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Abstract:
In April 2008 the European Commission published a "White Paper on Damages actions for breach of the EC antitrust rules" (COM2008 (165) final). This article focuses mainly on two issues: the passing-on defence and standing of indirect purchasers and the compatibility of efforts to enhance the effectiveness of private actions for damages with leniency programmes offered by the EC Commission and national competition authorities.

As regards the passing-on defence and the standing of indirect purchasers, it is argued that the EC Commission's approach in the white paper is in theory the best solution. Yet, due to practical reasons it is suggested that in principle the passing-on defence should not be accepted and that indirect purchasers should not be encouraged to sue. In order to avoid a conflict with the ECJ's decisions in Courage und Manfredi, indirect purchasers should however not be categorically denied standing but only be discouraged from claiming damages by, for example, not alleviating their burden of proof.

Regarding the compatibility of the efforts to promote private enforcement with the leniency programmes, the EC Commission's suggestion to limit "the civil liability of the immunity recipient to claims by his direct and indirect contractual partners" is not considered a viable solution. In this paper it is argued that the best way to avoid a conflict of aims is to modify the way liability is apportioned between the cartel members, i.e. between the infringers of EC competition law who are jointly and severally liable towards the victims.

German law apportions liability equally between joint tortfeasors, unless otherwise provided (section 426 I 1 BGB). This paper shows that for the apportionment of liability between joint tortfeasors, German law can take into account both the cartel member's market share (thus incorporating the EC Commission's approach because the damages suffered by direct and indirect purchasers reflect the cartel member's market share) and the cartel member's contribution to uncovering the cartel. The latter aspect leads to the suggestion that a reduction in the fine imposed on a cartel member should lead to a parallel reduction in the cartel member's share of liability as compared to the other members of the cartel. The joint and several liability of all tortfeasors, including the successful leniency applicants', towards the victims remains unchanged.

De lege ferenda, however, it also seems justified to reduce the successful leniency applicants' liability towards the victims of the cartel accordingly. This conclusion is based upon the fact that the leniency applicants give the victims something in return: the victims receive the information necessary for them to recover their damages.

This approach, that was developed using German law as an example, should also work in other jurisdictions. It is a common legal principle that joint tortfeasors are jointly and severally liable towards their victims and that the liability as between the tortfeasors is apportioned according to the circumstances of the case.

antitrust, EC,european antitrust,european commission,cartel,competition,private action,enforcement,leniency,passing-on defence,liability apportionment,Courage,Manfredi,white paper,indirect purchasers,Kartell,Kronzeuge,private Rechtsdurchsetzung,Weissbuch,Gesamtschuldner,indirekte Abnehmer,Kommission

Abstract:
Under German law, the subscribed capital of a company can either be paid up in cash or in kind. Contributions in kind are subject to special rules because they pose the danger of an overvaluation of assets which is detrimental to both the other members of the company and to its creditors. Thus, contributions in kind have to be disclosed in the company's statutes and they are subject to special reporting requirements. A court will refuse registration of a company or of an increase in capital, if contributions in kind are overvalued. Also, if after registration a contribution in kind is found to be less valuable than the nominal value of the shares issued for it, the subscriber has to pay the difference in cash.

It is quite common, however, that subscribers of capital who have duly paid up their contribution in cash subsequently conclude a contract with the company. The company having received the contribution in cash, uses this money to e.g. buy an asset from the subscriber. The economic effect is that of a contribution in kind. In reality, the subscriber did not provide a contribution in cash, but a contribution in kind. If there is a close connection between the contribution in cash and the subsequent contract between the company and the subscriber, German courts assume an 'agreement to circumvent' the provisions governing contributions in kind. German legal doctrine speaks of a "hidden contribution in kind" or "disguised contribution in kind".

Regarding the German 'Aktiengesellschaft (AG)' (public limited company) the legal consequences of such circumvention are dramatic. The contract between the company and the subscriber is null and void and the promised contribution in cash is considered to be still unpaid. The subscriber therefore has to pay the contribution in cash again. As such circumventions are usually discovered during insolvency proceedings, the subscribers are very often unable to recover the initial sum that they paid up and that was used in the acquisition of an asset. To sum it up, in the case of a hidden contribution in kind the subscribers run the risk of having to pay their contribution twice. The same was true for the German 'Gesellschaft mit beschrnkter Haftung (GmbH)' (private limited company). However, this has changed. As of 1 November 2008, the contract between the company and the subscriber is valid. The contribution in cash is still considered to be unpaid, however the value of the hidden contribution in kind is offset against it. The subscriber only has to pay the difference in value between the promised contribution in cash and the provided contribution in kind. The dramatic consequence of the subscribers having to pay their contribution in cash twice is avoided.

This article analyzes the new law on hidden contributions in kind. It discusses its scope of application and doctrinal questions raised by it. Although the new law only applies to the 'GmbH', the article shows that it has also ramifications affecting the 'AG'. It argues that the dramatic consequence of the subscriber having to pay twice can be avoided in the case of an 'AG' as well. The article concludes with a brief discussion of the capital system of the proposed Societas Privata Europaea. It is argued that the provisions of the current proposal for an SPE-statute do not require that the value of contributions in kind matches the nominal value of the shares issued for it and that therefore the question of hidden contributions in kind does not arise.

The article is based on a lecture given in Frankfurt a.M. at the annual conference of the Company Law Society (Gesellschaftsrechtliche Vereinigung - VGR) on November 14, 2008. It will be published in [14] VGR (2009) (VGR-Conference Series). For a partial publication see also Die Aktiengesellschaft 2008, Vol. 24, p. 883 et seq.

contribution, disguised contribution, shares, assets, subscribed capital, circumvention, capital increase, insolvency, SPE, GmbH

Abstract:
The German Bundesgerichtshof (Federal Court of Justice) has recently passed a judgement in which it held board members of a company liable for oral information given to investors during a "road show". After the company had decided on an increase in its capital, the members of its managing board met with potential investors and explained the company's business plan to them. During their oral presentation they misrepresented a material fact by claiming that the company's projected liquidity for the end of 2000 was DM 40.5 million although it was - because of the costs of an already planned-for advertisement campaign - in fact only DM 20.4 million. Based on the information received, the investors subscribed shares. In May 2001 the company became insolvent.

The Bundesgerichtshof based its judgement on Sec. 280 (1), 241 (2), 311 (3) Buergerliches Gesetzbuch (German Civil Code), i.e. provisions that sanction breach of trust. In this article it is, however, argued that the Bundesgerichtshof in fact developed a new strand of prospectus liability that - a contradictio in adiecto - can be triggered by oral statements. Board members of a company who give an oral presentation to investors are liable for the completeness and correctness of the information given to the investors. This liability is not based on the board members having asked the investors to trust them personally, but rather on their status as the organs authorised to represent the company.

personal liability, oral statements, board members, breach of trust, prospectus liability, Information seigenhaftung, BGH, Vorstandsmitglieder, Organmitglieder, Prospekthaftung, Sonderverbindung, Vertretereigenhaftung, Dritthaftung aus c.i.c.,Statushaftung,Vertrauensinanspruchnahme,Vertrauenshaftung

Abstract:
The International Accounting Standards Board (IASB) has the task of independently developing accounting standards. The International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS) published by the IASB are transposed into European law via the so called endorsement procedure. Under European law, all listed companies are required to draw up their group accounts according to IAS/IFRS.

The IASB's parent body, the International Accounting Standards Committee Foundation (IASCF), is financed by voluntary contributions. According to the IASCF's financing guidelines, these voluntary contributions have to be raised internationally. The amount expected from each country's business community is determined by the country's gross domestic product.

This article deals with raising the contribution expected from Germany's business community. It argues that a listing fee can be constitutionally imposed on all listed companies. The article is based on an expert opinion delivered by the author in October 2007.

IASCF, IASB,IAS, accounting, international accounting, accounting standard, financial reporting, listing fee, financing IASCF, financing IASB, Rechnungslegung,Konzernrechnungslegung,Rechnungslegungsstandard,Finanzierung IASCF,Finanzierung IASB,IAS-VO,Sonderabgabe,Kapitalmarktteilnehmer,Steuer,Bilanz