Hedge Funds and Risk Decoupling: The Empty Voting Problem in the European Union

The law must remain adaptive and responsive to the constantly changing challenges of our society and our business life. One of the most pressing challenges of the past years is the emergence of alternative investment funds, in particular hedge funds, which masterfully exploit the traditional categories of corporate law, financial derivatives, and risk management. This Article is only concerned with the first of these two forms— negative decoupling.9 It looks at the various forms of negative riskdecoupling strategies and tries to shed light on their overall desirability. Three distinct theoretical perspectives are used as an analytical framework to examine the vast challenges of risk-decoupling: (1) a classical agency costs approach; (2) an information costs perspective; and (3) a view from corporate finance. This Article argues that shareholders with hedged risk exposure do not correspond to the traditional market expectations of shareholders. Based on the insight developed from these policy perspectives, this article develops regulatory reform proposals, particularly with regard to the EU context

Keeping up with Innovation: Designing a European Sandbox for Fintech. CEPS ECMI Commentary no 58 | January 2019

In the aftermath of the 2007-09 global financial crisis, regulators in all major jurisdictions introduced significant new requirements for financial firms. Certainly justified in purpose, these regulations have increased market barriers, both directly through specific obligations, and indirectly through the sheer magnitude and complexity they involve. Regulators primarily focused on bolstering financial stability and consumer protection, while frequently disregarding their objective of promoting financial innovation. Ten years after the crisis, we believe that it is time to reconsider the appropriate balance between those objectives. In this commentary, we show how EU financial regulation may stifle the innovation of financial services. We use the example of automated investment advice, so-called ‘robo-advisors’, and we show how a proper balance between regulatory objectives could be achieved through establishing a ‘guided’ regulatory sandbox

Investor-led sustainability in corporate governance

The transition to a sustainable economy currently involves a fundamental transformation of our capital markets. Lawmakers, in an attempt to overcome this challenge, frequently seek to prescribe and regulate how firms may address environmental, social, and governance (ESG) concerns by formulating conduct standards. Deviating from this conceptual starting point, the present paper makes the case for another path towards achieving greater sustainability in capital markets, namely through the empowerment of investors. This trust in the market itself is grounded in various recent developments both on the supply side and the demand side of financial markets, and also in the increasing tendency of institutional investors to engage in common ownership. The need to build coalitions among different types of asset managers or institutional investors, and to convince fellow investors of a given initiative, can then act as an in-built filter helping to overcome the pursuit of idiosyncratic motives and supporting only those campaigns that are seconded by a majority of investors. In particular, institutionalized investor platforms have emerged over recent years as a force for investor empowerment, serving to coordinate investor campaigns and to share the costs of engagement. ESG engagement has the potential to become a very powerful driver towards a more sustainability-oriented future. Indeed, I show that investor-led sustainability has many advantages compared to a more prescriptive, regulatory approach where legislatures are in the driver’s seat. For example, a focus on investor-led priorities would follow a more flexible and dynamic pattern rather than complying with inflexible pre-defined criteria. Moreover, investor-promoted assessments are not likely to impair welfare creation in the same way as ill-defined legal standards; they will also not trigger regulatory arbitrage and would avoid deadlock situations in corporate decision-making. Any regulatory activity should then be limited to a facilitative and supportive role

Die Sitzverlegung der Europäischen Aktiengesellschaft

Dieses Buch untersucht die neue gemeinschaftsweit gültige Rechtsform der Europäischen Aktiengesellschaft ('Societas Europaea'). Mit ihr hat der Gemeinschaftsgesetzgeber Ende 2004 ein Instrument geschaffen, dass es europäischen Großunternehmen erstmals erlaubt, eine gemeinschaftsweit einheitliche Unternehmensverfassung zu wählen. Ein besonderer Vorteil der neuen Rechtsform ist die Vereinfachung grenzüberschreitender Restrukturierungen, insbesondere der grenzüberschreitenden Sitzverlegung. Diese Möglichkeit steht Gesellschaften nationalen Rechts bisher noch nicht umfassend zu. Kollisionsrechtlich versucht sich der Gemeinschaftsgesetzgeber im Rahmen der relevanten divergierenden mitgliedstaatlichen Theorien (Sitz- und Gründungstheorie) einer Stellungnahme zu enthalten. Materiellrechtlich ist die ausführliche Regelung der Sitzverlegung einer Societas Europaea (SE) relativ restriktiv ausgefallen: so müssen beispielsweise immer gleichzeitig Sitz und Hauptverwaltung zugleich verlegt werden, was in einem Spannungsverhältnis zu der jüngeren Rechtsprechung des EuGH steht (Überseering, Inspire Art). Außerdem wird den Schutzanliegen von betroffenen Kreisen wie Gläubigern und Aktionären Rechnung getragen. Den Mitgliedstaaten steht es zudem frei, zusätzliche Schutzmaßnahmen zu schaffen. Der Autor untersucht grundlegend aus kollisions- und sachrechtlicher Perspektive, ob das geschaffene Sitzverlegungsregime den Anforderungen an eine genuin gemeinschaftsrechtliche Rechtsform gerecht wird, insbesondere ob es mit den dem EG-Vertrag zugrundeliegenden Grundfreiheiten in Einklang steht

Transfer of rights and obligations under DCFR and CESL : interactions with English and German law

The rules on assignment and transfer of rights and obligations are currently outside the scope of the proposed CESL. In contrast, the original DCFR from 2009 includes a chapter on these issues. Questions outside the scope of CESL are left to be solved by the ‘domestic’ provisions of the national law that is applicable under the relevant conflict-of-laws provisions. This paper is part of the larger CFR Context research project and explores interactions of the system of assignment of receivables under a future European contract instrument with both English and German national laws. This concerns above all other areas of law, for example the rules that apply upon the insolvency of one of the parties (in particular that of the assignor) and the rules on public policy. Key differences between the jurisdictions include, inter alia, the proprietary aspects of the assignor’s insolvency where the assignor is paid by the debtor, the priority rule for competing assignments, and the effects of a non-assignment clause. Here, the choice of the optional instrument rather than either English or German law will lead to diverging results and may therefore prejudice any of the parties involved