The treatment of shareholders in the insolvency of companies is a current research project co-led by the Bank of Italy and the World Bank. Research areas are (1) Shareholders’ Liability for the Distress of the Company, (2) Shareholders’ Powers over the Management During Insolvency Proceedings, and (3) The Treatment of Shareholders in Reorganization Procedures.
The initiative for this reseach was taken at the end of 2012. Around the globe the interaction between insolvency law and company law has gained the attention of policymakers, legislators and legal commentators due to forum shopping and regulatory arbitrage in corporate insolvency. The latter developments increase the tension between the rights of the shareholders, the creditors and, in general, company law and insolvency law.
This increasing tension has become subject of a large research project jointly led by the World Bank and the Banca d’Italia. The research is developed by the Community of Practice on Insolvency and Creditor/Debtor Regimes (the ‘CoP’) and has collected data on how various jurisdictions treat the legal position of shareholders of companies in the vicinity of insolvency. The focus of the research has been on identifying how this position is affected in a crisis scenario and to identify the interaction between shareholder rights and the normal operations in either a liquidation or a reorganization process. The questionnaire is designed to analyse the conflicts between insolvency law and company law and the focus will be on two principal areas of conflict, namely the individual rights of shareholders and the role of the shareholders’ meeting in an insolvent company.
The main issues that can be distinguished within those two principal areas of conflict are
(i) the respective powers of the board and the shareholders’ meeting in insolvency proceedings;
(ii) the substantive and procedural rights of shareholders in a company subject to insolvency proceedings;
(iii) the possibility of using the old/same corporate entity as a vehicle for the reorganization of the company; and
(iv) the possibility of the shareholders to retain a participation in the reorganized company, and, iof they are allowed to retain a participation, the allocation of value between creditors and shareholders.
Two years ago, the CoP has assigned the task of responding to or organizing the collection of responses to the survey to national coordinators. For the Netherlands, Professor Michael Veder (Radboud University of Nijmegen) and myself were appointed as national coordinators and we have analysed the conflicts between Dutch insolvency law and company law with the assistance of (now) professor Bas de Jong (Radboud University of Nijmegen) and Tom Dijkhuizen LLM of the Leiden Law School. The Netherlands Report (September 2014) is, together with some 20 other country reports, available via www.globalforumljd.org.
For furthers analysis and discussions: a conference will be organized June 23-24, 2016 and will be held in Rome, at the Bank of Italy premises.