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[No. 11] Now For Something Completely Different

Ok, this is pretty much off-topic. But it's about Star Wars and almost weekend without any interesting Supreme Court decisions of late to cover, so hey. Here goes (volume!).

And oh, there is of course precedent.

[No. 10] "Truer Words" According to Prof. B.

Check this, linking to this.

[No. 9] --- Breaking News --- Mark The Date! --- Inaugural Lecture of Prof. Steven Hijink ---

This Friday at 16.00 hrs (Amsterdam time) sharp in the aula at the Erasmus School of Law, my colleague Prof. Steven Hijink will give his inaugural lecture titled:

'Naar een Europees Jaarrekeningrecht".*

See you there? See you there!

* Pretty roughly translated: towards  European annual account law.

[No. 8] Report of the MCCG

By "MCCG" I mean the Monitoring Commissie Corporate Governance. I also could have framed it as "DMCCG", D standing for Dutch, but that may be one consonant too many. By "Report" I mean the latest monitoring report by the MCCG, available here.* ** Below the fold are the main findings.

* Unfortunately only in Dutch; which is a bit weird, in light of all these fancy English words like ' corporate', 'governance' and 'monitoring'. But that's the way it is. The code (2008) itself is available in English though.

** Additional docs availabe here, including research into board composition (same caveat as *).

[No. 7] Director Remuneration and Allocation of Powers

Last Friday, the Supreme Court decided a case that turned on the question, whether the supervisory board had the power to grant remuneration to a supervisory director who was fulfilling management director tasks for a certain period. The answer is no, as:

1. the supervisory director acting this way does not by doing so 'morph' into a management director, but remains to be a supervisory director (unless that supervisory director is transformed into a management director by a decision to that effect by the organ of the company empowered to decide so); and
2. the supervisory board lacks the power to grant remuneration to one of its members.

Which organ of the company is allocated the power to grant remuneration to either management director or supervisory directors depends, besides statutory rules on point, on the company's articles of association (insofar statutory rules are only default and not mandatory) ; normally the anser is 'the general meeting of shareholders'.

The gist of this decision is the clarification offered under 1. above, as already assumed in doctrine. As to 2: no shocker, to say the least. Anyway; both were effectively not taken into account by the lower court, resulting in its decision being reversed and remanded.

Ow, I really appreciate the opening remarks of the Supreme Court, putting emphasis on the importance of power allocation rules being clear and all, also to avoid situations in which conflicts of interests could arise (for example if the supervisory board could grant remuneration to one of its members). To me, this echos the regulatory side of corporate law, to be distinguished from its facilitating side; I discussed this Janus head nature of corporate law elsewhere in detail.

For our Dutch readers, here is the money quote.

De beloning van bestuurders en commissarissen dient, ongeacht de aard van de door hen verrichte werkzaamheden, in het belang van duidelijke verhoudingen binnen de vennootschap op het punt van de bevoegdhedenverdeling, en om belangenconflicten bij de toekenning van beloningen van bestuurders en commissarissen te voorkomen, te geschieden door de in de wet en de statuten aangewezen organen. Commissarissen kunnen, zoals ook valt af te leiden uit art. 2:151 BW, voor zekere tijd daden van bestuur verrichten, maar zonder een daartoe strekkend benoemingsbesluit van het daartoe bevoegde orgaan - in het geval van Imeko is dat ingevolge art. 18.1 van haar statuten de ava - maken zij geen deel uit van het bestuur. Indien de statuten van een naamloze vennootschap de vaststelling van de bezoldiging van de bestuurders aan de raad van commissarissen overlaten, zoals art. 2:135 BW toelaat en in art. 18.7 van de statuten van Imeko is geregeld, maakt dat die raad van commissarissen niet bevoegd om een bezoldiging aan zijn eigen leden toe te kennen ter vergoeding van door die leden verrichte werkzaamheden op bestuursniveau. De RvC kon derhalve, anders dan het hof oordeelde, aan art. 18.7 van de statuten niet de bevoegdheid ontlenen om een aanvullende managementvergoeding vast te stellen voor bestuurswerkzaamheden die zijn lid [verweerder 2] verrichtte.

[No. 6] Do Institutional Investors Follow Proxy Advice Blindly?

I've just posted a new paper on SSRN that addresses the issue of proxy advisors' influence on the voting behavior of institutional investors. Many thanks to the LSE for inviting me to present the paper last month in London. Hopefully the piece will make a small contribution to the ongoing policy debate in this area, including in the Netherlands where the Monitoring Committee Corporate Governance has recently announced that it will look into the issue this coming year. Here's the abstract:

The effectiveness of shareholder voting as a governance mechanism depends in large part on the voting behavior of institutional investors, many of whom receive recommendations on how to vote from proxy advisors such as ISS. Company managers and policymakers are increasingly concerned that institutional investors follow such voting recommendations blindly, without verifying their accuracy. We hypothesize that institutional investors allocate the limited resources available for verifying the accuracy of voting recommendations to voting decisions that are likely to have the greatest impact on portfolio performance. To test this hypothesis, we analyze proprietary data from four large funds, using the funds’ marginal propensity to deviate from voting recommendations as a proxy for resources devoted to verifying their accuracy. Consistent with our hypothesis, we find that funds tend to deviate from voting recommendations more often when they hold a large stake in the portfolio firm, when the firm performs relatively poorly and when the proposal has potentially significant value implications.

The paper can be downloaded here.

[No. 5] Evolution of Director Liability (Case) Law

Actually, October 2010 was a busy month for the Institute for Corporate Law.

In addition to the Cartesio symposium, a symposium was organized later that month on the evolution of director liability law, with an emphasis on case law developments. This symposium kicked off a series of symposia on director liability; the next symposium will take place this summer, covering recent developments in the applicable statutory regime as to conflict of interests, the one-tier board, dividend payments and payment of derivative damages.

The contributions to the 2010 symposium - including the 70+ page center-article covering director liability issues of private law, criminal law and administrative law - were published in a book that was released on December 23, 2011; this offers a state-of-the-art analysis of key issues re director liability from several perspectives .

Here is the abstract (Dutch only):

Bestuurdersaansprakelijkheid bij NV's en BV's is een onderwerp dat met regelmaat terugkeert in wetgeving, rechtspraak, literatuur en media. Dit onderwerp is bij uitstek voor de praktijk van bedrijfsvoering en ondernemerschap van belang; het heeft daardoor maatschappelijke relevantie. Deze bundel vormt de neerslag van een in 2010 gehouden symposium over evolutie van het bestuurdersaansprakelijkheidsrecht, waarin drie thema's centraal stonden:

1. de aansprakelijkheidsmaatstaf 'ernstig verwijt' als adequaat vehikel voor rechtsvinding en -ontwikkeling;
2. a-typische gevallen van bestuurdersaansprakelijkheid; en
3. bestuurdersaansprakelijkheid buiten het ondernemingsrecht (in het bestuursrecht en het strafrecht).

Dit symposium markeert het begin van een symposiareeks die beoogt het wetenschappelijk en maatschappelijk debat over de toekomst van het bestuurdersaansprakelijkheidsrecht te bevorderen.

For details go here.

 

[No. 4] Cartesio Revisited

On October 7, 2010, the Institute for Corporate Law organized a symposium on the Cartesio decision of the European Court of Justice. The contributions to that symposium were published in a book that was released on December 22, 2011; this is the go-to guide for anybody interested in the ins and outs of the Cartesio decision and its impact on cross-border activities of companies.

Here is the abstract (Dutch only): 'Op 7 oktober 2010 vond op de Erasmus Universiteit Rotterdam het symposium 'Europees ondernemingsrecht: grensoverschrijdend ondernemen na Cartesio' plaats. Dit symposium is het tweede in een reeks over Europees ondernemingsrecht. Centraal in dit symposium stond het arrest van het Hof van Justitie van de Europese Unie over Cartesio, de Hongaarse vennootschap die haar bestuurscentrum naar Italië verplaatste. Gedurende het symposium is dit arrest van verschillende zijden belicht. De tijdens het symposium gehouden voordrachten zijn in dit boek gebundeld. Tevens bevat dit boek een aantal belangwekkende publicaties over grensoverschrijdend vestigen en ondernemen.'

For details go here.

[No. 3] TDT @ Twitter

I just added a Twitter module, that will show tweets (mostly links to posts) from TDT (@TheDefTen). Hopefully this makes access to TDT even easier, in addition to the familiar feedburner option. We'll give it a try and see if things pan out.

[No. 2] Larry Ribstein

Just before Christmas, the corner of the blogosphere I tend to visit became filled with sad messages reporting the untimely death of Larry Ribstein. Ribstein, especially well-known* for his views on alternative entities ("uncorporations") and the law market, switched from his blog ideoblog.com to truthonthemarket.com in 2010; more background information can be found there.

* Especially in the US, but also elsewhere. I knew Ribstein only from his writings, but did share a conference room with him once in The Hague in 2007, where he - sitting in the audience - confronted a pretty well-known L&E speaker with the truism that causation is not the same as correlation.

[No. 1] Best Wishes and So Forth

Now that the "oliebollen en appelflappen"* have been consumed, as well as some nice bottles of champagne to mark the beginning of 2012, let's move onwards to new perspectives about corporate law (and related stuff, of course). Also on behalf of my fellow bloggers at TDT: thanks for visiting us in 2011, see you again this year!

* No translation available