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A wave of company law reform has swept across Europe and has now reached Denmark, where a proposal for a new combined companies act has been put forward and will soon enter the legislative process. In this article, the driving forces behind these reforms are explored. They are: the freedom to choose among the company law regimes of the European Union that follows from the case law of the EC Court of Justice; the demise of the doctrine of protection of capital; and the increasing insignificance of the distinction within company law between public and private limited companies. The main tenets of the Danish reform are: the introduction of a combined companies act to cover both the public and the private limited company; the possibility to choose between the main corporate governance models known in European company law, which, in combination with the possibility to use English at board meetings, the general meeting of shareholders and in public documents and accounts, should cater to the needs of crossborder business and investment; and a relaxation of the capital regime allowing limited companies more freedom in deciding the structure of their share capital and the distribution of control. [ABSTRACT FROM AUTHOR]

In the last decade, financial regulations have focused on issues posed by systemic risk. The derivatives market has been the subject of structural reforms which have involved both the post-trade—Regulation (EU) No. 648/2012 ('EMIR')—and the trading phase—Directive 2014/65/EU ('MiFID II') and Regulation (EU) No. 600/2014 ('MiFIR'). In particular, the post-crisis regulation is characterized by the increasing role of the EU authorities both as a supervisor and as a regulator. The paper focuses on the role of ESMA in light of its new intervention powers. This paper analyses the regulations on over-the-counter derivatives introduced in Europe, with the goal of underlining the costs and benefits of this approach. To fully achieve its objective, the paper proposes, in the first section, a logical path that starts from an overview of the regulatory response to the crisis; then, in the second section, it focuses on ESMA's growing role in light of the recent reforms. The third section points out the strengths and weaknesses of the law-making process with a particular reference to a highly technical topic. Finally, the analysis concludes by speculating on the potential 'Brexit' impact on the ESMA's reform proposal, due to the role played by financial institutions and the activism of interested Member States. [ABSTRACT FROM AUTHOR]

The EU Bank Recovery and Resolution Directive (BRRD) shifts the focus from reacting in the face of a crisis, to planning and preparing to avoid uncoordinated, ad hoc measures and aims to ensure banks resolvability; it strengthens and harmonizes early intervention measures and gives supervisors new tools and powers for managing failing banks while continuing part of their business, i.e. critical functions. The BRRD was conceived out of a need to reduce public funds being used to bail out banks considered 'too big to fail' and strengthen cooperation and coordination between Member States. The first part of this paper sets out how key resolution decisions, including during recovery and resolution planning, are taken for cross-border banking groups within the EU, and within the Single Resolution Mechanism (SRM) of the euro area. It also considers the impact of the BRRD on cooperation with third countries (small host countries). The second part of the paper offers a legal analysis of why no autonomous centralized decision-making powers were delegated to the Single Resolution Board (SRB). It considers whether legal judgements made in 1956 and enshrined as the ' Meroni doctrine' actually prohibit delegation of fully autonomous resolution powers to the SRB and more broadly prevent the creation of a centralized resolution agency for the whole EU. [ABSTRACT FROM AUTHOR]

The recent financial crisis has triggered considerable concerns about the activities of credit rating agencies (CRAs), which has led to a shift away from self-regulation based on voluntary compliance with the IOSCO Code to the implementation of a regulatory framework at EU level under the supervision of the European Securities and Markets Authority. Against the background of the role CRAs play in the financial market system and how they have failed to fulfil their intermediary function, this paper examines the main weaknesses attributed to the operation of CRAs before and during the financial crisis and assesses the EU's regulatory response to these weaknesses. As the paper will elucidate, many of the major concerns identified have been addressed following consecutive regulatory amendments, albeit to differing degrees and levels of satisfaction, which in the future will require redress and further improvements to be implemented, including, but not limited to, the issuer-pays model, over-reliance on ratings, ratings shopping and private enforcement. [ABSTRACT FROM AUTHOR]

With the institutional setting for the Banking Union having been established and become fully operational, market participants, supervisory staff, and academics are gradually getting to terms with the reality of the new two-tier system of supervisory and resolution authorities within the Eurozone. Drawing from media coverage, input from practitioners and the on-going academic debate, the present article seeks to present an-inevitably provisional-assessment of the new regime from a German perspective. While regulatees and their advisers within the country appear to have got used to the new reality, the paper also identifies a number of residual concerns, some of which are attributable to the specific characteristics of the German financial sector, others indicative of broader problems. [ABSTRACT FROM AUTHOR]

The establishment of centralized supervision by means of the Single Supervisory Mechanism (SSM) had to ensure the quality and impartiality of banking supervision, as well as the establishment of a supervisory system more properly aligned with the characteristics of the banking sector. The far-reaching mixed administration of the European Central Bank (ECB) and national competent authorities (NCAs) must also ensure strong and consistent supervision across the participating member states while using the NCAs' local and specific know-how. All elements indicate that a more effective banking supervision was necessary for the Eurozone. This may be challenging given the conflict between the required centralisation of supervision, on the one hand, and the far-reaching mixed administration and composite legal order in place on the other. The first years of experience with the SSM provide a multi-faceted picture of the effectiveness of centralised supervision. This paper discusses the effectiveness of centralised supervision within the context of a far-reaching mixed administration and legal order on the basis of three different elements. Firstly, the basis of supervision is discussed, i.e. the applicable substantive laws for which compliance must be ensured by the ECB, and which concerns the so-called Single Rulebook. Secondly, the organisation of supervision, in practice, is discussed on the basis of one of its most important features: the Joint Supervisory Teams. Lastly, the delineation of supervisory tasks is discussed, as well as its impact on the ECB and, based on the Dutch example, its impact on national supervisory models. These elements illustrate the many steps that have been taken to improve the effectiveness of centralised supervision. They also show how many obstacles are still left to overcome. [ABSTRACT FROM AUTHOR]

This article examines the administrative remedy provided by the Administrative Board of Review (ABoR) of the European Central Bank (ECB), as part of the broader issue of the right of defence of natural and legal persons vis- à- vis ECB supervisory decisions within the Single Supervisory Mechanism (SSM). After presenting an overview of the review panels established in the financial sector in the EU, the article describes the experience with the ABoR by analysing its composition, its mandate and scope of review, the main procedural aspects and the relationship with judicial proceedings before the European Court of Justice. Particular attention is given to the substantial issues dealt with by the ABoR in its Opinions and to some of the major challenges faced in the first 2 years of practice. Among them is the assessment of the correct application of national laws implementing EU legislation by the ECB. The paper identifies two aspects giving particular cause for concern and requiring legislative reforms: (1) the assessment of the suitability of the members of management bodies (fit and proper assessment) and (2) the inclusion of bank holding companies within the scope of banking supervision. [ABSTRACT FROM AUTHOR]

The issue of whether and how to regulate short selling has vexed regulators for some time. While there are a number of potentially damaging consequences that are said to stem from short selling, there is also evidence that it can have beneficial effects on financial markets. In the wake of the collapse of Lehman Brothers in September 2008, and more particularly the falls in the prices of listed financial securities that followed, the regulation of short selling has come back onto the regulatory agenda with a vengeance. Various regulatory techniques, some temporary and some more permanent, have been adopted to deal with short selling. This paper explores those implemented in the US, the UK, Germany and France. The EU has also been developing its regulatory response and in March 2012 the final text of a Regulation dealing with short selling was published. This paper considers the arguments for and against the regulation of short selling, and considers the EU's Short Selling Regulation in the light of these arguments. It is suggested that although the provisions of the EU's Regulation introducing disclosure to the regulator are broadly sensible, as are the provisions designed to foster a stricter settlement regime, other provisions are more problematic and have the potential to cause damage to European financial markets. [ABSTRACT FROM PUBLISHER]

One of the most innovative features of Basel III was the introduction of a new 'countercyclical' regulatory dimension for banks. In 2013, this dimension was operationalised in the European prudential framework included in the CRR/CRD IV package. Although the uniform implementation of these rules has been welcomed by the European legislator as creating a level playing field for banks and investment firms, this legal analysis reveals the existence of serious competitive disadvantages for small local and regional banks. While the largest entities are incentivised to exploit the arbitrage opportunities hidden in the CRR/CRD IV countercyclical provisions, such opportunities are not available to smaller entities. Thus, the unintended result of the new prudential framework seems to be not only a re-sizing of the banking balance sheets, but also a re-composition of the banking structures. In this paper, one of the building blocks of the Legal Theory of Finance, i.e., the construction of finance as a legal by-product is taken as a point of departure to show how the adoption of the new countercyclical rules paves the way for a new consolidation wave in the banking industry. [ABSTRACT FROM AUTHOR]

Two events are currently changing the landscape for business restructurings in the European Union: the 'Restructuring Recommendation' (RR) of the European Commission, issued in 2014, and the 2015 recast of the European Insolvency Regulation (EIR). In this paper, we critically review the RR and put it into the context of the reform of the EIR. We find that the recast EIR and the RR do not dovetail perfectly-a restructuring proceeding as proposed by the RR would not necessarily be within the scope of the recast EIR; we also suggest that, in any case, the EIR is not optimally designed to facilitate restructurings, given its treatment of secured creditors. Regarding the regulatory approach pursued in the RR, the Commission rightly pushes towards harmonisation with respect to Member States' restructuring regimes-regulatory competition is not a sensible regulatory alternative in this area. However, we criticise both the methodology and scope of the harmonisation proposal of the RR: sketchy minimum harmonisation of restructuring rules leaves huge potential for residual diversity in Member States' restructuring laws, and the Commission's narrow focus on restructuring proceedings ignores several aspects of the complicated interaction between the Member States' formal insolvency laws and the restructuring mechanism proposed. Further, we disagree with the substantive recommendations for Member States' restructuring laws suggested by the RR: they wrongly require financial difficulties or a likelihood of insolvency as an entry test for the recommended restructuring proceeding, and the process appears susceptible to abuse by sophisticated financial investors-it does not provide for the mandatory appointment of a supervisor and allows significant curtailments of creditor rights without sufficient safeguards in place. Instead, we propose an efficient debtor-in-possession (DIP) regime as an alternative that could be initiated regardless of a firm's solvency, provided that it is economically viable and that the filing is not abusive. [ABSTRACT FROM AUTHOR]

This issue of the European Business Organization Law Review is devoted to fundamental problems in the field of retail financial services as have become particularly clear since the recent disruption of the financial markets. Ultimately, these issues lead to line-drawing problems and policy choices about investor and consumer protection which are tackled from a legal and an economic perspective respectively. The articles in this issue have originated from papers and proceedings of the joint IMFS (Institute for Monetary and Financial Stability) and LEMF (Doctorate/PhD Program ‘Law and Economics of Money and Finance’) conference on ‘Retail Financial Services after the Crisis: Legal and Economic Perspectives on Investor and Consumer Protection’, which took place at the House of Finance, Goethe University of Frankfurt on 20 and 21 January 2012. [ABSTRACT FROM AUTHOR]

In the fifteen year period to 2008, the private equity industry grew enormously in Europe, to the point where it began to be seen as a rival to the public markets. This gave rise to concerns and calls for the private equity industry to be regulated. The financial crisis, and in particular the contraction of the market for debt prompted by the collapse of Lehman Brothers in September 2008, has led to a significant reduction in the number and value of private equity deals. However, if anything, the financial crisis has led to increased calls for regulation of the industry. This paper examines the development of private equity transactions in Europe, and analyses the nature of these transactions. It then considers whether the concerns raised in relation to private equity are justified. Broadly, the arguments in favour of regulation of private equity may be divided into two kinds: the need to increase transparency in the industry by imposing disclosure obligations, and systemic risk concerns. These arguments are considered, and the terms of the Alternative Investment Fund Managers Directive (AIFMD) are examined in the light of these issues. It is argued that the arguments in favour of regulation of private equity are weaker than has been suggested and that this Directive does not adequately differentiate between hedge funds and private equity when imposing this regulatory regime. [ABSTRACT FROM PUBLISHER]

Following recent developments in some European jurisdictions, the Committee of European Securities Regulators (CESR) proposed, on 9 February 2010, 'to extend major shareholding notifications to instruments of similar economic effect to holding shares and entitlements to acquire shares'. This initiative pushes for mandatory Economic-only Disclosure of Major Shareholdings in Europe (EOD). By providing twenty arguments against the CESR proposal, this paper seeks to spur a lively discussion as to whether mandatory EOD is desirable. It puts forward that European institutions are well advised to refrain from implementing the CESR proposal in its current form. If at all, implementing a requirement to report to regulators (Economic- only Reporting - EOR) and limiting EOD to very large positions serves social welfare better than EOD and avoids major differences between European securities law and US securities regulation. [ABSTRACT FROM AUTHOR]

In this paper, we use case studies to document how dominant shareholders have circumvented mandatory bid rules to appropriate wealth from minority shareholders. Dominant shareholders are numerous in Continental Europe. Creative compliance with mandatory bid rules reveals the failure of boards and regulators to protect minority shareholders and the difficulties of legislating in this area. We propose enhanced means for protecting their interests. [ABSTRACT FROM AUTHOR]