Legal Capital in Europe

 

 

 

 

 

Europe has known very different systems of company laws for a long time. These differences do not only pertain to the board structures of public companies, where single-tier and two-tier structures can be distinguished, they also pertain to the principles of fixed legal capital. Fixed legal capital is not a traditional ingredient of English and Irish company law and had to be incorporated into these legal systems (only) for public limited companies according to the Second European Company Law Directive of 1976. Both jurisdictions have never really embraced these rules. Against this background, the British Accounting Standards Board (ASB) and the Company Law Centre at the British Institute of International and Comparative Law (BIICL) have initiated and supported a study of the benefits of this legal system by a group of experts led by Jonathan Rickford. The report of this group has been published in 2004 (European Business Law Review [2004] 919). Its result was that legal capital was costly and superfluous; hence, the Second Directive should be repealed.

 

The British government has adopted this view and wants the European Commission to act accordingly. 

 

Against this background a group of German and European company law experts, academics as well as practitioners, have come together to scrutinise sense and benefits of fixed legal capital and all its specific elements guided by the following questions:

  • What is the relevant legal concept supposed to achieve
  • What does it achieve in reality?
  • What criticisms are there?
  • Which proposals or alternatives are available?

Fron the outset the group of experts – different from the Rickford group – has endeavoured to cooperate with foreign colleagues, which resulted in very fruitful and pleasant exchanges.

 

This volume contains, besides an executive summary of the results,

  • 15 essays on specific aspects of legal capital in Germany covering also neighbouring fields of law (e.g. accounting, insolvency);
  • 7 reports on fixed legal capital in other jurisdictions (France, Great Britain, Italy, the Netherlands, Poland, Spain and the U.S.A.) addressing the same questions as the essays on German law.

The British initiative disapproves of the Second Directive. The Directive does only deal with public limited companies in Europe, which is reflected in the analysis presented here. It is only concerned with the fixed legal capital of public limited companies, not with capital issues of private companies.

 

The study has arrived at a result that differs completely from that of the Rickford group. It verifies the usefulness of the concept of fixed legal capital and wishes to convince the European Commission of the benefits of the Second Company Law Directive. Two consequences follow:

 

Firstly, this study is published initially in German as a special edition of the Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR 2006) and is now published in a slightly shortened version in English as a special edition of the European Company and Financial Law Review (ECFR) to facilitate work in Brussels and abroad.

 

Secondly, it does (almost) not contain any recommendations directed at the German legislator, how to improve the concept of fixed legal capital of the German Aktiengesellschaft and how to free it from ‘scoriae’. This shall be dealt with later – possibly in the context of questions regarding reform of the German GmbH. The group is sure that such improvements and simplifications are possible in many cases and would render the useful concept of fixed legal capital even more efficient.

 

This study would not have been feasible without the generous and unbureaucratic support of the Thyssen foundation, for which all members of the group are sincerely grateful. Sincere thanks also go to Dr. Wilhelm Hartung, solicitor at Wilmer Halte in London, for his valuable help in finding native speakers for the translation of various contributions.

 

 

 

 

 

·         Nikolaus J. Adensamer, Dr. jur., associate at Cerha Hempel Spiegelfeld, Hlawati Partnerschaft von Rechtsanwälten, Vienna

·         Thomas Bachner, Dr. jur., Ph.D., research assistant and lecturer at the Vienna University of Economics an Business Administration

·         Walter Bayer, Professor at the University of Jena

·         Richard Booth, Professor at the University of Maryland

·         Pierre-Henri Conac, Professor at the University of Paris (Panthéon-Sorbonne)

·         Tim Drygala, Professor at the University of Leipzig

·         Horst Eidenmüller, Professor at the University of Munich

·         Jens Ekkenga, Professor at the University of Gießen

·         José Miguel Embid-Irujo, Professor at the University of Valencia

·         Andreas Engert, Dr. jur., lecturer at the University of Munich

·         Holger Fleischer, Professor at the University of Bonn

·         Barbara Grunewald, Professor at the University of Cologne

·         Mathias Habersack, Professor at the University of Mainz

·         Heribert Hirte, Professor at the University of Hamburg

·         Ulrich Huber, Professor at the University of Bonn

·         Susanne Kalss, Professor at the Vienna University of Economics and Business Administration

·         Andrzej Kidyba, Professor at the University of Lublin

·         Harm-Jan de Kluiver, Professor at the University of Amsterdam; attorney-at-law, De Brauw Blackstone Westbroek, Amsterdam

·         Christoph Kuhner, Professor at the University of Cologne

·         Marcus Lutter, Professor at the University of Bonn, speaker of the Center for European Economic Law

·         Peter Mankowski, Professor at the University of Hamburg

·         Hanno Merkt, Professor at the University of Freiburg

·         Eva Micheler, Assistan Professor at the Vienna University of Economics and Business Administration; Lecturer in Law, London School of Economics and Political Science

·         Massimo Miola, Professor at the University of Naples

·         Sebastian Mock, research assistant at the University of Hamburg

·         Ulrich Noack, Professor at the University of Düsseldorf

·         Janine Oelkers, Mag., research assistant and lecturer at the Vienna University of Economics and Business Administration

·         Christoph Paulus, Professor at the Humboldt-University of Berlin

·         Bernhard Pellens, Professor at the University of Bochum

·         Andreas Pentz, Dr. jur., attorney-at-law, Rowedder Zimmermann Haß, Mannheim

·         Hans-Joachim Priester, Honorary Professor at the University of Hamburg; Notary at Hamburg

·         Stephan Rammeloo, Professor at the University of Maastricht

·         Karsten Schmidt, Professor at the Bucerius Law School, Hamburg

·         André Schwanna, Dr. jur., attorney-at-law, Clifford Chance, Frankfurt a.M.

·         Thorsten Sellhorn, Dr. rer. oec., MBA, research assistant at the University of Bochum

·         Stanislaw Soltysinski, Professor at the University of Posen, attorney-at-law Soltysinski Kawecki & Szlezak, Warsaw

·         Gerald Spindler, Professor at the University of Göttingen

·         Andrzej Szumánski, Professor at the University of Krakow

·         Isabelle Urbain-Parleani, Professor at the University of Paris (Paris V, René Descartes)

·         Rüdiger Veil, Professor at the Bucerius Law School, Hamburg

 

 

 

 

 

You will find the results of this study in: Lutter (Ed.), Legal Capital in Europe, ECFR Special Volume 1, 2006.