Special issue of European Company Law: Liability in Corporate Groups

The question of liability in corporate groups has been referred to as one of the great unsolved problems of modern company law. The acceptance in the late nineteenth century of companies as owners of shares in other companies gave legal basis for group structures. The transnational group of companies is the prevailing business form for both European enterprises and internationally.

In this special issue of European Company Law, prepared with SMART participants PhD Candidate Linn Anker-Sørensen, Professor Jukka Mähönen and Professor Beate Sjåfjell as editors, corporate groups and some of the most topical questions concerning the pervasive issue of liability in corporate groups are in focus. In addition to the SMART contributions by the editors, SMART participant Professor Vibe Ulfbeck has also contributed a piece (with co-author Andreas Ehlers).

The articles are currently accessible online and in paper for subscribers to the journal European Company Law (links below). SMART has a goal of open access wherever possible, and will therefore post full text of all articles in the University of Oslo Faculty of Law Legal Studies Research Paper Series in January 2017, where they will be freely downloadable.

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European Company Law, October 2016, volume 13, issue 5.

 


Special Issue on Liability in Corporate Groups, European Company Law, Kluwer Law International, October 2016, volume 13 (2016), issue 5
Editors: Linn Anker-Sørensen, Jukka Mähönen, and Beate Sjåfjell

'The Pervasive Issue of Liability in Corporate Groups', Jukka Mähönen, Issue 5, pp. 146–149

The question of liability in corporate groups has been referred to as ‘one of the great unsolved problems of modern company law’. This special issue indicates the multi-faceted faces of corporate groups both in national, transnational and international settings, especially as regards corporate group liability. The contributions in the issue show that although there is not a common understanding of groups and how they should be regulated, the legislators and notably the courts and academics continue to try to think out new ways to understand corporate structures and efficiently tackle attempts to use them to avoid societal and environmental liabilities.

'Towards a European Framework for Cross-Border Group Management', Christoph Teichmann, Issue 5, pp. 150–157

The cross-border group of companies is the prevailing form of European enterprises, but European company law does not reflect this reality. Even though, in this respect, Article 49 TFEU expressly guarantees the creation of subsidiaries, there are still many obstacles when it comes to create and manage a foreign subsidiary. Harmonization should step in as a means to facilitate cross-border establishment. Several expert groups have recently taken the initiative to elaborate a European framework for corporate groups. This article will analyse the different proposals and conclude with recommendations for future steps to be taken by the European legislator.

'Financial Engineering as an Alternative Veil for the Corporate Group', Linn Anker-Sørensen, Issue 5, pp. 158–166

This article analyses the fundamental question of how to identify a corporate group in the era of both organizational decoupling and security decoupling. The decoupling phenomenon provides a new challenge in identifying corporate control and thereby gaining an understanding of where the modern corporate group structure begins and where it really ends. The fundamental question is whether sufficient control as the fundamental criterion for group establishment remains unidentified: in this case, the legal framework would not consider the corporate relation as a corporate group, and hence, no corporate liability claims can be addressed. This situation would imply an alternative corporate veil.

'Tort Law, Corporate Groups and Supply Chain Liability for Workers’ Injuries: The Concept of Vicarious Liability', Vibe Ulfbeck, Andreas Ehlers, Issue 5, pp. 167–174

Recent years have seen a general trend in Europe to bring tort law claims against multinational companies for wrongs committed in the developing world by their subsidiaries or their contractual partners in supply chains. This article focuses on the possible vicarious liability for workers’ injuries in these two situations. It argues that to the extent such claims should be accepted in the context of supply chains, they should also be accepted in group company settings and that the company law principle of separate entities should not be regarded a barrier to the introduction of such liability in the described situations. 

'Related Party Transactions: Analysis of Proposed Article 9c of Shareholders’ Rights Directive', Kristinn Reynisson, Issue 5, pp. 175–182

Related party transactions (RPTs) have become a recognised issue of corporate governance. With the proposal for a new Art. 9c of the Shareholders’ Rights Directive 2007/36/EC, rules on RPTs are intended to become an even more integrated part of the codified corporate governance framework applicable on the Internal Market.

The European Commission proposal contains a provision that introduces more shareholder oversight and transparency of RPTs. This article offers an assessment of the proposal from corporate governance perspective and a critical analysis of the proposed provision’s text, e.g. its group related implications.

'The Environmental Liability Directive and Liability of Parent Companies for Damage Caused by Their Subsidiaries (‘Enterprise Liability’)', Lucas Bergkamp, Issue 5, pp. 183–190

This article discusses whether parent companies can, and, in light of opportunities for regulatory evasion, should be held liable under the ELD for environmental damage caused by their subsidiaries. Depending on the facts, a parent company could qualify as an operator of its subsidiary’s activities, but an extensive application of the operator definition to parent companies could have adverse effects on corporate risk management. Parent company liability could also be viewed as a remedy for the lack of mandatory financial security, but would not appear to meet a clear need and to be the preferred policy option.

'Konzernrecht: An Overview of the German Regulation of Corporate Groups and Resulting Liability Issues', Alexander Scheuch, Issue 5, pp. 191–198

More than half a century ago Germany introduced a comprehensive codification on corporate groups. This set of rules known as Konzernrecht differs significantly from the regulation of groups in other jurisdictions and has, over the course of time, faced a number of challenges. This article introduces the international reader to German Konzernrecht and its liability rules as well as recent contentious issues. A basic knowledge of these rules is relevant not just for lawyers who encounter German subsidiaries in international groups, but some peculiarities of German law should also be taken into account by future European legislation.

'The Courts as Environmental Champions: The Norwegian Hempel Cases', Beate Sjåfjell, Issue 5, pp. 199–206

This article presents the Hempel cases from the Norwegian courts, where a Danish parent company (Hempel AS) first was ordered to pay the costs for investigating the extent of pollution in ground previously owned by its Norwegian subsidiary, and then to pay the costs for cleaning up the pollution. The article argues that these decisions, although formally based on provisions in the Norwegian Pollution Control Act, de facto are innovative examples of case-law based liability, where society’s interest in environmental protection is prioritised over society’s and shareholders’ interest in protecting shareholders’ limited liability. Enhanced due diligence may be the result.

 

 

 

Published Nov. 15, 2016 11:59 AM - Last modified Jan. 16, 2017 1:22 PM