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Studiegids

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European and International Corporate and Financial Law

Vak
2019-2020

Course Description:
The course is addressed to students that have followed at least one course in Business Organizations Law in their undergraduate studies and wish to deepen their knowledge about corporate law and governance in theory and practice. The course is classified into three (3) parts, as follows:

1st part: The Corporate Form and “Normal” Governance
The first part of the course discusses the main areas within corporate structure and life that are regulated by law: duties and liabilities of management (with emphasis on this legal relationship's relevance to structures of general civil law), minority shareholders' protection, shareholder litigation, creditor protection (with emphasis on the concept of piercing the corporate veil), the powers of the general meeting vis-à-vis the powers of the management bodies (incl. principles of decision-making), the notary functions in corporate law and ease of formation of small corporations. For the European discussion the EU Company Law Directives serve as the basis of analysis (with references to national corporate law, when required), while for the US discussion the Delaware General Corporation Law and Delaware case law serve as the basis of analysis. Students shall have to hand-in a client’s memorandum within reasonable time after the conclusion of this part discussing certain aspects of the aforementioned areas in the law of their home jurisdiction.

2nd part: Law and Finance of Public Corporations
This part covers current conceptual thinking about corporate governance, finance and corporate ownership, the business structure of the firm and its relation to investors, the role of politics in corporate governance, institutional investors’ role in the public corporation, the foundations for venture capital markets, the role of lawyers and other gatekeepers in corporate governance, discusses shareholder primacy and its critics and links corporate governance systems to the various capitalist modes of production and accumulation.
Students should expect to be initiated into the differences between corporate law and governance in continental Europe and corporate law and governance in the Anglo-American world and to also understand the different policy challenges legislators are facing in continental Europe and the Anglo-American world. The effects of regulatory competition in the field of corporate law inside the EU (with emphasis on the freedom of establishment and free movement of capital) and inside the US are also analyzed enabling students to understand the extent to which legal convergence has been spurred by such competition.

3rd part: Advanced Corporate Transactions
This part is intended to give students exposure to the practical aspects of corporate law by analyzing ‘real-life’ transactional documents.
The bulk of this part is dominated by a discussion of M&A transactions covering contract, corporate and securities law issues relevant to mergers and acquisitions of large companies, mainly public. Topics covered include confidentiality agreements, management-led buyouts and the potential for conflicts of interest; distressed company acquisitions and negotiating key provisions of an acquisition agreement, such as representations, "deal protection", closing conditions, walk-away rights and related penalties and deal financing. This part shall be based around case studies of several actual transactions in Europe and the US. Students shall be making in-class group presentations of such cases discussing what went wrong in the transactions and how things could have done differently by the parties’ lawyers. Such students shall form part of the students’ final assessment.
Apart from M&A, there are separate classes discussing share capital increases, bond loans and shareholders’ agreements.

Course Objectives:

The primary objective of this course is to help students think beyond ‘black letter law’ in the field of corporate law and governance. The students are expected to be in a position to identify why corporate law and governance has followed different trajectories across jurisdictions and to analyze how financing conditions and political determinations have affected the corporate governance of public firms. This shall help students apply, going forward, the ‘law & economics’ or ‘law & finance’ approach to matters of corporate law and be able to discuss other related fields of the law (e.g. contracts law, securities law) in an interdisciplinary way. Apart from acquiring this different analytical skills re: corporate law, the student shall, particularly through the final part of the course, be able to demonstrate practical, ‘hands-on’, skills in dealing with corporate transactions as practitioners and shall stand ready to apply directly implementable knowledge in their professional life after graduation.

Achievement levels:
The following achievement levels apply with regard to the course:
Knowledge and comprehension:

  • Identifying the differences between corporate law and governance in the European and Anglo-American jurisdictions.

  • Predicting the trajectory that corporate law and governance development shall follow in key jurisdictions in the coming decades.

  • Assessing the interaction between contracts law, securities law, labour law and other fields of the law (e.g. data protection) with corporate law and governance.
    Application:

  • Identifying critical issues in real-life transactional documents that affects the interests of the party to the transactions that is being advised.

  • Revising real-life transactional documents in the framework of negotiations.

  • Designing corporate governance schemes aimed at improving incentives of the stakeholders within a corporation.

  • Outlining the steps required to be followed in several types of corporate transactions.
    Analysis:

  • Analyzing the financial, economic and political reasons of the interjurisdictional differences in corporate law and governance.

  • Comparing the competitive advantages gained by nations in international trade on the basis of their corporate law and governance patterns.

  • Evaluating the significance of the reforms currently proposed at the international, EU and national level in the corporate field.
    Presentation:

  • Explaining transactional strategies to clients through .ppt presentations through the group presentations of the M&A cases.

  • Drafting client’s memorandum re: shareholder litigation through the assignment that students are to hand in mid-term.

Mode of Instruction:
Students are expected to attend 16 interactive lectures and seminars (36 contact hours in total). Students shall be classified into ‘panels’ of four-five students at each class, such ‘panels’ featuring the students that will be on-call that day. Having panels of specific students on-call on a certain day guarantees that at least these students will have thoroughly done the readings (which are in any case mandatory to be done by all) and shall, thus, help spurring a class discussion between the instructor and the students. A student not being in a panel on a certain day does not mean that he/she may not be cold-called by the instructor.
In 5 of the lectures groups of students make a .ppt presentation on an M&A case discussing what went wrong and what should lawyers to the transacting parties had to do differently to avoid the complications. The presentations shall lead to class-wide discussions on the cases presented ensuring engagement by all students.

Assessment Method(s):

  • Client’s memorandum (mid-term paper): 20%

  • Oral presentation (in groups): 5%

  • Final exam (24-hour take-home exam): 75%

Reading List:

  • Textbook: Reinier Kraakman et al., The Anatomy of Corporate Law: A Comparative and Functional Approach (Third Edition), 2017, OXFORD UNIVERSITY PRESS

  • Casebook: William Carney, Mergers & Acquisitions: Cases and Materials (Fourth Edition), 2016, FOUNDATION PRESS

Selected Excerpts from:
1. Michael Jensen & William Meckling, Theory of the Firm, 3 Journal of Financial Economics 305
2. Harold Demsetz, The Structure of Ownership, 26 Journal of Law & Economics 375
3. Mark Roe, The Institutions of Corporate Governance, in Handbook of Institutional Economics 371 (2005)
4. Alfred Chandler, The Visible Hand (1977)
5. Mark Roe, Political Determinants of Corporate Governance (2003), p. 116-119
6. Sanjai Baghat & Bernard Black, Independent Directors, in The New Palgrave Dictionary of Economics and the Law (1998), p. 273
7. Jeffrey Gordon, The Rise of Independent Directors, 1950 – 2005, 59 Stanford Law Review 1465
8. Mark Roe, Strong Managers, Weak Owners (1992), p. 9-13, 16-17, 226-228
9. Masahiko Aoki, Toward an Economic model of the Japanese Firm, 28 Journal of Economic Literature 1
10. Gary Gorton & Frank Schmid, Universal Banking and the Performance of German Firms, 58 Journal of Financial Economics 29
11. Marco Becht & Ailsa Röell, Blockholdings in Europe, 43 Journal of Economic Review 1049
12. Lucian Bebchuk, A Rent Protection Theory of Corporate Ownership and Control, NBER Working Paper No. 7203 (1999)
13. Rafael La Porta et al., Corporate Ownership Around the World, 54 Journal of Finance 471
14. Rafael La Porta et al., Legal Determinants of External Finance, 52 Journal of Finance 1131
15. Rafael La Porta et al., Law and Finance, 106 Journal of Political Economy 1113
16. Jeremy Edwards & Alfons Weichenrider, Ownership Concentration and Share Valuation, 5 German Economic Review 143
17. Yoshiro Miwa & Mark Ramseyer, The Value of Prominent Directors: Corporate Governance and Bank Access in Transitional Japan, 31 Journal of Legal Studies 273
18. Mark Roe, Political Preconditions to Separating Ownership from Corporate Control, 53 Stanford Law Review 539
19. John Coffee, The Rise of Dispersed Ownership, 111 Yale Law Journal 1
20. Paul Mahoney, The Common Law and Economic Growth, 30 Journal of Legal Studies 503
21. Raghuram Rajan & Luigi Zingales, The Great Reversals: Finance in the 20th Century, 69 Journal of Financial Economics 5
22. Katharina Pistor, Codetermination, in Employees and Corporate Governance (1999)
23. Mark Roe, Strong Managers, Weak Owners, (1992), p. 161-163
24. Enrico Perotti & Ernst-Ludwig von Thadden, Corporate Control and Labor Rents, 114 Journal of Political Economy 145
25. Mark Roe, Political Determinants of Corporate Governance (2005), p. 1-10, 33-40, 83-93, 94-103, 109-110, 150-153
26. Pavlos Masouros, Corporate Law and Economic Stagnation – How Shareholder Value and Short-termism Contribute to the Decline of the Western Economies (2013), p. 13-17, 24-27
27. Peter Hall and David Soskice, Varieties of Capitalism – The Institutional Foundations of Comparative Advantage, p. 1-71
28. Assaf Hamdani, Gatekeeper Liability, 77 U.S.C. Law Review 53
29. Anup Agrawal & Sahiba Chadha, Corporate Governance and Accounting Scandals, 48 Journal of Law & Economics 371
30. Susan Koniak, The Bar’s Struggle with the SEC, 103 Columbia Law Review 1236
31. Bernard Black & Ronald Gilson, Venture Capital and the Structure of Capital Markets, 47 Journal of Financial Economics 243
32. Ronald Gilson & David Schizer, Understanding Venture Capital, 116 Harvard Law Review 874
33. Paul Gompers & Josh Lerner, The Determinants of Corporate Venture Capital Success, in Concentrated Corporate Ownership (2000)
34. Ronald Gilson, Engineering a Venture Capital Market: Lessons from the American Experience, 55 Stanford Law Review 1067
35. Margaret Blair, Shareholder Value, Corporate Governance and Corporate Performance, in Corporate Governance and Capital Flows in a Global Economy (2003)
36. James Collins & Jerry Porras, Vision & the Bottom Line, in Colossue: How the Corporation Changed America (2001)
37. Carol Hymowitz, Big Companies Become Big Targets Unless they Guard Images Carefully, Wall St. J.
38. Neal Boudette, As Jobs Head East in Europe, Power Shifts Away from Unions, Wall St. J.
39. Einer Elhauge, Sacrificing Corporate Profits in the Public Interest, in Environmental Protection and the Social Responsibility of Firms (2005)
40. Mark Roe, Political Determinants of Corporate Governance, p. 125-129
41. Hellen Callaghan & Martin Hoepner, Political Cleavages Over EU Efforts to Create a Single European Market for Corporate Control (2004)

Disclaimer:

Currently these pages are being updated to reflect the courses for 2019 - 2020. Until these pages are fixed as per 1 September no rights can be claimed from the information which is currently contained within.