Exam (elaborations)
Comparative Company Law - resit with answers 2019
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2019 re-sit with answers
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Question 1La Sedia Rossa is a private limited liability company incorporated in Member State X of the
EU (head office and registered office in that Member State). The company produces high-end
furniture. The iconic art deco collection has fueled the company`s profits for years. However,
competition from the modern and minimalistic Scandinavian furniture brands is lurking. The
CEO of La Sedia Rossa, Annalisa, evaluates where the company now stands and what needs to
be done in order to assure growth for the future. Member State Y of the EU offers an attractive
market for La Sedia Rossa to expand its customer base. Annalisa considers opening up a branch
there. She meets with a member of the commercial registry of Member State Y and discusses
her plans. The employee of the registry tells her that, in order to register the branch in Member
State Y, the law prescribes a capital requirement of euro 65.000,- for foreign entities. This
minimum capital requirement is also applicable to national private limited liability companies.
a. Is Member State Y allowed to impose the capital requirement on La Sedia Rossa with regard
to the registration of the branch based on EU law? Please explain. (3 points)
Imagine that after a while it turns out that La Sedia Rossa is doing almost all of its business in
Member State Y. Annalisa has discovered that the company law of Member State Y is more
attractive than that of Member State X. She therefore wants to move the registered and the head
office of La Sedia Rossa to Member State Y.
b. Can Member State X impose restrictions on the transfer of the registered office and head
office to Member State Y on the basis of EU law. Please explain. (3 points)
On a sunny day in June, Annalisa runs into Cedric who is the CEO of La Canape Vert, a public
limited liability company incorporated in Member State Z of the EU. La Canape Vert`s latest
collection proved to be a success. Cedric aims to expand his business. Both Cedric and Annalisa
see the benefits of a joint collaboration. The idea is that they will collaborate with regard to the
production of a new type of chair. They will each keep their own company but the chair business
will be a joint activity. They want to separate the new joint activity from the rest of their
respective companies in a new legal entity. They would prefer a legal entity incorporated in the
EU but not dependent on the national company law of any of the Member States.
c. Please advise Annalisa and Cedric on the way in which this could be achieved. Please also
comment on whether or not their desire to have a company not dependent on the law of an EU
Member State can be achieved. (2 points)
A few years later La Sedia Rossa acquires all the shares of Fresh Tables. Fresh Tables is a
company incorporated in the UK (registered office and head office in the UK). Fresh Tables is
operating at a loss and Annalisa fears that it will be easy for the creditors of Fresh Tables to
hold La Sedia Rossa liable as a parent company.
d. Are Annalisa`s fears justified? Please answer on the basis of UK law. For this part of the
question you can assume that also La Sedia Rossa is also a UK company. (2 points)
, Question 2
BeeFuel is a public limited liability company active in the production of biofuel incorporated
under the law of Member State A of the EU (with registered and head office in that Member
State). It has a listing on the stock exchange of that same Member State. Member State A has
opted out of the board neutrality rule. BeeFuel has nevertheless voluntarily decided to apply the
board neutrality rule. BeeFuel does not have any pre-bid defensive measures in place.
WhyWhy, a competitor of BeeFuel, is incorporated in the Netherlands and has its registered
office and head office in Amsterdam. WhyWhy has three types of defense measures in place.
WhyWhy wants to takeover BeeFuel and makes a public offer on all outstanding shares of
BeeFuel. The board of BeeFuel has already announced that it qualifies the takeover as hostile
and will do everything within its power to protect the company from being taken over.
TCL is one of the activist shareholders of BeeFuel. TCL owns 6% of the shares with voting
rights. It is in favour of a takeover and would like to have an explanation from the board of
BeeFuel of why they are against a takeover. TCL is convinced that it is not the only shareholder
who is discontent about the board`s reaction. TCL wants the board to provide more information
and to at least talk to the board of WhyWhy.
a. What action could TCL take in an attempt to create an opportunity to convince the other
shareholders of the benefits of this takeover and to receive more information from the board?
Please answer on the basis of EU law. (2 points)
b. BeeFuel wants to prevent a takeover. Is BeeFuel allowed to take defense measures and if so
under which circumstances? Please answer on the basis of EU law. Please note that the board
is not interested in looking for alternative bids. (4 points)
Please note that the next subquestion is not related to the case study above.
c. Imagine that you are the legal advisor of a listed public limited liability company incorporated
in Delaware. The board of directors wants to know whether it can protect the company against
a hostile takeover. Please explain i. whether or not this would be allowed and in which
circumstance and ii. how would the Delaware courts scrutinize the use of defensive measures
by the board of directors? (4 points)
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