Company Law Research Articles

Legal Protection for Persons with Disabilities in Specific Time Working Agreements

Law Number 8 of 2016 concerning Persons with Disabilities, explains that persons with disabilities are any person who experiences physical, intellectual, mental, and/or sensory limitations in interacting with the environment and other citizens experiencing obstacles and difficulties to participate fully and effectively. In the employment relationship between the company and the workforce, in this case, the problem solver is a promise of work. The work agreement is the basis for the formation of a working relationship. An employment agreement is valid if it fulfills the legal requirements of the agreement and the legal principles of the engagement. In the event that it is made in writing, it must pay attention to the applicable laws and regulations, for example, it regulates work agreements for a certain time. Fixed time work agreement. The problem is how is the legal protection for persons with disabilities in a work agreement for a certain time? Normative juridical and empirical juridical research methods. The perfection is that legal protection for people with disabilities in work agreements for a certain time is adjusted to the needs of the company which is carried out through requirements that have been stipulated in a separate decree, while still observing the applicable company laws and regulations and company laws and regulations. This can be seen from the lack of employee disturbance, such as at PT. Pupuk Indonesia the number of disruptive employees is 24 people, in terms of facilities PT. Pupuk Indonesia has prepared additional facilities for disruptive employees.

Dilemma of the Interested Director in Pakistan: Lessons from English Courts’ Jurisprudence

No-conflict and no-profit rules thrive in Company Law to extract the director’s undivided loyalty towards the company and oblige him to avoid conflict of interest and not to earn profit at the expense of the company and its shareholders. Disclosure of interest is required if the director steps into a situation of conflict of interest. Despite the statutory clarity, Pakistani courts’ attitude is not uniform and provides ample space for a loose or broad interpretation of the law concerning the application of these equitable rules, as the stringent application of rules satisfies the statute but the flexible application of these rules, and the categorization of disclosure of interest and exoneration of the director from breach of duty in cases of non-disclosure seem problematic and this does not sit well with the statutory requirement. Thereby setting up unhindered bridges to fill gaps between the Companies Law and Pakistani courts’ jurisprudence. The article focuses on the penumbral manners, as for the sake of completeness it compares the Pakistani legal regime with the English courts’ jurisprudence, which is more uniform and advanced, with the intent that Pakistani courts can learn the lessons from well-established English courts’ jurisprudence. Directors’ fiduciary duties, duty to avoid conflict of interest, no-conflict rule, no-profit rule, company’s best interest, director’s personal interest, interested director, disclosure of interest, nature and extent of disclosure, implied or explicit disclosure

Correlation between freedom of capital movement and freedom of establishment in European Union law

The study highlights the correlation between freedom of movement of capital and freedom of establishment in the law of the European Union, taking into the account modern case law of the Court of Justice of the European Union (CJEU). The author analyses the case law of the CJEU in the context of determining the scope of application of freedom of movement of capital and freedom of establishment in certaincases, including decisions made in 2021 and 2022. The author identifies the factorswhich are taken into account by the CJEU when determining whether to give preference to the application of a particular freedom. The author also highlights the approaches which have developed in the international and European law science to address thisissue. The author establishes that, based on the analysed case law, the CJEU assesses the main purpose, objective and impact of a national measure on the exercise of freedom of movement of capital and/or freedom of establishment. The Court may favour one freedom over the other based on these factors or consider both freedoms equally when assessing the compatibility of the measure with EU law. It often turns out that restrictive national tax measures may violate one or both of these fundamental freedoms of the EU’s internal market.The author concludes that guided exclusively by the provisions of the EU founding treaties on freedom of movement of capital (Article 63 TFEU) and freedom of establishment (Article 49 TFEU), it is often impossible to establish for certain which freedom will be applied to a particular economic activity of individuals and legalentities. In accordance with the case law of the CJEU, when deciding on the applicationof a particular freedom, in particular, the following factors should be taken into account: the presence of a “definite influence” of an owner of capital share (investor);the type of restriction on the freedoms of the EU internal market imposed by the EUMember State on the activities of entities engaged in economic activity. However, according to the author, there appears to be a lack of consistency indetermining the application of the freedom of movement of capital and/or freedom of establishment, which may be eliminated with the adoption of more judgments by the CJEU in the future and their further scientifi c understanding Key words: EU law, international economic law, international treaties, freemovement of capital, freedom of establishment, investment, company law, Court of Justice of the European Union, European integration.

The EU Directive on Women on Boards

After 10 years of delay, in November 2022 the EU passed the Directive on improving the gender balance among non-executive directors of companies listed on stock exchanges. This Directive imposes a 40% quota in respect of the underrepresented gender for listed company boards in the EU. The aim is to diversify corporate boardrooms and thereby boost economic growth and gender equality (among other objectives). In this paper I look at the mechanisms of the Directive and consider their practical effect and potential impact. I also ask whether the Directive has missed an opportunity to make a more tangible difference to gender equality by failing to effectively consider executive director diversity. I reach the conclusion that the Directive, as drafted, might have been suitable 10 years ago but is not necessarily today. The changes of the last 10 years threaten to mean the Directive becomes obsolete before its pre-destined end date in 2038. boardroom diversity, gender equality, quota, directors, company law, corporate governance, European Union

Editorial: Editorial European Company Law June 2023

Editorial: Editorial European Company Law June 2023

Investment, inflation, and the role of internal information systems as a transmission channel

We examine whether the quality of firms' internal information systems influences the relation between inflation shocks and corporate investment, as posited by imperfect information models. Inconsistent with RBC models’ prediction that nominal variables (e.g., inflation) do not affect real variables (e.g., corporate investment) but consistent with the presence of information frictions, we first document a positive relation between inflation shocks and firm-level investment. Next, we show that higher internal information system quality, measured through responses to the World Management Survey, mitigates the positive relation between inflation shocks and firm-level investment. This result suggests that internal information quality serves as a channel through which aggregate-level nominal variables affect firm-level real variables. We then document that firms with higher internal information system quality make relatively more efficient investment decisions following inflation shocks. Our inferences are robust to using the 8th EU Company Law Directive as a shock to internal information system quality and to several additional tests.

Legal Reformulation of Derivative Action Regulations for Protection of Minority Shareholders in Indonesia: Comparative Study of Indonesia and Australia

Arrangements related to legal protection for minority shareholders regulated in Law no. 40 of 2007 concerning Limited Liability Companies (hereinafter referred to as UUPT) still found limitations both in filing rights to sue, objections, and implementation of derivative actions in terms of arrangements regarding the protection of minority shareholders due to a corporate action or certain decisions that take refuge behind the legality of the validity of the General Meeting Shareholders (GMS) whose enactment is heavily influenced by the interests of the majority shareholders. The existing arrangements are felt to be far from justice for minority shareholders. This study will examine whether the Derivative Action arrangements contained in the Company Law as a legal umbrella in providing protection for minority shareholders are adequate and how the legal systems are compared with regard to Derivative Action arrangements in Indonesia and Australia. The purpose of this study is to find out to what extent the Derivative Action regulations contained in the Company Law can protect minority shareholders and to compare the legal systems between the two countries as input and consideration for corrections and improvements to the national legal system. This research uses a type of normative research with a statutory approach and a comparative approach. The results of this legal research found certain aspects of the Australian Corporation Law which can provide a sense of justice and legal certainty as legal benefits for minority shareholders which can be used as legal reformulations in Indonesia.

Research on the Governance of the State-owned Proprietorship Companies

As a symbol of the innovation of modern enterprise system in China, the state-owned proprietorship company is a unique corporate form designed by the Company Law for the corporatization reform of all state-owned large and medium-sized enterprises. A solely state-owned company is a limited liability company established by the state with separate investment. Its unique equity structure and traditional governance experience of state-owned enterprises determine the uniqueness of its governance structure. In the process of establishing and improving modern enterprise systems, state-owned proprietorship companies have exposed many problems in governance, such as unclear responsibilities of investors, indistinguishable governance between government and enterprises, and incomplete corporate governance structure. The corporate governance structure is the core of a company, and without a sound corporate governance structure, it is not an excellent company, which directly affects its competitiveness. Improving the governance structure of state-owned proprietorship companies provides useful reference for the reform of state-owned enterprises in China, and is of great significance for enhancing the market competitiveness of state-owned enterprises and achieving the preservation and appreciation of state-owned assets. Based on the analysis of the current situation and existing problems of the governance structure of state-owned proprietorship companies, countermeasures are proposed to improve the governance structure of state-owned proprietorship companies in China.

Social Entrepreneurship: The Choice Between Labels, Variants, Dedicated and Conventional Corporate Forms

Abstract 85 Around the globe legislators have created labels and dedicated company forms for social enterprises. On the basis of an analysis of US, UK, German, French, Dutch and Belgian law, this article exposes which elements are important (and which are not) in the creation of these labels and forms. First, the distinction between labels and dedicated forms is of relative practical importance. Even dedicated company forms are – like labels – to a large extent governed by general corporate law. This offers advantages in terms of network effects and easy adoption. Creating a completely new corporate form is therefore justified only if there are compelling reasons for a comprehensive overhaul of existing company law. Second, the introduction of labels and dedicated company forms is influenced by the level of stringency with which jurisdictions distinguish between companies and nonprofit forms. For instance, the American benefit corporations and the French ‘raison d’être’ were introduced to explicitly authorize what conventional companies can do elsewhere. Nevertheless, a high degree of flexibility in conventional company law is insufficient to facilitate social entrepreneurship. Mandatory law for social enterprise labels or forms is necessary to credibly signal commitment to a social purpose. Yet, creating labels or dedicated forms for lightly regulated ‘mission purposes’ may generate noise that interferes with this signal. 86

Improving the Gender Balance Among Directors of Listed Companies in the EU

Abstract 166In November 2022 the Council and the European Parliament adopted Directive (EU) 2022/2381 on improving the gender balance among directors of listed companies and related measures. Thus, by 30 June 2026, European Member States must ensure that large, listed companies reach the Directive’s gender balance objectives. Gender balance is achieved when members of the underrepresented sex hold at least 40% of non-executive director positions or members of the underrepresented sex hold at least 33% of all director positions, including both executive and non-executive directors. To achieve gender balance Member States must set up a procedure for selecting candidates for appointment or election to director positions. Although the article finds that quotas are the best model to bring about a real improve to gender balance on company boards, it questions whether the model, the Commission has chosen will achieve the objective of the Directive. However, the article also finds that it is likely to have a positive effect in the Member States that has been lagging behind. Moreover, the article criticizes that the Directive does not openly address the company law implications of the established procedure, and finds that the application of principles of equal treatment in top-management positions place the Directive in an unclear position between employment matters and company law.167

An Introduction to and Evaluation of the 2019 Belgian Companies Act – Preparing for the Previous War?

Abstract 109This article discusses some aspects of the completely new Companies Act (“BCCA”) adopted in Belgium in 2019. Even though the reform touched upon all aspects of company law and all company types, its main goal was to roll back Belgian goldplating of EU company law Directives and to turn the hitherto very rigid Belgian private company into a very flexible, contractual vehicle with little mandatory law applicable to it, except for rules on creditor protection. As part of this reform, the concept of legal capital (not just minimum capital requirements) was abolished for the private company. In order to allow a Belgian company to better compete in the light vehicle competition, Belgium moved from the real seat doctrine to the incorporation theory. For public companies, the main reform was probably the introduction of loyalty shares, which (so far) did not succeed in attracting more listings to the Brussels stock market, but did allow existing controlling shareholders to cement their control with a smaller stake than before. The reform was very successful in increasing legal certainty about many issues about which no authoritative case law exists. But in a way, the reform fought the last war (the light vehicle competition) while arguably not enough attention was paid to enabling venture capital and private equity contracting and the capital structures that go with these investments.110

Symposium Discussion Report: The Private Limited Without Capital and Loyalty Shares in Belgium

Abstract 58The 16th annual ECFR Symposium was opened by Koen Geens and Christoph Teichmann. The former addressed the evolution of company law in the EU and Belgium, focusing on the new Belgian Code on Companies and Associations which entered into force in 2019. The latter explained that the presentations in the morning would focus on topics of Belgian law that are also of interest to the European academic community, while the afternoon topics would be of an EU nature. The first morning session consisted of two presentations. The first one, given by Henri Culot, focused on the Belgian private limited company without capital. The second presentation was by Jeroen Delvoie and addressed loyalty shares.

Symposium Discussion Report: Classes of Shares, Social Entrepreneurship and Overall Belgian Company Law Reform

Abstract 162During the second morning session three topics were highlighted. Like in the first session they all concerned Belgian law but were also of interest to the European academic community. Marieke Wyckaert discussed classes of shares, Sofie Cools addressed corporate law for social entrepreneurship and finally Hans De Wulf made an overall assessment of the Belgian company law reform.

Power of Proof of Electronic Signature in Deed of General Meeting of Shareholders by Teleconference

The implementation of the teleconference GMS which has been regulated in the Company Law is always related to electronic signatures on the deeds produced. Restrictions on UUJN that have not yet regulated the authority of a notary to make electronic deeds raises problems related to the strength of proof of electronic signatures at GMS teleconferences. The method used in this paper is Normative Juridical and the results of this study indicate that teleconference GMS is still legal to do, but the deed produced must still be made in notarized form.

Implikasi Normatif Undang-Undang Cipta Kerja terhadap Perseroan Perorangan sebagai Reformasi Hukum Bisnis di Indonesia

It is clear that Micro, Small and Medium Enterprises (MSMEs) are the most common type of business among other types of businesses, but being able to register as a Limited Liability Company legal entity is by far the most popular form of business entity in Indonesia. As a result, Law Number 11 of 2020 concerning Job Creation was passed with the aim of improving the business climate and creating the widest possible employment opportunities. This regulation stipulates a new type of company, namely a sole proprietorship company. This sole proprietorship is an expression of changing laws in Indonesia, combining world regulations and economic demands for Indonesian society. This paper aims to find out the normative implications of the Job Creation Law for individual companies as a business law reform in Indonesia. The approach used in this article is normative juridical, with the methodology of collecting literature study materials. The conclusion of this paper is that the implementation of the individual company concept as a legal entity in Indonesia opens up the possibility of establishing and owning a company by one person with a concept that takes the form of a limited liability company.

Oppression and Mismanagement the Notion of Rule of Majority

The Prevention of Oppression and Mismanagement1 is a fundamental clause in the Companies Act that seeks to protect the interests of minority shareholders and prohibits firm management from abusing authority. However, although being a major clause of the Companies Act2, oppression and mismanagement3 are not defined. Because the meaning of mismanagement or oppression prevention might be broad, these phrases must be construed based on the facts of each instance. However, if we try to define Mismanagement, it relates to practises that violate the Memorandum of Association, Articles of Association, or other legislative rules, resulting in mismanagement inside the organisation. This provision empowers shareholders to sue the company’s management or majority owners in court if they think their rights are being violated or the business is being mishandled. The purpose of this article is to examine the portions of the Companies Act’s Prevention of Oppression and Mismanagement Act4, which is found in Chapter XVI of the Companies Act5, and contains its purposes, scope, and implementation as found in sections 241 to 246. It discusses the many behaviours that may constitute oppression and mismanagement, as well as how minority shareholders can seek redress through the legal system. The study also highlights the role of the Company Law Board and the National Company Law Tribunal6 in resolving oppression and mismanagement issues, as well as other particular directives such as A member’s shares or interest are purchased by another member, resulting in a capital decrease. Transfer/allotment of shares is restricted. Contracts between the company and the MD, or any other director or administration, may be cancelled or set aside as the tribunal thinks necessary. Any further agreements between the firm and anyone other than those stated above shall be dissolved. Only with proper notification and the approval of the affected party may the agreement be cancelled. Putting aside any transfer/delivery/payment/execution or other act pertaining to property made by or against the corporation during a period of three months of the date of the request under this section, which would be constituted fraudulent preference if done by or against the individual.7 Overall, this paper provides a thorough examination of the Companies Act’s Prevention of Oppression and Mismanagement provision and its significance in protecting minority shareholders’ interests and encouraging effective corporate governance.

ROLE OF NCLT IN IMPROVING CORPORATE GOVERNANCE IN INDIA: A DESCRIPTIVE ANALYSIS

On the event of India Today conclave 2023, the Honble Prime Minister of India on 18th March 2023, recognized the contribution of National Company Law Tribunal (NCLT) in strengthening the corporate governance practices in India. It imposes a curiosity in any research oriented mind that how the principles embodying the NCLT becoming one of the contributing factor for good corporate governance for the India Inc. In the merger and arrangement cases the NCLT has efficiency of the 93 %. In the oppression, mismanagement and other cases the efficiency counted at 80 %. Similarly in the insolvency dispute cases the efficiency is counted at 86 % in totality and the total amount involved in the settlement was more than ₹ 10,49,264 crore. Keeping in view the size of the corporate world operating in and through India, there need to be strengthening of the NCLT window in terms of resources and providing other jurisdictions to adjudicate the matters. The independence and machinery of the NCLT should be safeguarded and preserved.

The EU’s Proposed Reform of Directors’ Duties and the Missing Link to Soft Law

In this paper, we investigate whether reform of EU company law is needed to make corporate governance more sustainable. We also consider some issues to which the EU proposals on company law and sustainability paid scant attention, such as the role of corporate governance codes and other types of soft law, mainly of international origin, in promoting sustainable governance. In addition, we underline that in recent years the EU has adopted several measures which offer better prospects for sustainable governance than the reform of directors’ duties the EU is currently debating. We conclude that the failure to take corporate governance codes and the existing regulatory framework into account could seriously impair pending reforms of directors’ duties and their link to sustainability.

European Company Law in transformation—Striving for participation and sustainability

Abstract European Company Law, a European Union (EU)-level company law (as ‘federal policy’), has passed the 50-year mark these years. Twenty-five of those years were dominated by a market function approach, the ‘black-box’ approach, where the company was seen from outside and guaranteeing necessary information for those outside the corporation, rational information users (namely long-term creditors and investors), was paramount. A transformation away from this approach began some 30 years ago; the last 20 years were dominated, first, by an approach that strongly increased participation and true multiple ‘voices’ in companies—as an approach meant to empower and heat up discussion, it can be termed the ‘red-box’ approach. This is an approach where more structural information and empowerment took place, and relations within the company were more in the focus of the legislature as well. The advent of new economic sociology could also be sensed, as the EU became more of a political Union or the concept of a competition of legislatures became a potential reality, such as with Centros. As a common denominator, the ‘wisdom of the crowds’ would seem to be more in the focus. The second phase of these last 20 years, primarily in the last decade, was then dominated by a fixing of certain long-term goals from the outside, fostering a goal of sustainability. Again, important general trends of theoretical thought emerged, and this phase can therefore be seen as a ‘green-box’ approach. A framework constitution of values is the aim of such an approach. This article brings together EU company law as a federal task and the development of these three phases, including the history of thought and political developments, as well as their theoretical and political underpinning. The article does this mainly for development at the EU level (ius communitatis), but also provides a link to (comparative) national developments and inspiration (ius commune).

Corporate digitalization in the european context: going one step further

The digitalization of corporations is on the right path; however, the advantages sought by that process could be overshadowed by the disadvantages that come with any technological process. The aim of this work is to make a careful analysis of the framework set out by the lawmakers through Directive (EU) 2019/1151 of the European Parliament and of the Council, of 20 June 2019, amending Directive (EU) 2017/1132 as regards the use of digital tools and processes in company law, and, based on the principles governing corporate digitalization, take the analysis one step further, indicating where this issue should go in the future. Although technology helps corporations, its indiscriminate use in the corporate sphere could lead us to a European model of capital company that bears no resemblance to the one we have now. It is a process in which more advanced technology should be introduced progressively, in order to discover gradually how appropriate or not its adaptation is. This opens up a huge potential for modernizing corporate law that we should take advantage of – with caution and security – but to the fullest.