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Yale Law School Center for the Study of Corporate Law

Yale Law School Center for the Study of Corporate Law. Assessing Corporate Law Reform in a Transatlantic Context Conference Corporate Restructuring and Mobility Gerard Hertig (ETH Zurich) Paris, October 21, 2003. 2 Points. Revising EU law is of marginal importance

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Yale Law School Center for the Study of Corporate Law

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  1. Yale Law School Center for the Study of Corporate Law Assessing Corporate Law Reform in a Transatlantic Context ConferenceCorporate Restructuring and Mobility Gerard Hertig (ETH Zurich) Paris, October 21, 2003

  2. 2 Points Revising EU law is of marginal importance EU law may have a facilitation role  opt-in/opt-out default rulesrather than mandatory approach

  3. Revising EU corporate/takeover law is of marginal importance • Not yet adopted = cannot be that important • Unclear benefits of EU regulation • Evidence of link Corporate Governance – Performance BUT • Governance Indexes less reliable than Tobin’s q (survey bias, do not cover behavioral aspects and circumvention of rules) • IPO puzzle • Role of mandatory rules debatable (only best practices counts) • Large mergers and takeovers often end in failures, M&A activity slowing down for smaller firms • ECJ case law has eliminated many if not most restrictions to cross-border mobility • Main mobility driver: Taxes • Main restructuring driver: Near Insolvency Cases

  4. EU Facilitation Role = Default rather than Mandatory LawSource: Hertig & McCahery, An Agenda for EU Reform(in Ferrarini, Hopt, Winter, Wymeersch (eds), Modern Company and Takeover Law in Europe, OUP, forthcoming) • Benefits unclear + Impact for smaller firms  Providing choices rather than imposing them  Regulatory competition top down • Default approach • Opting out of EU law • Core provisions for all firms (e.g. squeeze-out and sell-out rights, mandatory takeover bid, shareholder standing to sue) • Additional provisions for new firms (e.g. one share/one vote, no staggered boards, no voting caps, no pyramid structures) • Opting into EU law • Established firms, MS resistance (e.g. board neutrality in takeover situations and employee participation structures) • Signaling provisions, especially for new MS (e.g. approval procedures for related party transactions, including for compensation agreements) • Is there room left for a EU mandatory approach? • Votingprocedures (special majorities, minority approval) • Disclosure (e.g. MS audit supervision) • Standardization (MS law is overly complex/diverse) • Facilitating litigation (reducing barriers to collective action)

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