Author: dr. Elina Karpacheva
I was pleased to attend the ERA’s Annual Conference on European Company Law and Corporate Governance held on 18-19th October in Trier. I would like to thank the Academy of European Law for awarding me their Peter Caesar scholarship for legal professionals that made possible my participation at that amazing event. Here is a short brief about the event.
The Annual Conference was a success, truly a day of valuable insights for corporate law professionals. The morning session started with the introduction of Commission’s plan for online registration of companies and digital access to company documents. A lively discussion arose in the room. Notary professionals from different countries raised their concerns about digitalization being used for fraud, provided the impossibility to verify the identity of the incorporators by digital means. It became apparent that there are vast differences between Member States in terms of incorporation rules and procedures. Representatives of Baltic countries stressed the importance of speed and effectiveness of online registration of companies. The reliability of Online Registrars was discussed as one of the main concerns. In his critical perspective of the Digitalization Proposal Prof. Pierre-Henry Conac made an excellent summary of the most important points raised.
The afternoon panels were reserved for the topic of cross-border conversions. It was a pleasure to hear Prof. Hans-Jurgen Hellwig’s review of CJEU and national case law on transfer of seats. He raised some prominent questions in the field, such as: What happens to assets and liabilities during transfers of seat and What should be the criteria for abuse of artificial structure/arrangement. The Commission stepped in by presenting its proposal for cross-border conversions. The principle of cross-border identity of companies was proclaimed. However, from the proposed text of Mobility Directive was not clear would cross-border transfer of assets and liabilities would take place by agreement or ipso iure. What is more, currently at Member State level there is substantive fragmentation of procedural steps to be followed by companies during conversion. Both speakers and participants at the Conference required from Commission to adopt a unified procedure similar to the one already in place in the Merger Directive. It was noted that the new EU developments do not concern cross-border divisions by absorptions which might be detrimental to various stakeholders.
In the last panel for the day Ms. Vanessa Knapp provided the most valuable view of a practitioner, stressing the importance of equivalent rules for cross-border mergers, divisions and conversions. She finished her presentation with an open-ended question would companies prefer conversion of seat in view of divergent or non-existing rules on the matter or businesses would go for cross-border merger in order to establish themselves in another Member state. The importance of the Commission’s proposal concerning cross-border conversions, mergers and divisions was reinforced in the light of the upcoming Brexit.
The second day of the Conference was devoted to corporate governance. The importance of effective internal compliance systems was once more proclaimed by Commission and all of the participants. The European Commission presented its Whistle-blower proposal of April 2018. The purpose of the new legislative act is to bring positive change in the global corporate governance culture and manage better the risks of corporate misbehavior. Representatives of compliance sector from Central and Eastern Europe raised their concerns about the effectiveness of whistleblower procedures in their countries due to cultural reasons. Prof. dr. Tomasz v. Braun spoke on the importance of absorbing the risk of political changes through effective corporate governance.
The next panel was devoted to Brexit in corporate law. Prof. Edmund Schuster from London School of Economics tried to measure the impact of Brexit to European companies. He discussed the impact on shareholders, on disclosure, incorporation, capital maintenance and on company information. His conclusion was that short-term frictions are possible (for example concerning transparency, takeovers and prospectus rules), but in the end the effects of Brexit on company law will be rather minor, especially provided that many of the concepts and rules are anyways inspired by the UK legal system.
The last panel of the conference was devoted to the GDPR as threat to corporate board. Mr. David Y. Habib contemplated on the question what is privacy and how does it matter for workers’ rights. The new case law of the ECtHR was discussed. It was concluded that the monitoring/processing operations have to comply with the transparency requirements of the GDPR and companies are responsible to conduct an accurate assessment on the impact of monitoring practices on employees’ privacy.