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As already mentioned, ECL provides not only capital formation rules, i.e., rules ensuring correct assessment of assets contributed for the formation of the legal capital, but also capital maintenance rules. These include a rule requiring that dividends are only paid when a company is showing a profit above the level of historically recorded legal capital. More precisely, Article 56(1) Directive 2017/1132/EU makes reference to the value of the net assets shown in the company’s annual accounts.
This definition is a good starting point. However, for the purposes of this book, it needs some further clarification. Indeed, the expression European Company Law (hereafter ‘ECL’) requires one to focus on the meaning of both ‘company’ and ‘company law’, on the one hand, and on the qualification ‘European’, on the other.
During the formation of the acquis on the freedom of establishment, the European Commission promoted discussion (see, § 7.3) of the adoption of legislative tools able to enhance cross-border mobility for companies and firms, in particular by permitting a company to transfer the seat with a view to changing the applicable company law (lex societatis), without going into liquidation.
Adoption of the majority principle as a general rule requires adequate consideration of minority shareholders’ interest. In this respect, ECL provides many rules aiming at protecting minority shareholders, such as: reinforced majorities for some fundamental matters, anti-dilution tools in case of a capital increase, double majorities for decisions affecting special classes of shares (or special consent of the affected shareholders), sterilisation of voting rights attached to treasury shares, and so on.
An important chapter of EU company law includes annual and consolidated accounts. The following paragraphs will offer a brief overview of Directive 2013/34/EU, and in particular will focus on: (a) the annual accounts layouts, the management report and the duty of publication; (b) the accounting principles; (c) the consolidated accounts. Information will also be given on the IAS/IFRS accounting principles, as well as on statutory audits.
As mentioned, the concept of corporate governance includes the system by which companies are directed and controlled. In Europe different board structures coexist as, depending on the country, companies may put in place either a ‘one-tier’ or ‘single board’ system (also called ‘monistic’ or ‘unitary board’ system), a two-tier (or ‘dual board’ or ‘dualistic’) system, or some form of mixed system. The EU acknowledges the coexistence of these board structures, which are often deeply rooted in the country’s overall economic governance system, and has no further intention of challenging or modifying this arrangement.
As previously mentioned, all of the company law directives have been revised or recast over time, with a view to coping with the needs of a more engaged economic environment in Europe. Before proposing amendments or replacements of existing acts, the Commission has entrusted groups of company law experts to recommend proposals for either simplifying or modernising European Company Law.