What are the Core Characteristics of a Company?

• Separate Legal Personality

• Limited Liability

• Transferable Shares

• Centralized or ‘Delegated’ management

• Shared Ownership

Generally, all over the world the companies have these 5 characteristics. However, this may vary by lacking 1 or 2 characteristics depending on the type of company.

Corporate Law > Rules on Corporate Governance.

What is Corporate Governance?

Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders' role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.

Poor Corporate Governance - Case Study Enron (US)

The role of a company’s board of directors is to oversee corporate management in order to protect the interests of shareholders. However, in 1999, Enron’s board waived conflict of interest rules to allow chief financial officer, Andrew Fastow, to create private partnerships to do business with the firm. These partnerships appear to have concealed debts and liabilities that would have had a significant impact on Enron’s reported profits. Subsequently, Enron’s collapse raises the issue of how to reinforce the directors’ capability and will to challenge questionable dealings through corporate managers.

What is Comparative Corporate Law? Why is it needed?

• Globalization > Increased International Company Activities

• Forces to compare national system > due to different approaches

Studied Compared Jurisdictions and their Legislation governing Corporate Law

• Germany - Aktiengesetz

• UK - Companies Act 2006

• US - Delaware General Corporation Law

Freedom of Establishment

• EU Framework arts 49-54 TFEU (fka 43-48 EC Treaty)

• ECJ case law made deep inroads into national company laws

• ..in respect of PRIVATE COMPANIES also!

Case Study - Centros Ltd v. Erhvervs case ? (EU)

What was the ECJ Decision?

• Denmark must allow UK private limited company to establish in Denmark

• even if UK company was created “for the sole purpose of evading” D’s stricter laws (on capital adequacy)

• even if UK company conducted no business in UK!

Articles 49-54 TFEU

• Art. 49 TFEU “restrictions on the freedom of establishment of nationals of Member States shall be prohibited”

• Art. 50 TFEU Provides for the Community power to issue DIRECTIVES “for the protection of interests” required by MS/ COMPANIES/ FIRMS

• Art. 54 TFEU “companies formed in accordance with MS Law having their registered office, central administration or principal place within the EU, shall be treated in the same way as natural persons"