Business Organizations

Business Organizations

• Reasons for comparative study– Sensitize to own business forms– Identify universal “truths” – Basis for reforms (LLCs, auditors)– Imperative of business globalization

• Civilian business organizations– Types – Rules (mandatory / default)– Protections


You are in-house counsel for Nanosoft Corporation, a US technology business incorporated in Delaware. Your company plans to manufacture miniature computers and sell them in Europe and Latin America. You must structure the new operations.

What do you do?


Is there a “company law” of Europe?

Latin America?

Are there civilian patterns for

business organizations?


European Community• Art. 54(3)(g) of Treaty of Rome

– Harmonization– Protection of members / third

parties

• Company law directives– History– Topics– Future

• Company law regulations

http://europa.eu.int/comm/internal_market/en/company/company/official/

Business OrganizationsFirst Council Directive 68/151/EEC Second Council Directive 77/91/EECThird Council Directive 78/855/EECFourth Council Directive 78/660/EECSixth Council Directive 82/891/EECSeventh Council Directive 83/349/EECEighth Council Directive 84/253/EECEleventh Council Directive 89/666/EECTwelfth Council Directive 89/667/EECDirective 2001/86/ECDirective 2003/58/EC

Council regulation (EEC) 2137/85Regulation (EC) 2001/2157

What do you notice about the directives?

What are regulations?

What topics?

http://europa.eu.int/comm/internal_market/en/company/company/official/

Business Organizations1st Directive (1968) “protect interests of members / others”

2nd Directive (1977) “formation / capital maintenance of public companies”

3rd Directive (1978) “notice / consultation for mergers of public companies”

4th Directive (1978) “publication of annual accounts of companies”

6th Directive (1982) “division of public companies”

7th Directive (1983) “consolidated accounts for company groups”

8th Directive (1984) “approval of statutory auditors of public companies”

11th Directive (1989) “disclosure by branches of EC companies”

12th Directive (1989) “single member private companies”

Directive (2001) “supplement to statute on SE”

Directive (2003) “disclosure by companies”

Regulation (1985) “European Economic Interest Grouping (EEIG)”

Regulation (2001) “statute for European company (SE)”


Controversial topics• Corporate governance: board structure (unitary / two-tier)

– Proposed Fifth Directive– Local option in SE (2001)

• Takeovers: substantive (detailed) regulation or disclosure– High level group report (2002)– Level playing field, equitable mandatory price, rights after

successful bid• Internal affairs doctrine (company law determined by place

of incorporation– Centros (ECJ 1997), Überseering (ECJ 2000)– Proposed 14th directive on transferring registered office


Civil law heritage• “Company” as private association of two or more

persons– Law merchant (partnership)– Separate personality– Distinction - formation / monopoly– One person company?

• State recognition, not creation

What kinds of companies?


A. sociedad anónimaB. sociedad cerradaC. sociedad colectivaD. sociedad en comandita

(sociedad comanditaria)E. sociedad de empresas

(en participación)F. sociedad de inversiones G. sociedad de responsabilidad limitadaH. sociedad filialI. sociedad matrizJ. sociedad por accionesK. sociedad pública (corporación)L. sociedad unipersonal

US equivalent?





US equivalent?

__ corporation

__ closed corporation

__ general partnership

__ government agency

__ limited partnership

__ joint venture

__ individual corporation

__ investment company

__ limited liability company

__ parent company

__ subsidiary company





US equivalent?

AJ corporation

B closed corporation

C general partnership

K government agency

D limited partnership

E joint venture

L individual corporation

F investment company

G limited liability company

I parent company

H subsidiary company


Where does one find the rules that govern companies?

–civil code–commercial code–company statutes


Where does one find the rules that govern companies?

–civil code (partnerships, personal)–commercial code (limited liability)–company statutes (specialized)


What is “hub and spoke” structure of civilian business organizations?


Non-business associations • Political, charitable, cultural• History

– Not recognized in early codes– German Civil Code (association right)– Creature of state (but later recognized as

fundamental human right)

• Modern codes– Switzerland: informality of non-profit– Registration not necessary


Protective philosophy• Capital structure (formation)

– Minimum paid-in capital– Proper consideration– Condition to registration

• Distributions– Capital maintenance rules– Reserve accounts

• Statutory auditor– Protection of minority shareholders, creditors– Regulation of qualifications, independence


How is this handled in the United States?

• Capital formation• Limits on distributions• Supervision of governance, financials


paterfamilias (pay-tuhr-fuh-MIL-ee-uhs) noun The male head of a family or a household; father figure.

[From Latin paterfamilias (father of the household), from pater (father) + familias, from familia (household), from famulus (servant, slave).]

The feminine equivalent of the word is materfamilias.


What explains the difference in protective mechanisms in Europe and the US?

Business Organizations

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