Consejeros dominicales minoritarios y buen gobierno corporativo

The capital companies law allows the appointment of constituency directors tothe board without the concurrence of the majorityas amechanism to empower minority shareholders.The proportional representation system (art. 243 LSC) intendsto give voice to minority shareholders, in line with the most innovative trends in corporate governance and shareholder activism. The presence of minority directors on the board raisesissues of interestfor our Law. First, the fittingof directors appointed by minority or controlling shareholders in the legal status of directorship. Because directors are naturally dependent on the shareholder who appoints them, they suffer from a conflict of loyalties between serving the company or their dominus. Company Law tries to mitigate it through the duty of independence (art. 228 d) LSC), or abstention rules forconflicts of interest (art. 228 c) LSC). Second, the competitor doctrine, enshrined inarticles 229.1 f) and 224.2 LSC, applies only to minority directors, and works as a shield to prevent these minority directors from entering the board without the consent of the controlling shareholder. Ultimately, the pro-majority biasprevailing among the Spanish doctrine leads to an asymmetric treatment of controlling directors compared to minority directors and lowers the quality of corporate governanc

Shareholder activism, hedge funds, and the art. 161 LSC

El activismo accionarial es el desarrollo más novedoso del gobierno corporativo en las empresas cotizadas. La literatura económica y jurídica más atenta ha estudiado en profundidad su importancia y el papel que juegan los hedge funds en sociedades cotizadas en entornos de capital disperso. Construyendo sobre esa base, este trabajo se propone indagar la intervención de los inversores institucionales y hedge funds en países como el nuestro, con alta concentración de capital. La visión más extendida es que la dispersión de capital es una condición previa para el activismo accionarial. Pero también es sabido que el derecho, y en particular, el derecho de sociedades, puede contribuir a mejorar las condiciones que faciliten la entrada de activistas y equiparlos con herramientas eficaces para aumentar la supervisión y la rendición de cuentas de los socios de control. En la última parte del trabajo se tratará de reconsiderar el art. 161 LSC conforme a estas coordenadas en sociedades cotizadasShareholders’ activism is the newest thing in corporate governance. Economic and legal literature have given a comprehensive account of the importance of shareholder activism and the role that hedge funds play in listed firms basically in jurisdictions with widely held firms. Built upon this literature, this paper addresses the matter of the engagement of institutional investors and hedge funds in a jurisdiction like Spain, with a prevalence of concentrated capital structures. The common view has been that capital dispersion is a precondition for activist engagement. Nevertheless, law matters. A friendlier jurisdiction towards activists and with good tools to empower shareholders might increase monitoring and accountability of controlling shareholders. The last part of the paper tries to rethink the art. 161 LSC in order to make it work for listed firms.financiación del proyecto de investigación del Ministerio de Educación y Ciencia “GOBIERNO CORPORATIVO: EL PAPEL DE LOS SOCIOS”, (REF. DER2014-55416- P

Barbari ad portas: la prohibición de la retribución externa como arma defensiva

Este trabajo analiza el sistema de retribución supletoria o golden leash que los socios activistas utilizan con frecuencia para incentivar a sus consejeros dominicales en los órganos de administración de la sociedad. Esta práctica está, en apariencia, y salvo dispensa de la junta, prohibida en el Derecho de sociedades español. Hasta el momento, la cuestión no ha suscitado apenas debate doctrinal entre nosotros. Este trabajo ofrece una visión crítica de la aproximación prevalente en España y de sus preconcepciones subyacentes Según la tesis aquí defendida, entre las reglas relativas a los deberes de lealtad se cobijan en España dos reglas dirigidas a prevenir que administradores dominicales minoritarios accedan a los consejos de administración sin el consentimiento de los socios de control: la regla del conflicto permanente ex art. 229.1 f) LSC y la prohibición de remuneraciones externas del art. 229.1 e) LSC. El verdadero alcance de ambas consiste en el blindaje del poder de la mayoría para configurar el consejo de administración y desarticular el sistema de representación proporcional. Este régimen coloca acaso a España a la cabeza de las jurisdicciones menos propicias al activismo accionarial de entre los países desarrollados En relación con las retribuciones de tercero se analiza la ratio de la regla -el fundamento fiduciario-, la situación en el Derecho comparado, así como el mecanismo de autorización o dispensa en manos de la mayoría. La conclusión que se alcanza es que las compensaciones de tercero pueden tener efectos beneficiosos para la sociedad y que el sistema de dispensa de la LSC no está bien calibrado para ajustar y moderar los rigores de una prohibición configurada en términos amplísimos. Se propone una interpretación que reduce teleológicamente la prohibición a los supuestos de conflicto de interés. En consecuencia, este tipo de retribuciones deben considerase admisibles si son transparentes y alineadas con el interés de la sociedadThis article analyzes the supplementary compensation system or “golden leash” that activists often use to incentivize their nominee directors in the boards where they are present. Spanish Corporate Law contains an overarching ban of any kind of third-party remuneration. Thus far, the current solution has stirred very little controversy in Spain. This paper offers a critical stance on the Spanish approach and solution. The view expressed in the article is that, among the Spanish rules on fiduciary duties (provisions to prevent directors from making conflicted decisions), there are two tricky instruments whose true aim is to prevent the nomination of minority directors to the board without the consent of the controlling shareholder(s): the permanent conflict rule and the prohibition of third-party remuneration. Their (actual, though undisclosed) function is to shield or secure the power of the majority to nominate the board and counteract the effects of the cumulative system. This regime places Spain at the top of the most unfriendly jurisdictions for shareholder activism among developed economies The paper analyzes in detail the rationale of the ban -the fiduciary basis- and the authorization in the hands of the majority. The conclusion is that the golden leash can be beneficial for the corporation, and the waiver foreseen in Spanish Law is maladjusted to counteract the rigors of a very broadly configured prohibition. The paper advocates a narrow interpretation of the rule, limited to situations of conflicts of interests. According to this view, golden leashes should be legal if transparent and aligned to the interest of the corporatio

A contractual approach to discipline self-dealing by controlling shareholders

In this paper we model the relationship between a controlling shareholder and outside investors when the presence of the controlling shareholder generates valuable self-dealing investment opportunities. These self-dealing operations generate private benefits for the controller but they may also be profitable for the outside investors. Our analysis proves that regulation of self-dealing opportunities is necessary to facilitate access to funding when self-dealing is not verifiable, and explains why current regulation does not simply ban all self-dealing operations. We then analyze the two alternative existing enforcement mechanisms, which are based on disclosure and approval rules (Rules-based regime) and/or on litigation rules (Standard-based regime). While both prove effective at facilitating access to funding, we show that an alternative penalty default regulation could improve overall efficiency by providing incentives for the controller and the outside investors to opt-out and implement the first-best contract

The promise of reward crowdfunding

Research Question/IssueWe study reward crowdfunding (RC), the most innovative segment of the crowdfunding market, where, instead of a debt or equity contract, fund providers are promised some good or service in the future in exchange for their contribution to the funding of the investment project under a contract that does not penalize the creator's failure to deliver. The existing economic and legal literature is puzzled by the platform's use of this seemingly inefficient contract where a standard pre-sale contract would appear to work better. Research Findings/InsightsCounterintuitively, we prove that the no-penalty contract is the optimal contract between creators of unknown talent and early adopters of their products when creators can benefit from being discovered as talented and from the goodwill generated by delivering on their promise to early adopters. Theoretical/Academic ImplicationsOur analysis contributes to understanding RC by showing that the no-penalty RC contract, far from being an inefficiency, is a contractual innovation specifically designed for talent discovery. We also contribute to the literature on relationship contracts, showing that even in a one-shot game, it is possible to sustain a contract in the desire to build a reputation that will be useful in a future contract with a third party. Practitioner/Policy ImplicationsOur analysis has important policy implications on how backers should be protected. Standard measures of consumer or investor protection may be counterproductive.María Gutiérrez‐Urtiaga gratefully acknowledges the financial support from Comunidad de Madrid and the EU's European Social Fund through grant S2015/HUM‐3353 EARLYFIN‐CM and from the European Regional Development Fund through grant FEDER UNC315‐EE‐3636