Peter O. Mülbert

Corporate Governance of Banks

Good corporate governance of banks is of a vital concern to banks themselves as well as to the banking supervisors. During the past decade, listed banks and even non-listed institutions worldwide started to publicly emphasise that good corporate governance is of vital concern for the company, and even to adopt individualised corporate governance codices. In turn, the Basel Committee on Banking Supervision already published two editions of a guideline entitled ‘Enhancing corporate governance for banking organisations’ which reflects the supervisors’ taking on the issue to perfection. Last but not least, two years into the financial crisis, the issue of banks’ good corporate governance has started to attract pronounced interest, with the OECD taking a leading role. Against this backdrop, the article, on the one hand, discusses the particularities of banks’ corporate governance — due in large part to banking regulation and to deposit insurance — in a principal-agent framework, and, on the other hand, presents the supervisors’ financial stability perspective taking the Basel Committee’s guidance as a starting point. The article concludes with reflections on some tentative lessons from the current crisis for (banks’) good corporate governance: banks’ corporate governance differs from that of a generic firm. Deposit insurance and prudential regulation, while aimed at compensating for deficits in the monitoring and control of banks, both act to exacerbate the particular problems that are inherent in banks’ corporate governance. From this perspective, banking regulation and banks’ corporate governance interact as the driving forces of a vicious circle that produces ever more regulation. Hence, one may doubt whether banks’ corporate governance should map the way forward for corporate governance in general. In particular, this holds true for the way forward to regulating bankers’ pay.

A Synthetic View of Different Concepts of Creditor Protection - Or a High-Level Framework for Corporate Creditor Protection

Protection of corporate creditors has become an important topic within the European Union. At EU level, discussion has been sparked by widespread dissatisfaction with some very rigid and cumbersome provisions, and even with the whole concept of the Second Company Law Directive. At EU Member State level, three landmark decisions by the European Court of Justice — Centros, Überseering, and Inspire Art — opened the way for an all-out competition between the different company forms provided for by national company laws. At both levels, albeit for different reasons, British company law — and in particular the absence of any legal capital in the private limited company — acts as the main driving force putting pressure on the concept of legal capital as enshrined in the Second Directive, which in turn was modeled on German company law notions.The High Level Group of Company Law Experts provided the appropriate starting point for the present discussion by dealing not only with the raising and maintenance of capital, but by also taking up the wrongful trading remedy (s. 214 British Insolvency Act) and the equitable subordination remedy. This present article builds upon this broader approach, seeking to develop a conceptual framework for an efficient creditor protection regime within a purely national setting, i.e., leaving aside the additional problems created by pseudo-foreign companies and the impact of the provisions of the EU Treaty for the free movement of companies on national company laws.Given the rich variety of creditor protection mechanisms within EU Member States, any attempt at developing even a high-level framework has to start by identifying the relevant risks against which creditors need protection and the required extent of such protection. Against this backdrop, any jurisdiction has to make a choice whether to rely mostly on creditor self-help or on mandatory protection rules. In principle, since all mechanisms for creditor self-help are inherently costly and fail to protect involuntary (tort) creditors and “weak” contractual creditors as effectively as they do “strong” contractual creditors, there is a case for mandatory protection rules. The article then goes on to review the different well-known mechanisms for mandatory creditor protection. In line with earlier findings and the criticism mostly from English scholars, the case for a German-style legal capital regime turns out to be weak, at best.On the other hand, since shareholders’ incentive to act to the detriment of creditors increases with the company becoming financially distressed, it is important to provide for mechanisms that will work to effectively control any opportunistic behavior on the shareholder’s part. In this respect, equitable subordination of a shareholder’s right as well as the wrongful trading remedy may serve important roles. The article concludes by taking a brief look at the resultant high-level framework for an efficient creditor protection regime.

Legal Capital – Is There a Case against the European Legal Capital Rules?

Legal capital rules have traditionally been among the cornerstones of European Union Company Law. This led to the early promulgation of the Second (“Capital”) Directive concerning the formation and maintenance of a legal capital. The unanimity of the basic decision in favor of legal capital rules became apparent once again as recently as last year in the EU regulation on the European Corporation (SE), that requires a minimum capital of € 120,000 and contains rules governing the raising and maintenance of this capital.

Zur Einberufung der Hauptversammlung durch die nach § 122 Abs. 3 AktG ermächtigte Aktionärsminderheit

DeutschDie durch eine Aktionarsminderheit einberufene auserordentliche Hauptversammlung der Balda AG vom 18. 7. 2013 1 hat gezeigt, dass Rechtsstellung und Befugnisse der gerichtlich zur Einberufung ermachtigten Minderheit bislang wenig geklart sind. In besonderer Weise gilt dies fur die Frage, ob der einberufende Aktionar befugt ist, eine Anmeldestelle zu benennen, und in der Folge Aktionare, die sich innerhalb der Frist des § 123 Abs. 3 Satz 2 AktG unter der angegebenen Adresse anmelden, zur Teilnahme an der Hauptversammlung berechtigt sind. Der Beitrag bejaht diese Frage. EnglishUnder Section 122 Para. 3 of the German Stock Corporation Act, a court may authorise shareholders to call a shareholders’ meeting, when a demand to call such a meeting had already been denied by the management board. Minority shareholders of the Balda AG, pursuant to such authorisation, called an extraordinary shareholders’ meeting for 18 July 2013. The events at the meeting demonstrated that minority shareholders‘ legal status and authority in such circumstances remain largely uncertain. In particular, if the articles of association require the shareholders to give notice of their attendance prior to the meeting, the German Stock Corporation Act is ambiguous as to whether a minority shareholder who calls a meeting may specify the mailing address to which shareholders have to give their notice. It is also unclear whether shareholders who give notice of their attendance to such an address are entitled to participate in the shareholders’ meeting. This article analyses both issues and concludes that (a) a minority shareholder may specify the mailing address to which shareholders have to give their notice, and (b) shareholders who give notice of their atten- dance to that address may participate in the shareholders’ meeting.