The business judgment rule represents a central doctrine of corporate governance, due to its major implications on corporate directors' liability and to its infl uence on the relationship between ...shareholders and the board of directors. The interpretation of the Rule as a behavioral standard or as an „abstention doctrine” can determinatively influence the liability proceedings against directors who acted in consideration of their fiduciary duties. This paper aims at analyzing the national legal provisions of the Business Judgement Rule and the compatibility of the legal provisions with the established interpretations of the Rule that can be found in the foreign literature. Absent a case law that clarifies de approaches of the Business Judgement Rule by the national courts, the research analyzes the traditional Common Law approaches of the Rule and the obstacles which hinder a faithful transfer of the Rule in Romania. The objective of these identifications is to draw de lege ferenda proposals for an efficient application of the legal provisions in the future. Considering that this Rule is the natural consequence of trust and of the powers granted to corporate directors, the conclusions of the research suggest solutions for the stabilization of the continuous tension of the supreme values of the corporate world: authority and liability.
This paper analyzes the Principal-Agent Problem in Corporate Governance.
Focus is on the question: One-Tier or Two-Tier system of Corporate Governance - which one is more effective in reducing Agency ...Costs?
The authors analyze provisions regulating corporate governance in different legal systems, and therefore, they conclude: It should be prescribed by Codes of Corporate Governance that system of corporete governance applied in particular company shall depend on its shareholding structure. Consequently, significant indication for potential investors to not invest in the company, would exist if the best practice of corperate governance (including the system of Corporate Governance recommended by CCG) is not applied.
Purpose - The aim of this paper is to seek to examine the operation of S.37 of the Health and Safety at Work Act 1974 in the context of the debate about director's duties for health and safety. It ...goes on to consider whether its increased use is indicative of an inclination on the part of regulators to more readily target senior officers within companies.Design methodology approach - This is a conceptual paper.Findings - The section has received much attention in recent years because unlike the bulk of the Health and Safety at Work Act 1974 from which it derives, it imposes no positive duties. Its use arises via a secondary duty and only comes into operation following proof of organisational fault. However, this indirect duty is imposed typically against directors and the section is therefore of great interest as part of a wider debate on the imposition of liability at board level.Originality value - Drawing on an a review of leading cases and the initial findings from analysis of the response to a Freedom of Information request made to the Health and Safety Executive in February 2012, the use of the section will be placed under the spotlight and considered in the context of other linked statutes.
Dutch company law is undergoing tumultuous times. Much is changing in the legislation, for example, a major revision of private limited company law is imminent. The courts are constantly presented ...with an increasing number of difficult issues. It is precisely in such times that there is a need for guiding ideas, and I went searching for them. In this paper, I have relied on the American theory of pragmatism to help find a method to trace principles of law (section 1). I present nine principles of Dutch company law (section 2) and finally enlist the aid of these principles to solve a problem of present Dutch company law (section 3). Based on these principles, I take a fresh look at Dutch company law. In my search, I came to the conclusion that, as a result of the increasing importance of ‘duties of care’, it is becoming less important who does and who does not belong to the company. To ensure that courts review the actions of corporate executives with restraint, I consider it important to make a distinction between standards of conduct and standards of liability.
This article discusses the proposed changes to the capital maintenance regime applicable to the Dutch BV. The draft legislation introduces a liability of directors for unlawful distributions and an ...obligation for shareholders to repay distributions made to them in the suspect period of one year prior to the opening of bankruptcy proceedings. The current enhanced balance sheet test is replaced with a simple balance sheet test and a liquidity test. With the proposed new rules on creditor protection, the Dutch legislature aims to balance welfare and fairness: the law should not place unnecessary restrictions on company's financing decisions, but at the same time it should offer effective protection to creditors. The draft legislation has been subjected to a consultation process. The reactions to the consultation document show that it is not easy to strike the right balance between the interests of the three parties involved: the shareholders, the directors and the creditors.
Remarks on the features of the personal liability companyThe Companies Act 71 of 2008 provides for the establishment and incorporation of profit and not-for-profit companies. The former includes ...public companies, state-owned companies, private companies and personal liability companies. Another unique company not mentioned by name, yet widely acknowledged in jurisprudence and literature, is the “close” or “owner-controlled” company. This contribution examines the features of the personal liability company within the context of the private and close company by sifting through the prescripts in the Companies Act. An analysis of the personal liability company’s unique features is followed by a study of the features shared with the private company, after which the focus shifts to the close company, which is subject to significantly fewer restrictive prescripts.The analysis firstly reveals that as the features of the personal liability company are so widely dispersed throughout the Companies Act and its regulations, it makes any claim to a complete grasp of this company type risky. Secondly, although the Companies Act has introduced the personal liability company as a separate type of company, it does appear to be the successor to the so-called section 53(b) company under the Companies Act of 1973. Therefore, as the provisions relating to these two entities are similarly phrased, jurisprudence on the liability of directors of the section 53(b) company may very well apply to the personal liability company as well. Thirdly, the Companies Act – for the most part – remains faithful to its tradition that company law has developed primarily in response to public companies’ needs. The exemptions and relaxations applicable to the personal liability, private and close company are thus often conceptualised as exceptions to, or adaptations of, public company provisions. This approach may hinder instead of support the interpretation of the scope and consequences of these three company types. Finally, the significant degree of overlap in the features of the personal liability and the private company gives rise to the question whether introducing the personal liability company as a separate type of company truly is the most efficient approach, or whether treating it as a special type of private company would not have prevented unnecessary duplication and uncertainty.
Effective risk management is the process of evaluating and guarding against potential losses to the organization. The chief financial officer (CFO) of a nonprofit organization should be very ...concerned about risk management issues because they directly affect the use of financial and other resources. Risks include many areas, including property, income, liability, people, volunteers, governance and fiduciary considerations, client relationships, and collaborations. Labor relations laws vary from state to state, and a lawyer specializing in human resources issues should be consulted regarding the legality of the termination before any decision is finalized. An ongoing trend regarding liability for nonprofit organizations is related to employment practices liability. A significant rise in the number of liability suits and in insurance costs has made it increasingly difficult for officers and directors to protect themselves. Many nonprofit leaders and managers fail to understand that risk management involves matters of risk associated with their assets.
This paper analyzes the Principal-Agent Problem in
Corporate Governance.
Focus is on the question: One-Tier or Two-Tier system
of Corporate Governance – which one is more effective
in reducing Agency ...Costs?
The authors analyze provisions regulating corporate
governance in different legal systems, and therefore,
they conclude: It should be prescribed by Codes of
Corporate Governance that system of corporete governance
applied in particular company shall depend
on its shareholding structure. Consequently, significant
indication for potential investors to not invest
in the company, would exist if the best practice of
corperate governance (including the system of Corporate
Governance recommended by CCG) is not applied.
In corporate governance there is a greater tendency to impose stricter liability on company directors for breach of their common law duties of care, skill and diligence when such a breach causes ...detriment to the company and its shareholders. This article suggests that the correct balance between the strict objective test and the more lenient subjective test can be created by the codification of the duty of care, skill and diligence and through the enactment of a statutory business judgment rule.This will serve as a mechanism to protect company directors against the ramifications of honest business mistakes, provided certain conditions are met.
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