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european law presentation

Friday 28 March, 2008

I attended a presentation given by Prof. Paul Storm of (Erasmus?) University-Rotterdam @ John Marshall Law School Center for International Business & Trade entitled “Recent Developments on the European Corporate Scene.” Basically it was simply a lecture on European corporate law. He said basically that the European Union granted 4 freedoms, of the movement of goods, persons, capital, & establishment (of a company). Establishment was the focus of his talk. Establishment provides the basis for harmonisation, creates the backbone for mobility, & new legal forms. The EU has issued 14 directives regarding harmonization, which don’t just prescribe mechanics, rather control mechanisms. 3 amendments to existing directives failed.

Labor/employee participation in management (works councils-management & supervisory boards) have limited cross-border takeovers by giving labor a voice in the negotiations. By moving the headquarters location, certain corporate structures disappear. In the Sevic case in 2005, the German trade register refused to acknowledge a Luxembourg acquisition because German law did not permit cross-border mergers.  The rule of reason could be possible justification.

The EU has authorized a few new forms (legal structures) under European Community law-European Economic Interest Grouping in 1985, which aren’t much used; European Company, (with smaller supervisory boards) in 2001 ,which has been adopted by Alliance, BASF, & Porsche; & European Cooperative Societies in 2003, of which the 1st was adopted in 2005.

Prof. Storm also discussed the divestiture of LaSalle Bank from ABN Amro from the Dutch perspective.  The end result was the supreme court ruled that the deal must maximize the share price for shareholders, which seemd alien to Dutch law, but was expanded to include employees & customers interests as well.

He also commented briefly on Yukos Oil, which was assessed enormous tax bills, given 2 days to pay, & declared bankrupt.  When addressing the Dutch holding company Yukos Finance, the issue became “Could the Dutch court overrule this turn of events?”  The end result was no.

Finally in Q&A, he addressed the following issues

-German managers are trying to get rid of mitbestimmung & reform company law so that they are more attractive for foreign direct investment

-It’s legal in the Netherlands for Americans to found companies in Delaware just for the purpose of opening an office in Europe, but not in Germany

-there must be an actual case for the European Court of Justice to offer an opinion

-A European constitution is not in sight for a long time.

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