OXFORD UNIVERSITY PRESS

Transcription

1 Capital Markets and Company Law Edited by Klaus J. Hopt, Hamburg, and Eddy Wymeersch, Gent OXFORD UNIVERSITY PRESS

2 Contents Figures Tables Cases The Contributors xv xvii xvix xxiii Part I: Facts and Figures 1 Chapter 1: The Equity Markets, Ownership Structures and Control: Towards an International Harmonization? by C. Van der Elst 3 A. Introduction 4 B. Equity Markets 7 C. Evolution of Ownership and Control in the Nineties 15 D. Conclusion 45 Chapter 2: Recent Developments in the Market for Markets for Financial Instruments by S. Prigge 47 A. Introduction 48 B. Evidence 49 C. Analysis 70 D. Conclusion and Outlook 83 Chapter 3: European Disclosure for the New Millennium by M. Becht 87 A. Introduction 87 B. Where Europe Falls Short 88 C. Why the Existing European Directives Do Not Work 89 D. Electronic Filing 90 E. Conclusion 91 Part II: Legal Capital 93 Chapter 4: The Rules of Capital Under Pressure of the Securities Markets by F. Kubler 95 A. Introduction 95 B. Some Characteristics of Legal Capital Regimes 97 C. Rules on Capital as Elements of Legal Capital Regimes 103 D. The Impact of Financial Markets' Pressures for Change 107 E. Where Will, Where Should Europe Go? ///

3 Vlii Contents Chapter 5: Legal Capital Rules and Modern Securities Markets; the Case for Reform, as Illustrated by the U.K. Equity Markets by E. Ferran 115 A. Introduction 115 B. Statutory Framework of English Law on New Share Issues 122 C. The Regulation of Underwriting Commissions, Underwriting Structures, and Share Issuing Good Practice 139 D. Conclusion 141 Chapter 6: Legal Capital Rules and the Structure of Corporate Law: Some Observations on the Differences Between European and U.S. Approaches by M. Kahan 145 A. Minimum Legal Capital Rules 145 B. The Power to Issue New Shares 148 Part III: Disclosure and Accounting 151 Chapter 7: Financial Disclosure and Accounting by K. Van Hulle 153 A. Introduction 153 B. Alternative Solutions Considered in Developing the 1995 Accounting Strategy 155 C. Characteristics of the 1995 Accounting Strategy 157 D. Examination of the Conformity Between IAS and the Accounting Directives 159 E. Towards a Mandatory Application of IAS 168 F. Concluding Remarks 171 Chapter 8: The Impact of Transparency Regulation on Company Law by W. F. Ebke 173 A. Introduction 173 B. In Search of Answers 175 C. Conclusions 197 Chapter 9: Audit Within the Framework of Corporate Governance. by P. Nobel /. 199) A. Corporate Governance 200 B. The OECD Principles of Corporate Governance 202 C. Code of Best Practices of the German Grundsatzkommission on Corporate Governance and the German Corporate Governance Code 202 D. Stock Market Development of Corporate Governance Codes 203 E. The Increased Function of the Audit 203 F. Focus on the Demands of Management 205 G. The New Perspective: External Audit as Part of Corporate Governance 207 H. The Independent Audit in Europe 210 I. Consequence: Increased Demands for Independence 211 J. Development ofthe'big Five' Audit Firms 211 K. Demands of the SEC (Securities and Exchange Commission) 212 L. The Independent Auditor as the Basic Principle of Corporate Governance 215

4 Contents IX Appendix. The Commission's Proposal to Modernize the Rules Governing the Independence of the Accounting Profession 215 Part IV: Corporate Governance and Shareholder Value 221 Chapter 10: Shareholder Value and the Modernization of European Corporate Law by G. Ferrarini A. Introduction 223 y B. Finance Theory and Corporate Law 225>< C. European Best Practices 232 D. Take-over Defences 241 E. Financial Restructurings 254 F. Conclusions Chapter 11: Shareholder Value, Company Law, and Securities Markets Law: A British View by P. Davies 261 A. The Emergence of Shareholder Value 261 B. Company Law: Constant Content and Changing Context 263 C. Securities Markets Law and Shareholder Value 277 D. Conclusion 287 Chapter 12: Corporate Governance in Germany - ^ by K. J. Hopt.289 ] A. Introduction 289 B. Systemic Elements of Corporate Governance in the International Discussion and the Use of these Elements in the German System 291 C. Highlights for Reform: Internal Corporate Governance 299 D. Highlights for Reform: External Corporate Governance 313, E. Conclusion: 20 Theses 323 Chapter 13: Impact of Take-overs and their Regulation on French Company Law and Practice by L. Faugerolas 327 A. Introduction 327 B. Launching a Tender Offer and Complying with Company Interest 328 C. Adapting the Principle of Company Interest to Comply with the Specific Features of Stock Market Law 333 D. Conclusion 339 Chapter 14: Shareholder Value: A New Standard for Company Conduct by C. Kirchner A. Introductory Remarks 341 B. Incentives and Sanctions for Shareholders and Stakeholders 341 C. Profit Maximization Versus Shareholder Value Maximization 343 D. Defence Measures of Target Companies in Take-over Bids 344

5 X Contents Chapter 15: Shareholder Value: A New Standard for Company Conduct by M. Blair 347 A. The First Part of the Answer 348 B. The Second Half of the Answer 350 C. Topic 1: Companies'Duties 350 D. Topic 2: Senior Management Arrangements, System, and Controls in the Financial Services Sector 351 E. Conclusion 352 Appendix. Draft Statement of Directors' Duties 353 Part V: The Institutional Investor 355 Chapter 16: The Changing Role of Institutional Investors A German Perspective by W. Gerke, M. Bank, and M. Steiger A. Introduction 357 B. Institutionalization of the Investment Process 359 C. Impact of Technological Changes on Institutional Investors 364 D. The Future Role of Institutional Investors 366 E. Conclusions 384 Chapter 17: Cross-border Voting in Europe by J. W. Winter 387 A. The Growing Significance of Market-oriented Systems of Corporate Governance in Europe 388 B. Cross-border Voting 391 C. Shareholding in a World of Giral Securities 394 D. Chains of Intermediaries 397 E. Cross-border Shareholdings 399 F. Voting Rights in Cross-border Chains of Intermediaries 402 G. Are Registered Shares a Solution? 408 H. Further Complications 410 I. Depositing, Blocking, and Registering 413 J. An Unsatisfactory Situation 416 K. E-voting 416 L. Shareholder Voting in the U.S. 418 M. Building Blocks for a European Solution 423 Chapter 18: Institutional Investors and Corporate Governance: Solution or Problem? -_. by J. M. Garrido and A. Rojo {427/ A. Introduction: the Debate on Corporate Governance 427 B. Corporate Governance Models 431 C. Institutional Investors and Corporate Governance Models 434 D. The Role of the Institutional Investors: the Spanish Case 437 E. Conclusion 446

6 Contents xi Chapter 19: Optimism and Pessimism: Complementary Views on the Institutional Investors' Role in Corporate Governance by J. M. Garrido 449 A. Optimism and Pessimism? 449 B. A Word About Methodology 451 C. The Present State of Institutional Investors' Activism 454 D. The Need for Reform 457 E. Conclusion: What Can We Realistically Expect from Institutional Investors? 458 Part VI: The Corporate Governance Recommendations 459 Chapter 20: Do Good Governance Recommendations Change the Rules for the Board of Directors? by J. Rickford 461 A. Introduction Proposed Agenda 462 B. Cui Bono? 464 C. Origin and Rationale 465 D. Mechanisms for, and Levels of, Compliance 478 E. Economic and Political Effects 482 F. Dependencies 485 G. Whither Good Governance Recommendations? 487 H. Conclusion 490 Chapter 21: Do Good Governance Recommendations Change the Rules for the Board of Directors? by G. Rossi 493 A. Path Dependence and Corporate Governance 493 B. Social Democracy, Public Firms, and Efficient Financial Markets 495 C. Corporate Governance Rules Have No Clear Theory of Corporation 499 D. Corporate Governance Rules are Vague and Inconsistent 501 E. Corporate Governance and Tax Reform 503 F. Conclusion 504 Chapter 22: Do Good Governance Recommendations Change the Rules for the Board of Directors? by B. Pettet 505 A. Introduction 505 B. Mr. Jonathan Rickford's Chapter 505 C. Professor Guido Rossi's Chapter 505 D. Codes as Bargains to Alter the Legal Rule 511 Chapter 23: Do Good Governance Recommendations Change the Rules for the Board of Directors? by L. Van den Berghe 517 A. The Chapter by Mr. Jonathan Rickford 517 B. Some Open Questions 523 C. The Chapter by Professor Guido Rossi 523 D. Some Remarks on the Comments Made by Pettet 526

7 xii Contents Part VII: Conflicts of Interest 527 Chapter 24: The Impact of Insider Trading Rules on Company Law by H.-D. Assmann 529 A. Introduction: the Issues and the Scope of the Study 529 B. Company and Capital Market Law 531 C. The Impact of Insider Trading Regulations on Company Law, Corporate Organization, and Corporate Governance 533 D. Conclusion 546 Chapter 25: An Institutional Innovation to Reduce the Agency Costs of Public Corporate Bonds: Changing the Role of the Trustee by Y. Amihud, K. Garbade, and M. Kahan 549 A. Executive Summary 549 B. Introduction 557 C. The Agency Costs of Debt and Differences Between Private and Public Debt 552 D. The Proposal 555 E. Duties of the Supertrustee 557 F. Incentive Structure of a Supertrusteeship 560 G. Who Might be a Supertrustee? 563 H. Conclusions 564 Chapter 26: The Impact of Insider Trading Rules on Company Law by Z. Goshen 565 A. Introduction 565 B. A Market View 565 C. A Company View 568 Part VIII: Groups of Companies 571 Chapter 27: Do We Need a Law on Groups of Companies? by E. Wymeersch 573 A. Introduction 573 B. A Typology of Group Companies 575 C. Conflicts of Interest 580 D. Conclusion 597 Chapter 28: Impact of the Financial Markets on Issues of Group Law by P. Hommelhoff 601 Chapter 29: Tunneling by S. Johnson, R. La Porta, F. Lopez-de-Silanes, and A. Shleifer 611 A. How the Courts Allow Tunneling 612 B. Cases on Tunnelling 615 C. Conclusion 617

8 Contents Xlll Chapter 30: The Impact of Financial Markets on Issues of Group Law by M. Lutter 619 Statement 619 Part IX: Harmonization of Company Law 621 Chapter 31: Harmonization in the Future of Company Law in Europe by C. Timmermans 623 A. Introduction 623 B. The European Community and Company Law 624 C. How to Explain this Striking Change in Aspirations? 626 D. The Centros Judgment of March 9, E. The EC Harmonization of Company Law in the Future 636 Chapter 32: Thou Shalt Not Sow Thy Vineyard with Divers Seeds? The Case Against the Harmonization of Private Law by U. Procaccia and U. Segal 639 A. Introduction 639 B. Dissimilar Jurisdictions 641 C. Similar Jurisdictions 653 Part X: Convergence of Divergence 661 Chapter 33: The Rise of Dispersed Ownership: The Roles of Law and the State in the Separation of Ownership and Control by J. C. Coffee, Jr 663 A. Introduction 664 B. The Evidence of Convergence 674 C. When Does Separation of Ownership and Control Arise? A Historical Perspective 685 D. "Does Law Matter" Reconsidered 720 E. Conclusion 738 Index 743