Business Organizations Reasons for comparative study –Sensitize to own business forms –Identify universal “truths” –Basis for reforms (LLCs, auditors) –Imperative of business globalization Civilian business organizations –Types –Rules (mandatory / default) –Protections

Business Organizations You are in-house counsel for Nanosoft Corporation, a US technology business incorporated in Delaware. Your company plans to manufacture miniature computers and sell them in Europe and Latin America. You must structure the new operations. What do you do?

Business Organizations Is there a “company law” of Europe? Latin America? Are there civilian patterns for business organizations?

Business Organizations European Community Art. 54(3)(g) of Treaty of Rome –Harmonization –Protection of members / third parties Company law directives –History –Topics –Future Company law regulations

Business Organizations First Council Directive 68/151/EEC Second Council Directive 77/91/EEC Third Council Directive 78/855/EEC Fourth Council Directive 78/660/EEC Sixth Council Directive 82/891/EEC Seventh Council Directive 83/349/EEC Eighth Council Directive 84/253/EEC Eleventh Council Directive 89/666/EEC Twelfth Council Directive 89/667/EEC Directive 2001/86/EC Directive 2003/58/EC Council regulation (EEC) 2137/85 Regulation (EC) 2001/2157 What do you notice about the directives? What are regulations? What topics?

Business Organizations 1 st Directive (1968) “protect interests of members / others” 2 nd Directive (1977) “formation / capital maintenance of public companies” 3 rd Directive (1978) “notice / consultation for mergers of public companies” 4 th Directive (1978) “publication of annual accounts of companies” 6 th Directive (1982) “division of public companies” 7 th Directive (1983) “consolidated accounts for company groups” 8 th Directive (1984) “approval of statutory auditors of public companies” 11 th Directive (1989) “disclosure by branches of EC companies” 12 th Directive (1989) “single member private companies” Directive (2001) “supplement to statute on SE” Directive (2003) “disclosure by companies” Regulation (1985) “European Economic Interest Grouping (EEIG)” Regulation (2001) “statute for European company (SE)”

Business Organizations Controversial topics Corporate governance: board structure (unitary / two-tier) –Proposed Fifth Directive –Local option in SE (2001) Takeovers: substantive (detailed) regulation or disclosure –High level group report (2002) –Level playing field, equitable mandatory price, rights after successful bid Internal affairs doctrine (company law determined by place of incorporation –Centros (ECJ 1997), Überseering (ECJ 2000) –Proposed 14 th directive on transferring registered office

Business Organizations Civil law heritage “Company” as private association of two or more persons –Law merchant (partnership) –Separate personality –Distinction - formation / monopoly –One person company? State recognition, not creation What kinds of companies?

Business Organizations

A.sociedad anónima B.sociedad cerrada C.sociedad colectiva D.sociedad en comandita (sociedad comanditaria) E.sociedad de empresas (en participación) F.sociedad de inversiones G.sociedad de responsabilidad limitada H.sociedad filial I.sociedad matriz J.sociedad por acciones K.sociedad pública (corporación) L.sociedad unipersonal US equivalent?

Business Organizations A.sociedad anónima B.sociedad cerrada C.sociedad colectiva D.sociedad en comandita (sociedad comanditaria) E.sociedad de empresas (en participación) F.sociedad de inversiones G.sociedad de responsabilidad limitada H.sociedad filial I.sociedad matriz J.sociedad por acciones K.sociedad pública (corporación) L.sociedad unipersonal US equivalent? __ corporation __ closed corporation __ general partnership __ government agency __ limited partnership __ joint venture __ individual corporation __ investment company __ limited liability company __ parent company __ subsidiary company

Business Organizations A.sociedad anónima B.sociedad cerrada C.sociedad colectiva D.sociedad en comandita (sociedad comanditaria) E.sociedad de empresas (en participación) F.sociedad de inversiones G.sociedad de responsabilidad limitada H.sociedad filial I.sociedad matriz J.sociedad por acciones K.sociedad pública (corporación) L.sociedad unipersonal US equivalent? AJ corporation B closed corporation C general partnership K government agency D limited partnership E joint venture L individual corporation F investment company G limited liability company I parent company H subsidiary company

Business Organizations

Where does one find the rules that govern companies? –civil code –commercial code –company statutes

Business Organizations Where does one find the rules that govern companies? –civil code (partnerships, personal) –commercial code (limited liability) –company statutes (specialized)

Business Organizations What is “hub and spoke” structure of civilian business organizations?

Business Organizations Non-business associations Political, charitable, cultural History –Not recognized in early codes –German Civil Code (association right) –Creature of state (but later recognized as fundamental human right) Modern codes –Switzerland: informality of non-profit –Registration not necessary

Business Organizations Protective philosophy Capital structure (formation) –Minimum paid-in capital –Proper consideration –Condition to registration Distributions –Capital maintenance rules –Reserve accounts Statutory auditor –Protection of minority shareholders, creditors –Regulation of qualifications, independence

Business Organizations How is this handled in the United States? Capital formation Limits on distributions Supervision of governance, financials

Business Organizations paterfamilias (pay-tuhr-fuh-MIL-ee-uhs) noun The male head of a family or a household; father figure. [From Latin paterfamilias (father of the household), from pater (father) + familias, from familia (household), from famulus (servant, slave).] The feminine equivalent of the word is materfamilias.

Business Organizations What explains the difference in protective mechanisms in Europe and the US?

Business Organizations