Month: May 2024

A European Central Bank Standing Guard over a European Currency Union

A post by guest blogger Jan Meyers (Cleary Gottlieb)

            A good while ago, in the late 1970s and early 1980s, I wrote my doctoral thesis at Stanford about the possible design of a more integrated European monetary system. It was then still a somewhat nebulous prospect amidst experiments with semi-fixed exchange rate arrangements between participating European currencies (the “snake-in-the-dollar-tunnel”, then “le serpent dans l’espace” and, eventually, ERM I) following the unravelling of the Bretton Woods gold-dollar standard. Fast forward to the present: a genuine European central bank has been standing guard over a genuine European currency union for 25 years, steering it through a succession of turbulences. It has been and continues to be a fascinating story, with several plot twists and an abundance of intriguing questions. I could not resist the temptation of writing another book about it. It has actually been a joy writing it.

            The book revisits the architecture of the European currency union as it continues to evolve in Europe’s incomplete EMU and now faces today’s concurrent challenges posed by government debt sustainability concerns and the considerable public expenditures, investments and reforms needed in particular to address climate change and the green transition, population ageing, the changing landscape of global trade and the rebuilding of credible defense capability.

Continue reading “A European Central Bank Standing Guard over a European Currency Union”

Zijn ziekenfondsen en landsbonden van ziekenfondsen onderworpen aan de patrimoniumtaks?

Een post door gastblogger Dirk Deschrijver

1. In artikel 147 W.Succ. staat dat “de verenigingen zonder winstoogmerk, de internationale verenigingen zonder winstoogmerk en de private stichtingen, beheerst door het Wetboek van vennootschappen en verenigingen” vanaf 1 januari volgend op de datum van hun oprichting onderworpen zijn aan een jaarlijkse taks tot vergoeding van de successierechten.[1] Deze bepaling gaat terug op artikel 44, lid 1 van de wet van 27 juni 1921[2] waarin stond: “De vereenigingen zonder winstgevend doel en de instellingen van openbaar nut zijn onderhevig aan eene jaarlijksche belasting.” Het ging toen om de invoering van een jaarlijkse “taxe tot vergoeding der successierechten” ten belope van 0,10% op het brutovermogen van die lichamen. Vrijstellingen van die belasting werden toen niet voorzien. Daarentegen was er bijv. in artikel 2, § 1 van de wet van 17 oktober 1945[3], welke een éénmalige belasting van 5% op het kapitaal invoerde, wel sprake van een vrijstelling ten behoeve van “erkende mutualiteitsverenigingen.”[4]

Continue reading “Zijn ziekenfondsen en landsbonden van ziekenfondsen onderworpen aan de patrimoniumtaks?”

Misbruik van vennootschapsgoederen: doe het niet – Cassatie 9 mei 2024

Een kat in het nauw maakt rare sprongen. Een bestuurder in het nauw doet dit best niet. Zo leert een cassatiearrest van 9 mei 2024.

Vennootschap X verkeert in ernstige financiële moeilijkheden, die nopen tot het openen van een procedure van gerechtelijke reorganisatie. In het kader van die procedure ontvangt vennootschap X een betaling van ongeveer 1.500.000 EUR op haar vennootschapsrekening. Nog dezelfde dag verdwijnt dit geld van de rekening van vennootschap X, middels een overschrijving naar verbonden vennootschap Y (aangeduid als “storting in R/C”). Een deel van “het” (juridisch heeft het geen zin om te spreken over het geld) geld zet vervolgens de weg verder en belandt op de rekening van nog twee andere verbonden vennootschappen (A en B).

Continue reading “Misbruik van vennootschapsgoederen: doe het niet – Cassatie 9 mei 2024”

Remuneration of independent directors in shares

A post by guest blogger Pieterjan Heynen

Based on the annual reports of Belgian listed companies, Guberna and VBO recently conducted a study in order to determine to what extent the recommendations of the Belgian Corporate Governance Code are being observed. Particular attention was paid to Recommendation 7.6, a relatively new provision which was introduced into the Code in 2020. This Recommendation states that non-executive directors should receive part of their remuneration in shares. However, the Guberna and VBO study showed that this provision is currently one of the least complied with in the Code, since only 15% of Belgian listed companies include shares in the remuneration package of their non-executive directors.

In response to the low level of application of this recommendation, we conducted a more in-depth empirical study, complemented by theoretical and comparative findings. The results of our analysis will be presented at a conference on “Recent Trends in the Remuneration of Executives and Directors”, which will take place at the University of Antwerp on 23 May 2024 (see also here). Our focus was on the compensation of independent directors, who, as non-executive directors, also fall within the scope of Recommendation 7.6. At first glance, this may sound surprising. The “explanations” of companies that do not comply with this recommendation sometimes state that they do not provide for remuneration in shares, precisely because they do not want to jeopardize the independence of their independent directors…

Is this skepticism justified? Does equity compensation inevitably impair a director’s independence? Answering this question requires a good understanding of the role and functions of independent directors. After all, they are key players in Belgian listed companies and form a de facto majority on most boards. Moreover, the Belgian Code for Companies and Associations (CCA) assigns them specific roles in related parties transactions and audit, remuneration and nomination committees.

From these specific legal tasks, it can be inferred that independent directors have a role to play as “mediators” in two of the three well-known principal-agent conflicts of corporate law. On the one hand, they should act as a buffer between the executive management of the company and its shareholders, as a kind of additional control mechanism. This follows, among other things, from their presence on the audit and remuneration committee. On the other hand, they also appear to mediate the second principal-agent conflict, between the controlling shareholder and minority shareholders, which follows from their involvement in related party transactions.

Taking these tasks as a starting point, it may indeed be interesting to remunerate independent directors in shares. In this way, they are no longer merely mediators in the principal-agent problems mentioned above, but instead they become principals themselves. An independent director who is also a (small) shareholder may experience an important additional incentive to look after the interests of all small shareholders.

However, not everyone will agree with this view. For example, it could also be argued that independent directors should not only look after the interests of minority shareholders, but that because of their independence, they are rightly positioned to take into account a broader, societal interest as well. According to this view, their role includes the observation of the interests of all the company’s stakeholders. Consequently, remuneration in shares could be counterproductive in such a case, because it could narrow the focus of independent directors to the interests of shareholders, while overlooking other stakeholders.

Thus, the question of whether independent directors have a narrow or a broad role, focusing on the interests of shareholders or of all stakeholders, respectively, cannot be answered unambiguously. Moreover, a comparative law analysis shows that legal systems often provide different answers to this question. In our presentation we examine these different approaches that can be found in Belgium, France, the Netherlands, Germany, the UK and the US. We will also look at results from economic research. Does equity compensation incentivize independent directors to better perceive their role? Or does it have only a minor impact on their attitude on the board?

Based on these theoretical, comparative law and empirical findings, we take stock of Recommendation 7.6 of the Belgian Corporate Governance Code regarding equity compensation for independent directors.

This blogpost is based on a joint research project with Pieterjan Heynen, Tom Vos and Theo Monnens.

Pieterjan Heynen
Jan Ronse Institute
KU Leuven

De termijn tot aangifte van een schuldvordering in een faillissement kan niet omzeild worden langs de achterdeur (Cass. 12 april 2024)

Een post door gastblogger mr. Vincent Verlaeckt

1. Het Hof van Cassatie heeft in zijn arrest van 12 april 2024 (C.23.0415.F/1) bevestigd dat de aangiftetermijn tot het indienen van schuldvorderingen niet kan omzeild worden door een schuldvordering op te nemen in een proces-verbaal van verificatie dat wordt neergelegd na de aangiftetermijn van 1 jaar met het doel deze schuldvordering via de betwistingsprocedure alsnog te laten opnemen in het passief middels een vonnis.

Continue reading “De termijn tot aangifte van een schuldvordering in een faillissement kan niet omzeild worden langs de achterdeur (Cass. 12 april 2024)”

Two lectures by Professor Steven L. Schwarcz (Duke) at KU Leuven – on financial innovation and on relative and absolute priority in reorganization

16 and 17 May

On May 16th and May 17th Prof. Steven Schwarcz will (virtually) give two lectures at KU Leuven (Belgium):

  • On May 16th from 2 to 4 pm (Belgian time) he will be a guest lecturer in the course of “European Banking and Investment Services Law”, currently taught by Prof. Filippo Annunziata, to give a lecture on “Regulating Financial Innovation: FinTech, Crypto-assets, DeFi, and Beyond”. You can join either online, or in room DV3 01.07 (where the online lecture will be streamed).
  • The day after, on May 17th from 9 to 11 am (Belgian time), he will be a guest lecturer in Prof. Joeri Vananroye’s class on Economic Analysis of Law, to speak about “Comparing relative priority under the EU Restructuring Directive with absolute priority under U.S. Chapter 11 as a default rule to achieve creditor consensus” (online only).

Prof. Steven L. Schwarcz is the Stanley A. Star Distinguished Professor of Law & Business at Duke University and Founding Director of Duke’s interdisciplinary Global Capital Markets Center (later renamed the Global Financial Markets Center). His areas of research and scholarship include insolvency and bankruptcy law, international finance, capital markets, systemic risk, corporate governance, and commercial law.

You are very welcome to take the opportunity to join those lecture. Please register here by May 15th.