Experiments in Comparative Corporate Law: The Recent Italian Reform and the Dubious Virtues of a Market for Rules in the Absence of Effective Regulatory Competition

The article addresses a sweeping Reform of corporate law which was enacted by the Italian government in 2003 and came into effect on January 1, 2004. The new statutory regulation significantly increases freedom of contract in corporate law, relying on the idea that the development of an efficient market for rules will allow the natural selection of the rules that better suit the need of the different stakeholders. Together - and to some extent to compensate for - this greater freedom of contract, new protections for minority shareholders have also been implemented. The reform also imports into the Italian legal system principles and rules originated or developed in other jurisdictions of both common and civil law. The article provides a critical overview of some of the major innovations, focusing on the ones concerning the financial structure of the corporation (new categories of shares, bonds, separate pools of assets, and the like); corporate governance and the protection of minorities. The reform is assessed in the current European regulatory competition scenario, in which the greater flexibility of Italian corporate law might play a significant role

Cost-Based and Rules-Based Regulatory Competition: Markets for Corporate Charters in the U.S. and the E.U.

Regulatory competition in corporate law is increasing in Europe and, not differently from what happens in the US, a market for corporate charters is developing in Europe. This article examines the differences between the US corporate law market, and the European one - to the extent that one exists. The basic idea is that, in Europe, there is a stronger competition for the (first) incorporation of rather small, closely-held corporations; while in the US a small closely-held corporation usually incorporates locally, where its shareholders and directors are located, and reincorporates - often in Delaware - when it is growing and, usually, when it goes public. Discussing the possible causes and consequences of this very important, but often overlooked difference, European regulatory competition is described as cost-based, i.e. relying primarily on the costs of incorporation; while US regulatory competition is considered as affecting more directly the rules concerning the internal affairs of the corporation (and directors\u27 powers and liabilities in particular), and takeover regulation

Takeover Regulation as a Wolf in Sheep\u27s Clothing: Taking U.K Rules to Continental Europe

Aesop was an optimist. In his cautionary fable that inspired the famous admonition about wolves in sheep\u27s clothing, the predator intentionally dons a sheep\u27s fleece in order to sneak up on a lamb. His disguise, it turns out, is so effective that he ends up being mistaken for the real thing and killed by another wolf. According to Aesop, even the most effective fraud can turn against its perpetrator, and justice be done. The results are not always so salutary with other clandestine predators, including legal rules that appear aimed at protecting vulnerable groups, but instead provide valuable tools to be exploited by other, and more powerful, lobbies. The thesis of this Article is that some of the takeover regulations that have proven so successful at protecting minority shareholders in the U.K., and have been incorporated into European takeover regulation, may operate in Continental systems as a deceptive guise that instead ensures protection for entrenched controlling shareholders

Like Moths to a Flame - International Securities Litigation after Morrison: Correcting the Supreme Court\u27s Transactional Test

Because of the broad jurisdiction American courts have asserted in cases arising under the Securities Exchange Act of 1934, they have been called a Shangri-la for “foreign-cubed” class actions with little connection to the United States. Over the past forty years, the standards used by American courts to determine their jurisdiction in international securities disputes have evolved, culminating in the U.S. Supreme Court’s Morrison decision of 2010. The new transactional test promulgated in Morrison replaced all of its predecessor tests, from a test measuring whether the conduct in question took place in the United States to a test measuring whether the effects of the conduct were felt in the United States, to a combined conduct-effects test. This new transactional test is unsatisfactory, however, because depending on how it is interpreted, it is either too narrow to protect American investors as Congress intended in Section 10(b) of the Securities Exchange Act, or too broad to resolve the ambiguities that plagued the conduct-effects test. This Article proposes a new effects test that will resolve ambiguities, protect American investors, and refrain from asserting American judicial jurisdiction overseas contrary to principles of international comity. Though the effects test would not grant private parties a cause of action against violators operating in the United States but who exclusively defraud those overseas, Congress has already granted authority to federal agencies to pursue such bad actors. The effects test is also in accordance with principles of other important jurisdictions, such as the European Union, and could serve as a basis for an international agreement on jurisdiction in international securities cases