Marco Ventoruzzo

Cross-border Mergers, Change of Applicable Corporate Laws and Protection of Dissenting Shareholders: Withdrawal Rights under Italian Law

Abstract The European common legal framework for cross-border mergers and acquisitions is becoming ever clearer. In the light of the principle of freedom of establishment, a cross-border merger can either have the side-effect, or be primarily justified by, the goal of a change of the applicable company laws for one – or some – of the companies participating in the transactions. In this respect cross-border mergers, often driven by substantial economic factors, also become a crucial issue for regulatory competition in European company law. This Article addresses the issue of the protection of minority shareholders who do not consent to the merger (or acquisition), discussing what seems to be one of the most important protections provided under Italian law: withdrawal rights. An analysis of protection of minorities vis-à-vis a change of the applicable company laws, in particular achieved through a merger, is very relevant, but often overlooked, in the discussion on the development of a market for rules in Europe. In fact, the existence and relevance of effective minority protections, such as a withdrawal or appraisal right, contributes to both define the relative attractiveness of the different legal systems from the point of view of the companys stakeholders, and to limit the ability of majority shareholders and/or managers to shop around for the fittest company law system.

The Disappearing Taboo of Multiple Voting Shares: Regulatory Responses to the Migration of Chrysler-Fiat

In 2014, the Italian Government broke an old taboo of Italian corporate law, joining the ranks of many different legal systems that allow the issuance of multiple voting shares (MVSs), including the United States. The importance of the reform is therefore broad, also because it offers the occasion to review, more generally, the state of the debate on MVSs. The new rules are also interesting because they are both a cause and a consequence of regulatory competition in Europe, and can be considered an example of the recent trend toward greater flexibility and contractual freedom in corporate law. This article examines the new rules in a comparative perspective, considering similar experiences in Europe and the US, and discussing the empirical evidence on the effects of MVSs, especially in listed corporations. The second part of the paper illustrates some interpretative issues raised by the new Italian rules, and the possible motivations of the Italian legislature in taking this step also vis-a-vis the planned privatization of some large state-owned enterprises.

The Thirteenth Directive and the Contrasts Between European and U.S. Takeover Regulation: Different (Regulatory) Means, Not so Different (Political and Economic) Ends?

Cross-border acquisitions, especially through hostile takeovers, represent one of the most dramatic consequences of the growing integration, both within Europe, and when considering the economic balance of power between the U.S. and the European industries. This Article focuses on the single most important piece of legislation on European takeover law, the Thirteenth Directive of the European Union on Takeover Regulation, which was approved on April, 21 2004 and must be implemented by Member States before the end of 2006. Passage of the Thirteenth Directive is no minor event. Earlier versions were embroiled in arresting political controversies that generated significant Member State antipathy toward European regulation of the area. As a result, several earlier versions were rejected, causing many experts and observers to question whether any takeover directive would be adopted at the EU level. Also as a result of the political controversies, the final version of the Directive represents a significant compromise, most strikingly for the flexibility it affords Member States in adopting its various provisions. For all these reasons, final passage of the Directive represents a significant legislative accomplishment, worthy of attention not only for its substantive effect, but also for its contribution to the on-going debate over the desirability of harmonization versus regulatory competition. Consistent with prevailing European perspectives, but differently from the U.S. approach, the core premises of the Thirteenth Directive involve significant restrictions on the freedom of both the raider and of the target corporation. Under the Directive, corporate raiders are generally obliged to obtain control only through the launching of a public tender offer on all the outstanding shares, at a fixed minimum price. Meanwhile, the directors (and/or the controlling shareholders) of target companies are limited under the Directive regarding the defensive measures that they can employ to repel a hostile bid. Meanwhile, in the United States, these restrictions are almost completely absent, as would seem in keeping with its more market-oriented approach to regulation of various categories of economic activity. Taking as its starting point U.S. rules and assumptions regarding takeovers, this Article identifies the fundamental features of the European approach to takeovers in a comparative and critical perspective. I examine extent of and rationales for the discrepancies between the two systems, discrepancies that, in the next few years, will play an important role in shaping the international takeover scenario, and therefore the cross-Atlantic economic landscape. Two common risks of comparative analysis are a tendency to over-emphasize superficial differences and a temptation to evaluate one system as inherently superior to another. Through my analysis, I show that, even if manifested through different rules, the distance between U.S. and European takeover regulation might be considered less extreme than most scholars and experts presume, especially if, instead of looking at the means of the regulation (the specific rules adopted ), we look at its ends, meaning the underlying policy (and political) goals pursued and some of the economic effects of those rules.

Why Shareholders’ Agreements are Not Used in U.S. Listed Corporations: A Conundrum in Search of an Explanation

This short essay, prepared as the text of a talk for a conference on shareholders’ agreements, examines what I consider one of the most puzzling and overlooked issues of US corporate law and securities regulation. The issue is why agreements among shareholders are not often used as control enhancing devices among American listed corporations. I offer a few ideas on this question, not providing a conclusive answer, but rather exploring some hypothesis and suggestions for further research. In order to do that, I divide my discussion in two parts. First, I quickly overview the substantive regulation of shareholders’ agreements in the United States, focusing in particular on Delaware law and on the Model Business Corporation Act. Second, I concentrate on the issue of the use – or, better, limited use – of shareholders’ agreements in listed corporations. I offer some new possible explanations for the limited use of these type of covenants in the United States.

Takeover Regulation as a Wolf in Sheep's Clothing: Taking Armour & Skeel's Thesis to Continental Europe

Aesop was an optimist. In his cautionary fable that inspired the famous admonition about wolves in sheeps clothing, the predator intentionally dons a sheeps fleece in order to sneak up on a lamb. His disguise, it turns out, is so effective that he ends up being mistaken for the real thing and killed by another wolf. According to Aesop, even the most effective fraud can turn against its perpetrator, and justice be done. The results are not always so salutary with other clandestine predators, including legal rules that appear aimed at protecting vulnerable groups, but instead provide valuable tools to be exploited by other, and more powerful, lobbies. The thesis of this Article is that some of the takeover regulations that have proven so successful at protecting minority shareholders in the U.K., and have been incorporated into European takeover regulation, may operate in Continental systems as a deceptive guise that instead ensures protection for entrenched controlling shareholders.