Category: ENG

Authorizations to issue shares and disapply pre-emption rights in the UK, Belgium and France: law, economics and practice

Paper in the Journal of Corporate Law Studies

In Europe, shareholder approval and pre-emption rights have traditionally fulfilled an important role in protecting shareholders in listed corporations against excessive dilution in share issuances. However, these protections also make it costlier and slower to raise capital through share issuances. That is why countries generally allow shareholders to authorize the board of directors to issue shares without shareholder approval and without pre-emption rights – within certain limits. The protection offered by pre-emption rights and shareholder approval therefore depends on the extent to which shareholders are willing to approve authorizations to issue shares and disapply pre-emption rights. 

In a paper recently published in the Journal of Corporate Law Studies, I provide new empirical evidence on the flexibility of such authorizations in practice in French and Belgian listed corporations. Proxy advisors and (associations of) asset managers have adopted guidelines on the maximum size for authorizations – typically 50% of legal capital for authorizations to issue shares with pre-emption rights, and 10% of legal capital for authorizations to issue shares without pre-emption rights (although Glass Lewis is more flexible for Belgium, with thresholds of 100% and 20%, respectively). 

Continue reading “Authorizations to issue shares and disapply pre-emption rights in the UK, Belgium and France: law, economics and practice”

Corporate insolvency law – seen from a comparative perspective

A guestpost by Prof. Dr. Reinhard Bork (Universität Hamburg)

 

The financial shipwreck of a company is a customary event in nearly all states of the world. Most jurisdictions have special statutes addressing this topic and they are – beyond terminological issues – all dealing with the same questions: how is the term “insolvency” defined? How are insolvency proceedings commenced? What are the responsibilities of the court on the one hand and of the Insolvency Practitioner on the other hand? Are there various classes of creditors and what are their procedural and substantive rights? How is the insolvency estate determined? What are the effects of the opening of insolvency proceedings on the estate? What are the consequences for executory contracts or rights to set-off? Can transactions performed prior to the opening of insolvency proceedings be reversed to the benefit of the general body of creditors? What is the legal position of secured creditors? Is restructuring of an insolvent company a possible scenario and what are the differences between liquidation and restructuring proceedings? Which rules apply to cross-border affairs, e.g. to assets located in a foreign jurisdiction? Continue reading “Corporate insolvency law – seen from a comparative perspective”