Chapter
IV. Recent Issues and Empirical Studies
1. Defensive Measures against Hostile Takeovers
3. Listing of Subsidiaries
Holger Fleischer: A Guide to German Company Law for International Lawyers – Distinctive Features, Particularities, Idiosyncrasies
I. Legal Sources and Types of Business Organisations in Germany
1. No Code Unique, no Comprehensive Company Code, no Unitary Capital Company
2. Multitude of Company Law Acts
3. No Single Dominant Organisational Form
b) Additional Explanations
4. Popularity of Hybrid Business Organisations
II. Main Players in Company Law
b) Limited Liability Companies Act
3. Company Law Scholarship
III. Distinctive Features of German Stock Corporation Law
1. Interest of the Enterprise (“Unternehmensinteresse”)
2. Two-tier Board (“duale Führungsstruktur”) and Codetermination (“Mitbestimmung”)
3. Mandatory Nature of the Stock Corporation Act (“aktienrechtliche Satzungsstrenge”)
4. Fiduciary Duties of Shareholders (“mitgliedschaftliche Treuepflichten”)
5. Rescission Suits (“Beschlussmängelklagen”) as the Most Important Enforcement Mechanism
6. Codified Law of Corporate Groups (“Konzernrecht”)
IV. Gradual Erosion of German Particularities in Company Law
Kenichi Osugi: Directors’ Liability and Enforcement Mechanisms in Japan
II. Brief Introduction to Japanese Laws and Practices
III. How Derivative Suits Operate: A Rough Comparison between the US and Japan
1. Shareholder Suits in the US
2. Derivative Suits in Japan
3. Rough Comparison between the US and Japan
IV. What Accounts for the Differences between the US and Japan
3. Involuntary Settlement
4. Rules on Gathering Evidence
VII. Derivative Suits in Japan: Policy Evaluation
Kyung-Hoon Chun: Corporate Opportunity Doctrine as a Basis for Directors’ Liability – A New Statutory Experiment in Korea
I. Introduction: Hypothetical Scenarios and Comparative Sketch
II. Overview of Korean Corporate Law on Directors’ Duties and Liabilities
a) Bases of Fiduciary Duties
a) Liability to the Company
b) Liability to Third Parties
III. Two Cases before the Legislation
2. Gwangju Shinsegae Case
2. Notes on Art. 397-2 of the KCC
a) Scope of the Business Opportunity
V. Criticisms and Evaluation
2. Comments on this Criticism
Jianbo Lou: Ordinary Corporate Conduct Standard vs. Business Judgment Rule – A Review of Case Rulings by Beijing Courts between 2005 and 2014
1. Directors’ General Duties Under Chinese Law
2. The Anglo-American Root of Directors’ General Duties in PRC Company Law
III. Position of Beijing Courts Regarding Directors’ General Duties
1. Key Elements of Directors’ Civil Liabilities for Breach of General Duties
2. The Court’s Practices Regarding Standard of Duty of Diligence
3. The Courts’ Position Regarding Duty of Loyalty
IV. OCC Standard from a Comparative Law Perspective
1. The Two-Part Test in UK and US
2. Business Judgement Rule
3. OCC vs. Business Judgment Rule
Hans Christoph Grigoleit: Directors’ Liability and Enforcement Mechanisms from the German Perspective – General Structure and Key Issues
II. Basic Legal Structure of Directors' Liability
1. Non-Contractual and Mandatory Liability under § 93 AktG
2. Basis of Liability: Breach of Directors’ Duties
a) Specifications of Directors’ Duties – Care, Loyalty and Legality
b) The So-called Mortal Sins
c) Individual Culpability
3. Recognition of Directors’ Discretion (Safe Harbor)
a) Entrepreneurial Decision
b) Acting for the Benefit of the Company
c) No Evident Violation of Corporate Interests
4. Burden of Proof: Breach of Duty and Causation
5. Scope of Liability: Unlimited Liability for any Breach of Duty – No Privilege or Limitation in Statutory or Judge-Made Law
6. Limits to Liability through Disclaimers, Waivers (etc.) on the Part of the Corporation
a) Ex Ante Disclaimer: Provisions in the Corporate Charter or in the Employment Contract
b) Ex Ante Approval (by Shareholders or the Supervisory Board) of the Conduct Giving Rise to Liability
c) Ex Post Measures: Waiver and Settlement
d) Coverage of a Director’s (Personally Incurred) Penalties by the Corporation
a) Enforcement by the Supervisory Board – Mandatory Enforcement Under the ARAG/Garmenbeck Doctrine
b) Enforcement by Shareholders – Derivative Suits
9. Statute of Limitations
III. Fundamental Issues Under Current Discussion – Key Arguments
a) Legal Source: Protection of the Infringed Law in Question (not Protection of the Corporation)
b) Adjustment for Profits
c) Organizational Safeguards – Compliance Requirements
2. Business Judgments – Protection of Directors’ Discretion
a) Defining a “Safe Harbor” for Business Judgments – Limits to Legal Certainty
b) Ex Ante Perspective and the Standard of Evidence
c) The Function of Reasonable Information
d) Discretion in Questions of Law – “Legal Judgments”
3. Collective and Individual Responsibility
a) Division of Functions and Individual Responsibility
b) Responsibility for Participation in a Board Decision
4. Privileges for Directors Resulting from General Principles and Judge-Made Law
a) Application of the Doctrine of Employee Privilege
b) Privilege Based on the Corporation's Duty of Loyalty
c) Privilege with Regard to Fines Imposed Upon the Corporation
d) The Unambiguous Denial of Any Privilege by the Positive Order of § 93 AktG
5. Enforcement by the Supervisory Board
a) Duty to Enforce Claims Against Directors (ARAG/Garmenbeck Case)
b) Duties and Discretion with Respect to Negotiating Settlements Concerning Director’s Liability
Gen Goto: Legal Capital in Japan and the Influence of German Law
II. Legal Capital under Japanese Law
1. Differences from German Law
a) No Minimum Capital Requirement
b) No Duty of Directors upon Loss of One Half of Legal Capital or Insolvency
c) Calculation of the Amount of Legal Capital
2. Commonalities with German Law
a) Restrictions on Distributions to Shareholders
b) Regulation of Contribution to Shares
III. Paradigm Shift of 2005
2. Functional Approach of the Companies Act 2005
3. Deregulation of Contributions to Shares
c) Liability for Unpaid Shares
4. Abolishing the Minimum Capital Requirement
5. Any Effect on New Businesses?
IV. Shareholder’s Liability for Undercapitalization
1. Ex Post Liability for Lack of Adequate “Cushion”?
2. Limited Liability and Incentive of Shareholders
V. Conclusion: Future of Legal Capital in Japan
Andreas Cahn: Capital Maintenance
I. The Function of Capital Maintenance in a Legal Capital Regime
II. The Scope of the Capital Maintenance Rules
1. Open Distributions Through Dividends or Share Repurchases
2. Disguised Distributions
a) The Concept of Disguised Distributions
b) Book Values, Market Values and Business Interests of the Company
d) Disguised Distributions and Transactions with Shareholders in Their Capacity as a Third Party Distinguished
e) Disguised Distributions Involving Third Parties
III. Legal Consequences of Violations of the Capital Maintenance Provisions
IV. Intra-Group Transfers and Modifications of the Capital Maintenance Regime by the Law of Corporate Groups (Konzernrecht)
1. The Issue of Intra-Group Transfers
2. The Transferee’s Liability Under Group Law
a) The Bifurcated Statutory Groups of Companies Law Regime of the Aktiengesetz
b) Enterprise Agreements and Capital Maintenance
c) De Facto Control and Capital Maintenance
Ruoying Chen: From Legal Capital to Subscribed Capital – Capital Rule in China and its Economic Background
II. China’s Economic Reform and its Impact on Corporate Law in China
1. China’s Economic Transformation since the 1970s
2. The Impact of the Economic Transformation on Corporate Law
III. The Legal Capital Regime
1. The Mandatory Minimal Registered Capital
2. Restrictions on Change of Capital
3. Distribution of Dividends and Other Payment by Company to Shareholders
IV. Costs of the Legal Capital Regime
3. Costs of Rent-seeking Activities
V. Subscribed Capital Regime: the 2013 Corporate Law Reform
1. The Subscribed Capital Regime: Freedom of Contract
2. Illegal Taking Back of Capital
VI. Challenges of the “Thin” Capital Regime
1. Abuse and Strategic Use Without Supplemental Institutions
2. Distribution of Dividends
a) Limited Liability Company
4. Change of Role of the Company Registrar
III. The Role of Shareholders
Gerald Spindler: The Role of Shareholders in Public Companies
II. The General Framework for Shareholders’ Rights
III. Right to Ask and Be Informed
V. Representation of Shareholders
VI. Duties and responsibilities of shareholders
2. Misuse of Shareholder Rights
VII. Institutional Shareholders
VIII. Overcoming Rational Apathy?
IX. Protection of Minorities
X. Virtual General Meetings
Kon-Sik Kim/Moon-Hee Choi: Declining Relevance of Lawsuits on the Validity of Shareholder Resolution in Korea – A Comparative Essay
II. Some Background Information
1. Korean Commercial Code
2. Overwhelming Popularity of Corporation as a Form of Business
3. Major Corporate Organs and the General Shareholders Meeting
III. Historical Development of the Rules on SR Lawsuits
2. Development in Germany
IV. SR Lawsuits in Korea: Law
a) Grounds for Rescission
b) Comparison with the Rescission Lawsuit
a) Grounds for Non-existence
b) Comparison With Nullity Lawsuits
c) Comparison With Rescission Lawsuits
V. SR Lawsuits in Korea: Reality
2. Relative Importance of SR Lawsuits
3. Number of SR Lawsuits by Type of Lawsuits
4. Prevalence of Non-existence Lawsuits
5. Who Files an SR Lawsuit?
6. Matters Disputed in SR Lawsuits
1. Dividing line Between Rescission and Nullity Lawsuits
2. Effect of Pending SR Lawsuits
3. Dealing with Abusive or Inefficient Lawsuits
b) Standing requirement for plaintiff
c) Discretionary Dismissal
d) Plaintiff’s Liability and Security Deposit
4. SR Lawsuits as a Shareholder Remedy
Hiroyuki Kansaku: The Role of Shareholders in Public Companies
II. Shareholders’ Rights in Japanese and German Joint-stock Company Law
1. Short History of Japanese Joint-stock Company Law
2. Authority of Shareholders’ Meetings and Individual or Minority Shareholders’ Rights
III. Limits of Shareholder Control and the Transformation of Corporate Governance in Japan and Germany
2. Limits of Shareholder Control in Japan
3. Limits of Shareholder Control and the Transformation in Germany
IV. Measures to Enhance Shareholders’ Corporate Control
1. Expectations of and Impediments to Effective Corporate Control by Shareholders
a) Voting Rights and Engagement
a) Voting Rights and Engagement
Junhai Liu: Regulation of Corporate Groups in China
I. Introduction to Corporate Groups in China
1. The Legal Reform of the Company Law of 2013 to Aid the Growth of Corporate Groups
2. Encouraging Policy by Chinese Governments
3. Growing Number of Domestic and Multinational Corporate Groups
II. The Pros and Cons of Corporate Groups
1. Advantages of Corporate Groups
2. Opportunism Arising from Corporate Groups
3. The Right Attitude Towards the Corporate Groups
III. The Regulatory Framework for Corporate Groups in China
7. Outlook on the Codification of Corporate Groups in China
IV. Fiduciary Duty of Controlling Shareholders in Company Law
1. Corporate Groups Are Governed by Company Law
2. Shareholders’ Fiduciary Duty Under Art. 20 Company Law
3. Controlling Shareholders’ Fiduciary Duty Under Art. 21 Company Law
4. The Ideal Relationship Between the Parent Company and the Subsidiary
V. Piercing the Corporate Veil in the Context of Corporate Group
1. One Exception to the Principle of Shareholder’s Limited Liability
2. Piercing the Corporate Veil as Legal Consequence for Shareholder Disregard for the Corporate Legal Personality
4. Commingling of Legal Personalities
5. Piercing the Corporate Veil of a One-man Corporation
6. The Relationship Between Art. 20 para. 3 and Art. 63 Company Law 2013
VI. Protecting Subsidiaries’ Creditors under the Company Law
1. Public Disclosure of Credit Information for Corporate Groups
2. Outdated Beliefs on Registered Capital
3. New Challenges for Due Diligence
4. Valid and Adequate Collateral Measures
5. Shareholder’s Liability for Breach of the Obligation to Contribute and Maintain Equity Capital
6. Proactive Approach to Abuse of the One-man Corporation
7. Mandatory Audit Requirement
VII. Company Law Protection of Subsidiaries’ Minority Shareholders
1. Direct Actions in Company Law
2. Direct Actions Under the Securities Law
3. Public Interest Litigation in the Securities Market
4. Indirect Derivative Actions
VIII. Social Responsibility of Corporate Groups
1. Corporate Social Responsibility in Chinese Law
3. Justification for the Theory of Optimization of Profits
4. Diversified Forms of Corporate Social Responsibility
5. MNEs Need to Pay More Attention to Corporate Social Responsibility in the Chinese Market
Hyeok-Joon Rho: Corporate Groups in Korea – Reconciliation of Individualism with Collectivism
II. Shareholding Structure in Korean Corporate Groups
III. Aspects of a Controlling Company
1. How to Secure the Authority to Make Directions
b) Inscription in the Articles of Incorporation or By-laws
d) Case Law on Wholly Owned Subsidiaries and Its Applicability
e) Monitoring through Information Rights
2. Protection of Minority Shareholders in the Controlling Company
a) Sale of Business by the Controlling Company
b) Purchase of Business by a Controlling Company
c) Double Derivative Action
d) Monitoring of the Subsidiary by Minority Shareholders in the Holding Company
3. Preliminary Conclusion
IV. Aspects of Dependent Company
1. Duty of Directors in Dependent Company: Justification of Corporate Group Interests
2. Procedural Requirements for a Transaction with the Controlling Company
3. Protecting Stakeholders in the Dependent Company Through Shareholder Liability
a) Piercing the Corporate Veil
b) Shadow Director Liability
4. Preliminary Conclusion
Eiji Takahashi: Recht und Wirklichkeit der verbundenen Unternehmen in Japan
II. Die tatsächliche Situation verbundener Unternehmen in Japan
1. Fakten zur Eigentumslage börsennotierter Aktiengesellschaften in Japan
2. Fakten zu verbundenen Unternehmen in Japan
a) Wechselseitige Beteiligungen
III. Zukünftige Regelungen verbundener Unternehmen in Japan
1. Zukünftige gesetzliche Regelungen der wechselseitigen Beteiligungen
2. Zukünftige gesetzliche Regelungen der Unternehmensgruppe
3. Zukünftige gesetzliche Regelungen der Konzerne im Spiegel der aktuellen Rechtsprechung
a) Konzernbildungskontrolle
b) Die Konzernleitungspflichten in der japanischen Rechtsprechung
c) Schutz der Gläubiger von Tochtergesellschaften
d) Schutz der Minderheitsaktionäre einer Tochtergesellschaft
Katja Langenbucher: Do We Need a Law of Corporate Groups?
1. The Controlling Shareholder May Pursue Third Party Interests
2. Management May Not Prevail Against the Controlling Shareholder
3. Creditors May Be More Exposed
II. The Formation of a Corporate Group
III. The Management of a Corporate Group
1. The Situation Without Group Law
2. The Situation With Group Law
3. The Dual-track of German Corporate Group Law
IV. The De Facto Group (“faktischer Konzern”)
1. The Concept of “Dependency”
2. Enabling Component: Make Use of Influence But Compensate Within a Year
a) Using Influence to the Disadvantage of the Dependent Subsidiary is Legal…
b) Duties of Loyalty and Capital Maintenance Are Overruled…
c) Management of the Subsidiary May Lawfully Abide by the Wishes of the Dominating Parent Company…
d) … as Long as Compensation Is Granted Within a Year…
e) … and the Parent’s Strategy Serves the Group Interest
3. Protective Component: Compensating the Company, Minority Shareholders and Creditors
a) Compensation Given to the Company
b) Compensation for Minority Shareholders and Creditors
V. The Contractual Group (“Vertragskonzern”)
1. Concluding the Contract
a) Profit Distribution Agreement
German and Asian Perspectives on Company Law
：Law and Policy Perspectives
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