More and more companies appear with strange abbreviations behind their business name. Consider Chrysler Group LLC (instead of Inc.) or LVMH Montres & Joaillerie France SAS. Some even speak about the ‘endangered corporate form’ and point to the rise of the uncorporation. This primer examines how the uncorporation has evolved in the United States and, more recently, in other economies around the world. We find that the growth in non-listed business forms in Europe, Latin America and Asia has been shaped by a mixture of learning and professional advice arising from the company law review process, as well as by the indirect influence of overseas business forms. We examine the main components of uncorporate business forms that are responsible for limiting transaction costs, curbing opportunism and creating organisational structures that are compatible with entrepreneurial expectations. We show the main differences between the partnership-type and corporatetype uncorporations, particularly the LLC in the United States (US-LLC), the SAS in France and Colombia, and the LLP in the United Kingdom (UK-LLP), Singapore (S-LLP), India (I-LLP) and Japan (Yugen Sekinin Jigyou Kumiai, J-LLP). We find that, given the pitfalls in the evolution of uncorporation laws, an international Model Act would be consistent with lower transaction and information costs and could help to encourage cooperation between firms situated in different jurisdictions.

Securitisation is an important financing technique. Following the financial crisis, reform activities in relation to pitfalls of securitisation have been underway. In particular, following the financial crisis, a significant debate has raged globally about whether risk retention mechanisms before the crisis were effective. The idea is to align the incentives of originators/securitisers and investors in order to prevent the negative impact caused by the originate-to-distribute model. If the effective risk retention and due diligence goals are achieved, securitisation may continue to deliver its benefits to investors, and the full implementation of the reforms in the EU and the USA will act as a deterrent and inject confidence in the markets.

The shareholder empowerment debate in corporate law is premised upon a reoccurring assumption that, historically, there has been an erosion of shareholder rights. This article contends that this premise is inaccurate and that shareholder rights have remained fundamentally constant. It goes on to argue that a more promising approach to theexisting understanding of rights in the shareholder empowerment debate may be found in the broader legal rights literature. In analysing shareholder rights through this lens it is contended that, while there has not been an appreciable abrogation of shareholder rights, it is in the nature of legal rights per se to contain power whilst simultaneously reinforcing the institutions and structures from where those rights emanate.

The enterprise group form presents special risks of mismanagement when entities in the group are in financial trouble. At the same time, pursuing a group interest might assist in resolving the financial difficulties. In any event, delineating rules for this situation is challenging, given the variety of group structures and the potential erosion of the benefit of limited liability when the regulation targets the whole group. The conflict is between ‘entity law’ (which addresses each group entity separately) and ‘enterprise principles’ (addressing the group as a whole). There is scope for crafting the ‘wrongful trading’ provision, now being adopted as an international standard, to accommodate the group scenario. In this context, enterprise principles should function only to help ascertain the commercial reality, rather than to override entity law.

Certain insolvency law rules, like creditors' priorities and set-off rights, have a distributive impact on creditors. Distributional rules reflect the hierarchies of values and interests in each jurisdiction and, as a result, have high political relevance and pose an obstacle to reforming the EU Insolvency Regulation. This paper will show the difficulty of reform by addressing two alternative options to regulate cross-border insolvencies in the European Union. The first one is the ‘choice model’, under which companies can select the insolvency law they prefer. Although such a model would allow distressed firms to select the most efficient insolvency law, it would also displace Member States’ power to protect local constituencies. The choice model therefore produces negative externalities and raises legitimacy concerns. The opposite solution is full harmonisation of insolvency law at EU level, including distributional rules. Full harmonisation would have the advantage of internalising all externalities produced by cross-border insolvencies. However, the EU legislative process, which is still based on negotiations between states, is not apt to decide on distributive insolvency rules; additionally, if harmonisation includes such rules, it will indirectly modify national social security strategies and equilibria. This debate shows that the choice regarding power allocation over bankruptcies in the EU depends on the progress of European integration and is mainly a matter of political legitimacy, not only of efficiency.

This article puts forward the idea that the creation of an online review facility where all market participants are able to review and rate all companies listed in a particular market would solve a number of problems that currently prevent shareholders, in particular institutional investors and the ultimate beneficiaries of investment vehicles such as pension funds, from engaging with companies. It would also allow shareholders and stakeholders with a long-term focus to engage with companies. It is suggested that all listed companies should be required to have a link to this review and rating facility on their website. Listed companies should have the ability to respond to the reviews and ratings on the site. Furthermore, the review facility should be regulated. The arrangement currently used for appointing and overseeing the operator of the UK securities settlement system could serve as a model.

This article explores how issuer liability re-allocates fraud risk and how risk allocation may reduce the incidence of fraud. In the US, the apparent absence of individual liability of officeholders and insufficient monitoring by insurers undermine the potential deterrent effect of securities litigation. The underlying reasons why both mechanisms remain ineffective are collective action problems under the prevailing dispersed ownership structure, which eliminates the incentives to monitor set by issuer liability. This article suggests that issuer liability could potentially have a stronger deterrent effect when it shifts risk to individuals or entities holding a larger financial stake. Thus, it would enlist large shareholders in monitoring in much of Europe. The same risk-shifting effect also has implications for the debate about the relationship between securities litigation and creditor interests. Creditors' claims should not be given precedence over claims of defrauded investors (e.g., because of the capital maintenance principle), since bearing some of the fraud risk will more strongly incentivise large creditors, such as banks, to monitor the firm in jurisdictions where corporate debt is relatively concentrated.

This paper explores the shareholders' meeting's corporate governance role. We argue that the functions performed by the shareholders' meeting are highly dependent on companies' ownership structure, and we focus on the case of jurisdictions, like those in Continental Europe, with a majority of companies with concentrated ownership structures. In theory, the shareholders' meeting is the time and place where shareholders' property rights are protected and where shareholders aim, through, e.g., voting and litigation rights, to protect their investments in the firm. Consequently, attention should be drawn to the development of efficient tools to accomplish this objective. In this respect, the main corporate governance challenge is to combat expropriation and tunnelling by controlling shareholders. We attempt to contribute to the current debate on the shareholders' meeting's governance role by providing some basic regulatory guidelines that may inspire the legislative proposals that are now being drafted in Spain as well as in other parts of Continental Europe. On the one hand, we explore possible ways to empower (minority) shareholders through voting at the shareholders' meeting. On the other hand, we conduct an empirical study of rulings applying the section of the Spanish Public Companies Act governing challenges to shareholder resolutions. The data provide evidence that this litigation mechanism, as is often claimed, faces both under and over-enforcement problems and is therefore in need of reform. We offer a tentative roadmap for improvement, based on the idea of incentivising value-increasing litigation without favouring the development of opportunistic suits. We also highlight the importance of disclosure and information rights and their impact on the litigation strategy.

Governments have bailed out banks that were considered too big to fail (TBTF). In an attempt to end these bail-outs, the European Commission has presented a proposal for a Directive for a European framework for the recovery and resolution of credit institutions and investment firms. This article analyses what insolvency law theory has to say about TBTF and vice versa. The dominant insolvency law theory, the creditors’ bargain theory (CBT), does not do well in explaining the problems presented by TBTF. The CBT frames insolvency law as a set of rules to overcome common pool problems, most notably to prevent a destructive race to the assets by individual creditors. The problems TBTF presents, however, do not primarily relate to a race to the assets. In order to understand the TBTF problem and key elements of the Directive's response (capital write-down and bail-in), the CBT needs to be supplemented with the property law theory of anticommons and its explanation of hold-out behaviour. Common pool problems and anticommons problems have different game-theoretical companions. Whereas common pool problems can be explained by the prisoners’ dilemma, anticommons can trigger a game of chicken. In the case of TBTF, shareholders and creditors can engage in this game of chicken with the state. The Directive sends out the message that states will no longer be drawn into playing this game.

This paper examines the development of the legal framework regarding fiduciary duties of directors in China. The concept of fiduciary duty was introduced by the 2005 revisions to China's Corporate Law. The implementation of fiduciary duties in China has encountered considerable obstacles because of the inherent weakness of the legal system. The legal texts are simple, vague and rigid. In the enforcement process, formalised judgments have placed limitations on precedent creation, thus reducing the deterrent effect, and the judicial system has shown reluctance to intervene in matters related to directors' duties in listed companies. There have been improvements, however. In a limited number of judicial decisions, courts have attempted to more clearly define the meaning of directors' fiduciary duties. In the penalty decisions of the China Securities Regulatory Commission (CSRC), the duties of directors have been interpreted in a more sophisticated manner.

The article discusses the most recent corporate governance developments both in Switzerland, in the aftermath of the adoption of the so-called ‘Anti-Rip-off’ Initiative, and in the EU, based on the Action Plan ‘European Company Law and Corporate Governance’. Compared with previous EU Green Papers, the reforms envisaged in the Action Plan issued by the European Commission on 12 December 2012 are moderate and rather cautious. In Switzerland, the adoption of the ‘Anti-Rip-off’ Initiative on 3 March 2013 was a game-changing political decision for the future development of corporate governance in listed corporations. There are many parallels between the most recent developments in Switzerland and the EU. Both jurisdictions see the enhancement of transparency and the increase of shareholders' sense of responsibility when it comes to corporate governance as key objectives. At the same time, differences are emerging between the strategies used in each jurisdiction. While the EU is strengthening both the legal position and the autonomy of shareholders, Switzerland is imposing legal obligations on shareholders to ensure appropriate engagement. This raises the fundamental question of whether the aim of sound corporate governance is better served by the enhancement of transparency and shareholder rights or by intensified legislative intervention. Against this backdrop, this comparative legal article analyses selected reform efforts to strengthen the role of shareholders and to improve transparency on the part of companies, institutional investors, and proxy advisers.

This paper re-evaluates the corporate governance concept of ‘board independence’ against the disappointing experiences during the 2007-08 financial crisis. Independent or outside directors had long been seen as an essential tool to improve the monitoring role of the board. Yet the crisis revealed that they did not prevent firms' excessive risk taking; further, these directors sometimes showed serious deficits in understanding the business they were supposed to control, and remained passive in addressing structural problems.

A closer look reveals that under the surface of seemingly unanimous consensus about board independence in Western jurisdictions, a surprising disharmony prevails about the justification, extent and purpose of independence requirements. These considerations lead me to question the benefits of the current system. Instead, this paper proposes a new, ‘functional’ concept of board independence. It would redefine independence to include those directors that are independent of the firm's controller, but, at the same time, it would require them to be more accountable to (minority) shareholders.

If a company is harmed by the behaviour of a third party, shareholders may suffer the economic consequences in the form of a reduction in the value of their shares. This article, taking a comparative law perspective, answers the question whether shareholders should be able to claim such a loss that is merely reflective of the company's loss. The basic rule is that a direct claim by the shareholder is not allowed; the company should claim damages. Exceptions to this ‘no reflective loss’ principle in jurisprudence of the UK, the Netherlands and the European Court of Human Rights are analysed. There appear to be two necessary conditions for an exception: (i) the shareholder must have an independent cause of action, and (ii) the reflective loss needs to be certain, i.e., it is certain that the shareholder will not be compensated indirectly through a lawsuit against the wrongdoer by or on behalf of the company. Several specific cases that satisfy these conditions are discussed. It is submitted that awarding damages to the shareholder personally can be justifiable and a derivative suit is usually not a good alternative to protect the injured shareholder in these cases.

In recent years, there has been a growth in the use of English schemes of arrangement by companies registered in other EU Member States. Recent high-profile examples include TeleColumbas GmbH, Rodenstock GmbH, Primacom Holdings GmbH, Re Metrovacesa SA and Re Seat Pagine Gialle SpA, although there are many more. In each case, these companies were able to access the English scheme jurisdiction without shifting their seat or COMI to the UK. This paper investigates this phenomenon, explaining the use of an English scheme of arrangement and why it might be regarded as valuable to these companies. The paper then tackles two issues. First, it assesses how these companies are able to access the English scheme jurisdiction, and, in particular, it analyses the potential application of both the Insolvency Regulation and the Judgments Regulation in this regard. As part of this analysis, the recognition and enforcement of English schemes of arrangement in other Member States is discussed. Second, it considers whether this use of English schemes by companies registered in Germany, Spain, Italy and elsewhere gives rise to issues of forum shopping. This paper rejects the idea that forum shopping should be regarded as a concern in this context.

A rating trigger is a particular type of debt covenant that mandates the borrower to maintain its own credit rating above a certain rating threshold, requiring, in the event of a rating downgrade, the adoption of specific enforceable actions aimed at securing the lender claims from the borrower's higher risk level. Rating triggers lower the cost of borrowing capital, but when activated, they exacerbate the borrower's need for liquidity just at the moment when its credit risk is higher, making the borrower's default more likely to occur. Despite the potential threat posed by rating triggers on debt markets, these contractual devices remain almost unregulated both in the US and in Europe. The purpose of this paper is first to analyse the effects rating triggers can have on overall market risk and second to assess the proliferation of rating triggers among large US and non-US companies in order to establish whether these contractual devices need stricter regulation. The article is divided in two parts. Sections 2 to 5 provide an overview of the different types of triggers and analyse the rationale behind their use in terms of advantages and disadvantages for both issuers and investors. In sections 6 to 9, I perform an empirical analysis by assessing the rating triggers that have been used by Dow Jones Industrial Average Index companies. I then examine the correlation between the use of rating triggers and the companies' risk profiles by measuring their credit ratings and their Altman's Z-Scores in order to find out whether triggers are mostly used by risky companies, capable of being impaired by the triggers' activation and thus posing a threat to market stability. In section 10, I strengthen the analysis by examining whether such correlation also applies to non-US companies which use rating triggers. In section 11 conclusions are drawn suggesting the introduction by US and European regulators of a specific duty to disclose all the rating triggers that listed companies include in bond indentures and in financial contracts every year.

This article deals with the exclusion of non-profit-making entities from the right of freedom of establishment of Articles 49 and 54 TFEU. It analyses the historical reasons for this exclusion. It is argued that the exclusion from freedom of establishment is no longer justified on the basis of two elements. Firstly, the development of the jurisprudence of the European Court of Justice in the fields of competition law, free movement of capital and tax law makes such exclusion systematically no longer tenable. Secondly, a law and economics treatment of non-profit firms as organisations that efficiently provide services in alternative to for-profit firms weakens the reasons for the exclusion. The article proposes a uniform, European notion of non-profit entity based on a law and economics analysis of this type of firm for the purposes of Article 54 TFEU as opposed to possible different national notions. This is followed by a brief analysis of the hypothesis of regulatory competition among jurisdictions for the law regulating the corporate governance of non-profit entities.

The problem of claims heterogeneity makes allocating decision-making powers an arduous task for any insolvency law that aims to vest control over corporate insolvency proceedings in the creditors.

The Czech Insolvency Act 182/2006 is a case in point. One of the Act's chief reform aims was to take control over the proceedings away from the hands of the judges and insolvency trustees and vest it in the creditors.

Five years after the Act entered into force, it is time to look at how it succeeded in its ambition. This article reviews the rules allocating decision-making powers between secured and unsecured creditors in relation to several key ‘turningpoints’ in Czech insolvency proceedings, and also looks at how the initial rules were interpreted and applied by the insolvency courts. It also points to a set of amendments adopted by the Czech Parliament in the autumn of 2013 with a view to codifying those interpretive approaches that were found to work, as well as reversing those where the insolvency judiciary was thought to have drifted away from the original intentions of the Act.

In particular, the article looks at creditors' decisions on (a) the type of proceedings, (b) the appointment, removal, powers and conflicts of the insolvency trustee, (c) the election and removal of the creditors' committee, and (d) the assumption of the creditors' committee's powers by the creditors' meeting.

The article is limited to rules applicable to corporate debtors.

Since China's first comprehensive competition statute, the Anti-Monopoly Law (AML), took effect on 1 August 2008, Chinese competition enforcement authorities have enacted secondary legislation on merger review. Very recently, rules against monopoly agreements and abuse of dominance have also been adopted. This framework ensures that China's antitrust regime now operates with a degree of transparency and predictability. The AML addresses three broad categories of monopolistic conduct by business operators: monopoly agreements, abuse of dominance, and anti-competitive concentrations. This paper aims to analyse the latest enforcement developments in these three broad areas upon the three-year anniversary of the AML. Like most Chinese laws, the AML emphasises administrative enforcement over judicial enforcement. On the one hand, the author includes some meaningful studies on selected landmark decisions on merger control published so far by the Ministry of Commerce of China, and, on the other hand, focuses on the judicial enforcement by People's Courts through private actions for antitrust-type claims for damages.

The bonding hypothesis posits that a firm may improve its governance practices by listing in a foreign developed stock market, thereby subjecting itself to better legal and regulatory rules of the foreign market as well as to a superior level of scrutiny by gatekeepers in the market, which are unavailable in the home market. Previous studies have shown that the bonding effect has occurred on Chinese companies listed in Hong Kong. This article specifically questions whether the effect is accrued in the domain of gatekeeper scrutiny. First, it examines the role of four alleged gatekeepers in the stock markets of China and Hong Kong, i.e., sponsor, corporate attorney, credit rating agency, and auditor. Then, it proceeds to consider whether and to what extent Chinese companies are subject to a superior level of scrutiny by these gatekeepers on account of their being listed in Hong Kong.