type of clauses for disputes between management companies and investors of UCITS funds. Finally, in spite of the fact that there have been no cases before the Croatian courts regarding the validity of optional arbitration clauses, the author is of the opinion that the Croatian courts would take a positive attitude towards these clauses

INVESTMENT FUNDS WITH LEGAL PERSONALITY – A TRUE RIVAL TO MUTUAL FUNDS?

Investment funds come in a large variety of legal forms, investment techniques, target investors, redemption rights, and others. It is often said that there are no two investment funds that are the same. The focus of this article is the legal form in which they come. Authors shall analyze the position of investors in funds with legal personality in order to discuss differences in comparison to investors in mutual funds. On the EU level only the UCITS funds are harmonized, while alternative investment funds are left to national regulations. The aim is to discuss whether the legal status of investment funds is a real yardstick for determining the crucial investor’s rights such as redemption rights and relations between the investors and fund managers. In order to provide answer authors shall compare funds in jurisdictions that are comparable and often serve as role models, as well as those in which the fund industry is most developed, followed by the Croatian perspective. Finally, the authors shall contribute to the discussion of how can traditional types of companies such as joint-stock or limited liability companies be integrated into the capital market law arena, serving as a vessel to investment funds