Corporate governance issues surrounding executive compensation and executive severance

This paper seeks to explain why and how executive severances of publicly-traded Canadian and U.S. companies have reached the financial levels they have, generating public and shareholder outrage and causing governments on both sides of the border to introduce new legislation. The paper investigates the role of the CEO, boards and shareholders in the setting of executive compensation. As the origins ofthe three roles lie in business corporation law, the legislative framework of Canadian and U.S. companies is presented to permit the reader to understand the legal accountabilities and rights of each of the three parties. The paper identifies that executives may exercise substantial influence over boards, possibly impeding effective governance. The paper concludes that effective governance, including greater board independence and board competence in executive compensation matters will help to improve board functioning and minimize the effects of the agency problem, cronyism and managerial power.

Corporate governance issues surrounding executive compensation and executive severance

This paper seeks to explain why and how executive severances of publicly-traded Canadian and U.S. companies have reached the financial levels they have, generating public and shareholder outrage and causing governments on both sides of the border to introduce new legislation. The paper investigates the role of the CEO, boards and shareholders in the setting of executive compensation. As the origins ofthe three roles lie in business corporation law, the legislative framework of Canadian and U.S. companies is presented to permit the reader to understand the legal accountabilities and rights of each of the three parties. The paper identifies that executives may exercise substantial influence over boards, possibly impeding effective governance. The paper concludes that effective governance, including greater board independence and board competence in executive compensation matters will help to improve board functioning and minimize the effects of the agency problem, cronyism and managerial power.

Geschäftsleiterbinnenhaftung in Großvereinen

The internal liability of managers of large associations is becoming increasingly relevant in the context of their growing economic importance, especially considering the stricter compliance obligations. The book develops de lege lata with the help of corporate principles a liability regime for board members and association managers with and without corporate board positions that is in line with common interests. At the same time, the author uses a practical analysis of various association structures to indicate the problems that exist in the realization of liability and recommends de lege ferenda for a mandatory supervisory board for large associations based on the model of stock corporation law. The work addresses equally academics and legal practice as well as the associations themselves.

Konsultative Hauptversammlungsbeschlüsse im Aktienrecht aus rechtsvergleichender Sicht

In German stock corporation law, non-binding resolutions of the general meeting as one of the participation instruments for shareholders have so far mainly been summarized or analyzed under the heading of management board remuneration. The purpose of this thesis is, however, to analyze these resolutions not only in this context, but in a more independent and general context. The thesis examines the admissibility and legal basis, legal nature, subject matter, adoption, as well as the consequences of non-binding shareholders resolutions. Thereby, various topics are compared with U.S., Swiss, and Turkish law. In addition, European law is also addressed in various aspects.

Rechtsnatur der aktienrechtlichen Gründerhaftung

A problem that has so far remained unsolved in stock corporation law is the question of the legal nature of the founder´s liability under § 46 of the German Stock Corporation Act (AktG), with which the work deals. First of all, the views on the classification of the forunder´s liability as tortious or corporate character are discussed. Subsequently, the author explains that the founder´s liability under stock corporation law is a sui generis liability in the sense of a risk compensation liability, which secures a proper founding process of the stock corporation as (institutional) compensation for the abstract risk associated with the creation of a stock corporation and its release into legal transactions.

Interpreting the Factor of Dominion in Conduit Company Cases

The official commentary on the OECD Model as it stood in 1977 has misdirected the Conduit Companies Report and courts to draw an analogy between a “nominee or agent” and conduit company. On the basis of this analogy, courts have transposed the dominion test from cases involving agents and nominees into conduit company cases. A problem with the reasoning of such cases is that courts have treated beneficial ownership as a test of ownership, not as an anti-avoidance test. The official commentary has also misdirected Danish judicial forums in ISS Dividends and ISS Interest despite the fact that they treated beneficial ownership as an anti-avoidance test. The shortcomings in the reasoning of the Danish judicial forums can be better understood in the light of the reasoning of the Swiss Federal Supreme Court in the Swiss Swap case. In the Swiss Swap case, the Swiss Federal Supreme Court interpreted “beneficial ownership” in the light of the object and purpose of the tax treaty in question. The court considered beneficial ownership to be a requirement that is inherent in double tax treaties and applied beneficial ownership as a general anti-avoidance test. The court interpreted the dominion test in the light of the object and purpose of restricting treaty benefits to residents of contracting states. It examined the arrangement as a whole and found that the arrangement was inconsistent with the object and purpose of the Switzerland-Denmark double tax treaty. By contrast, in ISS Dividends and ISS Interest, the Danish judicial forums did not interpret the term “beneficial owner” in the light of the object and purpose of the Denmark-Luxembourg double tax treaty. They considered beneficial ownership to be a specific anti-avoidance test that was added separately to the OECD Model in 1977. They assigned dominion as a criterion by which the beneficial ownership test would work. They narrowed the scope of the dominion test and applied the test to the facts in the context of corporation law. They allowed treaty benefits to the recipient company on the basis that the recipient company did not immediately pass on passive income.

Interpreting the Factor of Dominion in Conduit Company Cases

The official commentary on the OECD Model as it stood in 1977 has misdirected the Conduit Companies Report and courts to draw an analogy between a “nominee or agent” and conduit company. On the basis of this analogy, courts have transposed the dominion test from cases involving agents and nominees into conduit company cases. A problem with the reasoning of such cases is that courts have treated beneficial ownership as a test of ownership, not as an anti-avoidance test. The official commentary has also misdirected Danish judicial forums in ISS Dividends and ISS Interest despite the fact that they treated beneficial ownership as an anti-avoidance test. The shortcomings in the reasoning of the Danish judicial forums can be better understood in the light of the reasoning of the Swiss Federal Supreme Court in the Swiss Swap case. In the Swiss Swap case, the Swiss Federal Supreme Court interpreted “beneficial ownership” in the light of the object and purpose of the tax treaty in question. The court considered beneficial ownership to be a requirement that is inherent in double tax treaties and applied beneficial ownership as a general anti-avoidance test. The court interpreted the dominion test in the light of the object and purpose of restricting treaty benefits to residents of contracting states. It examined the arrangement as a whole and found that the arrangement was inconsistent with the object and purpose of the Switzerland-Denmark double tax treaty. By contrast, in ISS Dividends and ISS Interest, the Danish judicial forums did not interpret the term “beneficial owner” in the light of the object and purpose of the Denmark-Luxembourg double tax treaty. They considered beneficial ownership to be a specific anti-avoidance test that was added separately to the OECD Model in 1977. They assigned dominion as a criterion by which the beneficial ownership test would work. They narrowed the scope of the dominion test and applied the test to the facts in the context of corporation law. They allowed treaty benefits to the recipient company on the basis that the recipient company did not immediately pass on passive income.

Part 2 Specific Issues of Arbitration in Brazil, 14 Stock Corporation Arbitration

This chapter assesses stock corporate arbitration. Corporate arbitration has distinct features compared to other segments of Commercial Arbitration. This is particularly true if listed corporations provide mandatory shareholder arbitration in their bylaws. In order to serve as an effective dispute resolution mechanism, one capable of providing consistent decisions and legal certainty, corporate arbitration needs to fulfil two conditions: first, to produce, at least in some cases, an award with erga omnes or extra partes effect; and second, to exclude conflicting awards on identical disputes referring to the same company and identical facts. Developing an effective framework for stock corporation arbitration is one of the biggest challenges for Commercial Arbitration in Brazil today. According to the listing rules of Brazil's sole equity exchange (B3), corporations listed in the market segments Novo Mercado or Level II must adopt arbitration clauses in their corporate bylaws. Hence, over 150 Brazilian stock corporations impose mandatory shareholder arbitration on their shareholders. The Brazilian Corporation Law (BCL) explicitly permits these arbitration clauses. The chapter then explains why the core principles of Commercial Arbitration do not straightforwardly justify the erga omnes effect of arbitral awards, and discusses several proposals aiming to create collective shareholder arbitration in Brazil.

Pertanggungjawaban Direksi Perseroan Terbatas Yang Melakukan Perbuatan Melawan Hukum

Abstract-Directors in a limited liability company can be likened to a life for the company. The Board of Directors in carrying out their duties in managing a limited liability company has the possibility to carry out acts against the law both civil and criminal in nature. However, acts against the law can be directly carried out by the company through its organs, or vice versa, acts against the law are carried out by employees and the company is responsible. Based on this, the problem is obtained: 1) what forms of unlawful actions by the Board of Directors in managing a limited liability company (Corporation)? 2) What is the responsibility of the Directors who commit illegal acts? This research method uses normative legal research, with literature studies of primary and secondary legal materials. Based on research findings, it is known that: 1) Forms of unlawful acts carried out by directors: using company money/ wealth for personal gain, company information for personal gain, conducting related parties transactions with companies, prohibiting competition with the company 2) Directors' responsibility for illegal acts is regulated in Law No. 40 of 2007 the directors are responsible for managing the company where the management has to be done by each member of the board of directors, in good faith and full of responsibility. From this, it is necessary to optimize the implementation and supervision of the Corporation Law which substantially provides protection to business stakeholder and other public rights. Keyword: Accountability of Directors, Limited Liability Companies, Action against the Law Abstrak-Direksi di dalam perseroan terbatas dapat diumpamakan sebagai nyawa bagi perseroan. Direksi dalam menjalankan tugasnya mengelola perseroan terbatas memiliki kemungkinan untuk melakukan perbuatan melawan hukum baik bersifat perdata maupun pidana. Akan tetapi, perbuatan melawan hukum itu dapat langsung dilakukan oleh perusahaan melalui organ-organnya, atau sebaliknya perbuatan melawan hukum itu dilakukan oleh pegawai dan perusahaan wajib mempertanggungjawabkan. Berdasarkan hal tersebut maka didapatlah permasalahan yakni 1) Bagaimana bentuk perbuatan melawan hukum yang dilakukan oleh Direksi di dalam mengurus perseroan terbatas? 2) Bagaimana tanggung jawab Direksi Perseroan Terbatas yang melakukan perbuatan melawan hukum? Metode penelitian ini menggunakan penelitian hukum normatif, dengan studi kepustakaan dari bahan hukum primer dan sekunder. Berdasarkan temuan penelitian diketahui bahwa: 1) Bentuk perbuatan melawan hukum yang dilakukan oleh direksi: mempergunakan uang/ kekayaan perseroan untuk kepentingan pribadi, informasi perseroan untuk kepentingan pribadi, melakukan transaksi dengan perseroan, larangan bersaing dengan perseroan 2) Pertanggungjawaban direksi atas perbuatan melawan hukum diatur dalam UU No. 40 Tahun 2007 direksi bertanggung jawab atas pengurusan perseroan dimana pengurusan itu wajib dilaksanakan setiap anggota direksi dengan itikad baik dan penuh tanggung jawab. Dari hal tersebut sebaiknya Perlu optimalisasi pelaksanaan dan pengawasan UUPT yang secara substansial memberikan perlindungan kepada pelaku bisnis dan hak-hak publik lainnya. Kata Kunci: Pertanggungjawaban Direksi, Perseroan Terbatas, Melawan Hukum