Legal Persons in Europe
Leadership, management style and communication - Programme Structure - Methodology and Research Objectives - Relationship to Research School - Academic Reputation and Effects of Cooperation
Leadership, management style and communication
The research group on Legal Persons in Europe is led by the general programme coordinator together with the programme coordinators from the participating institutions. The communication between the general programme coordinator, programme coordinators, senior researchers and researchers is frequent, and there is significant involvement by group members other than the programme coordinators in the design and management of the research project. The intensity of the actual cooperation in the group has resulted in a bottom up management structure, whereby the management style is more coaching in nature than steering.
The general programme coordinator is responsible for ensuring that adjustments to the research focus and approach are presented clearly to the research community, the presentation of which is at least once a year put forward for discussion at the project meeting during the annual conference.
Original Issue Definition and Objectives
The research programme as it was originally conceived is still very visible in its current set-up. The original plan primarily focused, as it still does, on the issue of harmonisation and implementation. Compared to the original design, the research carried out now is less focused on the (European) law of voluntary organizations (law relating to foundations and (unincorporated) associations), albeit that in the coming research period this topic will be high on the research agenda again as part of the planned research into group actions and the potential influence of non-governmental organizations on corporate social responsibility policy. The research agenda is influenced to a significant extent by European and even global discussions on Corporate Governance, with a particular focus on aspects of Corporate Social Responsibility. Revision of the agenda is on the one hand related to the urgency of this subject matter, and on the other with the fact that the Dutch law on foundations and (unincorporated) associations, also in a comparative perspective, is to a large extent fully crystallized, and there has been no sign of European initiatives in the direction supranational regulation in this area for some time.
Revision; Current Programme Structure
It was mentioned above that the revision of research agenda primarily relates to Corporate Governance, and in particular Corporate Social Responsibility. The core of the research agenda has been maintained and will also form the starting point for the group's research in the future.
The research programme currently is divided in four main lines of research, which will be briefly described below. These are:
1. Aspects of Formal Harmonization
One of the most important lines of research in this programme concerns the study of the way in which European legislation in the field of corporate law in a broad sense has been implemented in the national legal systems of the member states. The turbulent developments in this dynamic area of law have rendered the definition of common foundations and general principles in and between different legal systems necessary. The harmonization process in the area of company law has been in full stride since the first directive which saw the light in 1968. Throughout this process, it has been possible to observe a tendency on the part of member states to protect their own legal culture, also in this area of the law, by making use of the freedom frequently provided by the European basic principles to give the law national flavour. Also from this perspective, there is a manifest need for research into commonalities of legal cultures and legal principles. There is much of interest to be observed in this context. Thus, it is possible to observe that there are countries that naturally exercise restraint when it comes to changing national law, while other countries continually adopt a more liberal attitude towards the implementation of the basic principles of the directives. A good example is provided by the implementation of the ban on companies to provide financial assistance for the acquisition of its shares by third parties, as laid down in the second directive dealing with capital safeguards. Article 23 of the directive refers to the 'acquisition of shares'. In the Netherlands, where there is a tradition of extensive implementation of directives in the field of corporate law, it is thought that, given the rationale underlying the directive to ensure a company maintains sufficient capital, assistance for the subscription of newly issued shares should also fall within the scope of the ban, therefore, in Dutch law, there is a ban on the company to provide financial assistance for subscription and acquisition of shares by third parties. Other countries, such as France, foresaw the problems the ban would produce in practice, for instance in relation to the realization of takeovers, and adopted a more stringent textual interpretation and limited the implementation, so that the subscription of shares does not fall under the prohibition. These exciting topics were dealt with at the corporate law workshops at the Ius Commune conferences in 2004, 2005 and 2006, where presentations were given by a large number of researchers of the participating institutions as well as other universities such as Leiden, resulting in a substantial number of publications and forming the impetus for initiatives such as the project "Mergers and Acquisitions", a series of 15 books over the M&A process, published by Uitgeverij Paris in Deventer and edited by Steins Bisschops (Nyenrode/Maastricht) and Schwarz (Maastricht). Nine parts have so far been published in that series. Another project resulting from these workshops is "European Company Law", see below.
In 2003, Martha Meinema defended her Ph.D. thesis (Dwingend recht voor de besloten vennootschap. Een ebscouwing over de contractsvrijheid van aandeelhouders in rechtsvergelijkend perspectief, Deventer: Kluwer, 2003, promotors Schwarz and De Kluiver) in Maastricht. This thesis has strongly influenced thinking in the Netherlands on maintaining mandatory company law. In the meantime, a political desire for more flexible law in relation to the private limited company has led to a bill on the flexibilisation and simplification of the law on private limited companies, based on the expert report of the De Kluiver Commission (2004). This operation, among others directed at a more nuanced application of the system of directives on capital protection (2nd EC directive and the adaptation thereof in the SLIM operation) of companies with a private character, has led to substantial European and transnational oriented research by the research group. Another observation that is interesting in this light is that it appears that a more or less full harmonization can be achieved only if it deals with issues that do not have national historical or cultural undertones, while harmonization on more sensitive themes in practice appears extremely difficult, resulting in greater freedom of national legislators to allow the features of their own national law to resound in the implementation of directives. Thus, it was relatively simple to achieve a far-reaching harmonization of the law on annual accounts, while this was absolutely not possible for subjects such as takeovers of public companies against the wishes of the sitting board of directors.
In this framework, in cooperation with colleagues from the Utrecht and Leiden faculties, an initiative was taken to start a loose-leaf series European Company Law, in which company law issues are dealt with in European comparative law perspective, with a strong accent on studying the way in which the directives have been implemented in the different member states. At this time, the first part in this series has been published under the title 'European Company law in Accelerated Progress'(ed. S.M. Bartman), a compilation published following a conference in Leiden organized under the auspices of the research school (23 September 2005). Various senior researchers from the research group participated in this conference, including Dorresteijn, Lennarts and Schwarz, who published their findings in the aforementioned book. The series is published by Kluwer International and edited by Prof. A. Dorresteijn (UU), Prof. S. Bartman (UL), Prof. C.A. Schwarz (UM). This cooperation takes place within the context of the Center for European Company Law. This Center organizes biannual international conferences at the participating institutions. On 22 November 2007, the second conference will take place in Utrecht on the theme of companies crossing borders in Europe. The third conference will be organized in Maastricht in 2009. The conferences take place under the auspices of the research school. The Center for European Company Law also publishes the English language journal European Company Law, in cooperation with Kluwer International. Dorresteijn and Schwarz participate in the Scientific Editorial Board of this journal, in which other members of the research group also publish.
2. Aspects of Material Harmonization
In addition to the harmonization of company law in the formal sense, international practice has also had a certain harmonizing effect, in which respect different starting points in legal thinking can lead to extremely interesting problems. An example is provided by the problems brought about by different viewpoints with respect to the character of legal persons. In the Anglo-Saxon world, for instance, the legal person is seen as (the result of) a contract, while in other countries, such as the Netherlands, an institutional viewpoint is adopted. In the Netherlands, when a legal person is established it comes into existence as an institution, independent of its founders and shareholders. In this institutional approach, the legal person is often regulated by mandatory law and there is, for instance, barely room for contracts between shareholders. In contrast, in the contractual approach the starting point is that the legal person is based on (sub)contracts. It is precisely the deepening of understanding through comparative law research that gives rise to striking new perspectives that are not only academically highly interesting, but also of great importance for practice. Consider for instance the possible acceptance of "Incorporation by reference" in Dutch company law practice. An opposite trend can be observed in the current bill on the flexibilisation and simplification of the law on the private limited company. An important element in this bill is the separation of the capital safeguards of the 2nd EC directive and the legislative regulation of the private limited company.
3. Corporate Governance
The research group not only focuses its studies on the law in the European Union, but also looks to American law which has had a transforming influence on European company law, and in this context not only English company law, but also continental European legal systems. As a result the 'record-date system' has recently been introduced in Dutch company law, and American principles play an important role in discussions on for instance corporate governance and the creation of a level playing field in the area of the takeover market, which are themes that the research group has frequently discussed and published on. In this context, attention should be drawn to the recent turbulence on the takeover market in continental Europe, especially also in the Dutch context, and in particular against the background of the late implementation of the 13th company law directive "on Mergers and Takeovers". We now see here that which has been occurring in the United States for some time, namely shareholder activism and the tendency to exercise influence on management policy, for instance in relation to the strategy chosen within the company. Research within the group demonstrates that on the one hand there is an actual negation of the differences between the Rhineland and Anglo-Saxon management models. Comparative law research shows that one of the triggers is the fact that in the whole of Europe, the solution for improving corporate governance is sought in strengthening the position of the shareholder, to a large extent from the idea that giving actual power will stimulate interest in exercising shareholders rights. It is cautiously submitted that this does not in general appear to be the effect, and that hedge funds and other activists use the strengthening of the shareholders position, while for the rest shareholder absenteeism remains high.
The appointment of Prof. mr. Steins Bisschop as Professor of Company Law, in particular Corporate Governance, at the Maastricht Law Faculty as of 1 July 2007, will strengthen the research in this field. Professor Steins Bisschop has participated for some time in this Ius Commune research group.
Finally, there have been important developments in relation to material harmonization in relation to company law aspects of private international law in Europe. Attention is drawn here to recent groundbreaking judgments of the European Court of Justice concerning the freedom of establishment of legal persons in Europe and the consequences of these judgments for the approach in private international law to foreign legal persons in the various European jurisdictions. The manifest freedom of establishment of legal persons within Europe that stems from these judgments has led to increased competition between legal systems. This new, Darwinist manner of approaching legal systems offers another frame of reference for assessing legal developments as far as company law is concerned.
4. Corporate Social Responsibility
Finally, since 2003 cooperation has led to the launch of a new line of research in the group. According to the initiators, the discussion on Corporate Governance, as it is conducted in Europe, pays too little attention to the element of Corporate Social Responsibility (CSR). In 2005, the book "Maatschappelijk verantwoord ondernemen; Corporate Social Responsibility in a Transnational Pespective", edited by Hamers, Schwarz and Steins Bisschop, was published. This was followed by a large number of publications on this theme in national and international journals, which were in part made possible by a significant research subsidy from the Ministry of Economic Affairs. Cooperation within the multidisciplinary research team, led by Professor Jacqueline Cramer, resulted in the expansion of the scope of research in this field. A research proposal is now being prepared that will focus on a law and economics analysis of the CSR phenomenon (Faure/Schwarz). Incidentally, research activities in this area have led to the development of a master's course on Corporate Social Responsibility, and postdoctoral research in this area is in preparation.
The coordinators intend to continue this line of research into the standardization of Corporate Social Responsibility in the coming years.
Methodology and Research Objectives
The approach adopted by the research group continues to be focused on uncovering the foundations of (aspects of) national and transnational company law through fundamental positive law research, as well as through comparative law research. These methods are likewise used in the context of research into Corporate Governance, and in particular into Corporate Social Responsibility. With respect to the latter, a strong emphasis is also placed on a multidisciplinary approach. Courses and seminars on this field are held on a regular basis.
Relationship to Research School
This research group strives to contribute to the central mission of the Ius Commune Research School. In addition to conducting programmed research, regular research activities take place that cross programme boundaries, for example on the liability of directors in the field of environmental law. The relationship with the central leadership of the research school is highly developed, also due to the fact that the general programme coordinator of this research group is also the chairman of the Board of the Research School, and in that capacity in close contact with the director of the research school and the programme coordinators of other research groups. In the meantime, research in the area of comparative property law in relation to the ownership and right of usufruct attached to shares (E. Bos, Vruchtgebruik op aandelen, diss. Maastricht 2005), as well as on the role of company organs in the context of impending insolvency (M. Olaerts, diss. Maastricht 2007) has been completed and attempts are being made to obtain new subsidies for research into the new power relations in companies, as well as in the area of Corporate Social Responsibility, also in relation to law and economics. The research group endeavours to attain a strong position in national and international discussions on the development of national and European company law. From this perspective, it is satisfying that members of the research group are regularly involved in working groups and supervisory committees of research activities, or asked to give key note addresses at prominent conferences and to write preliminary reports (preadviezen).
Academic Reputation and Effects of Cooperation
The effect of cooperation within the research school is the concentration of strength around well-formulated projects and the resulting intensive cooperation between researchers, as well as of course shifting focus to multidisciplinary research and research that crosses programme boundaries. Although the project group Company Law in Europe is relatively small in size, its output in terms of quality and volume is highly satisfactory. The academic recognition is reflected in the invitations various researchers receive to participate in national and international conferences, to join editorial boards of book series and journals, to contribute to edited books outside the context of the research school, as well as to take part in policy committees, or to write preliminary reports (preadviezen). The group's commitment to themes such as the "Flexibilisation of the Dutch Private Limited Company", shareholder activism as well as the misuse of companies and the private international law dimensions of company law is substantial.