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The Future of Company Law - SLS Supported Conference



Moot Court Room


27th April 10.30am to 15:00pm on 28th April (GMT)

The Future of Company Law - SLS Supported Conference

Edinburgh Centre for Commercial Law is delighted to host a conference organised by the SLS Company Law Subject section, and supported by the SLS Subject Section Fund on “the Future of Company Law”. Scholars from all over the world, and at different stages of their careers, will discuss what the future of company law is for them, and identify common themes running through their research.

Program for the conference can be found below.

The Future of Company Law - SLS Supported Conference

Hosted by the Edinburgh Centre for Commercial Law


27th April 2023

Panel 1 – The Role of the Participants in the Company

10.30am – 12.00noon

  1. Katarzyna Chalaczkiewicz-Ladna, University of Glasgow et al

Title:        The Workforce Engagement Mechanisms in the UK: A Way Towards More Sustainable Companies?

Abstract:     Workforces play an important role in companies, even though their direct involvement in corporate governance processes seems invisible or marginal. While shareholder primacy has been justified by the mistaken argument that shareholder interests converge with those of the company, it is rather the interests of company workers that are most closely aligned with those of the company and the company’s long-term success. Arguably, the role of workforce can be crucial in addressing new challenges faced by companies and in implementing initiatives within the framework of corporate sustainability.

In 2018, the UK Corporate Governance Code introduced for the first time – through Provision 5 – workforce engagement mechanisms. The aim of this study is to analyse empirically the implementation of these mechanisms by FTSE100 companies in 2020 – the second year this provision is in force. We view the Provision 5 workforce engagement tools as one of the available channels leading towards the “Entity Model” of ESG (a model that locates accountability more clearly with the board alongside other forms of strategic decision-making), with the aim of making suggestions on how to improve participation during decision-making when using engagement mechanisms. Provision 5 is not only a stakeholder empowerment tool, but can be seen more broadly as the start of a process of experimentation to determine the best ways to engage all stakeholders in board decision-making. Finally, Provision 5 can provide an effective model for the development of the social dimension of sustainability, which to date has attracted less attention in the ESG model of sustainability.

  1. Paraskevas Rodosthenous, University of Birmingham

Title:        The changing of corporate board diversity and their impact on executive remuneration beyond the glass ceiling: towards a meritocratic direction with equality of opportunities.

Abstract:     The responsibilities of the board of directors have been on the corporate governance agenda for years. Acting as the agents of shareholders, directors are expected collectively to devise operational and financial strategies for the organisation and to monitor the effectiveness of the company’s practices. By examining what drives racial diversity on corporate boards, the purpose is to uncover recent trends in board diversity by analysing factors that drive the lack of diversity and explaining what is the logical relationship between the mid-level senior management acquiring board positions and to the extent of possibly supporting through high remuneration my main established argument around meritocracy considerations.

Inevitably, part of that debate would be to argue in favour of legislative mandated quota for under-represented gender or ethnical minorities at the board of directors, i.e. to encourage listed firms to have both women and “inclusive” individuals (defined by race or sexual identity). Resultantly, some existing empirical foundations should be emphasised assuming that the Dworkinian criterion of meritocracy can be strongly applied in terms of monitoring directors’ earnings. Thus, the emphasis should be given on achieving the goal of compensating people facing disadvantages due to ratio and gender-based discrimination and seeking to outline the contribution to the re-conceptualisation towards a more socially responsible framework. Lastly, some recommendations on how the problem will be improved should be mentioned.


  1. Ana Clara Carvalho, Panthéon Assas University

Title:        How Compliance Officers are Defining the Future of Company Law in Europe

Abstract:     Conflicts between regulators and business corporations characterise western modern-day corporate governance. These conflicts emerged gradually in the 19th century, with cases such as the Sadleir Affair from 1850, but took off in the 21st century, as seen in the Deutsche Bank Spying Scandal that went on at the beginning of the 2000s and lasted for almost a decade. Initiated as a reaction to company scandals, corporate regulation has grown more sophisticated over time while attempting to address fundamental issues. As a result, businesses are becoming increasingly resistant to legislation that stifles their innovation as regulators continue to make use of compliance tools to prevent significant scandals.


This research aims to study the role of compliance in the future of company law. First, it will be discussed how compliance came to be in the European Union and how it arose from corporate scandals. After that, the reflection will focus on how compliance and its professionals are changing traditional business environments and the need to adapt company legislation to accommodate current-day needs to fight money laundering and terrorism financing. This is illustrated by the increasing need to integrate compliance officers into legal departments of medium and large-sized corporations in Europe. Furthermore, this paper explores projections about how compliance will become an increasingly significant factor in the development of business legislation across Europe. Finally, the analysis will focus on the correlation between corporate governance innovation and the future of company law.


27th April 2023

Panel 2 – Exploring Paradigm Shifts

1pm to 3pm

  1. Irene-Marie Esser, University of Glasgow et al


Title:        The Elusive Purpose of Corporate Purpose

Abstract:     Corporate purpose has emerged in recent years as a key issue in connection with the role of corporate governance in the transition towards sustainability. Ultimately corporate purpose defines who the company is, and why it exists. It focuses on a meaningful contribution to meet social needs, communicated externally and embedded in corporate culture. We start by reviewing how corporate purpose is framed in academic discourse and then move on to addressing some key questions: whose interests should be encompassed by corporate purpose; who should decide about corporate purpose, the board or the shareholders; and what legal technique should be used to implement corporate purpose? We undertake our analysis in the context of the UK, which provides a suitable case study in the light of its long-standing emphasis on flexibility in company law, its development of soft law governance standards and its promotion of stewardship by investors. In that sense the UK provides a good test of the capacity of private ordering to set, implement and adjust corporate purpose. We link our analysis to our earlier ‘entity model’ of ESG, which we proposed as a solution to mitigate the limitations of the financialized model of ESG which has become dominant globally. 


  1. Ahmad Al Shariati, University of Sussex

Title:        The Purpose of Corporations in the Context of ESG Concerns: Continuing Shareholder Primacy or Countenancing Radical Reform?

Abstract:     Despite the dominance of the shareholder primacy approaches in most OECD countries, new academic debates and bold statements of business leaders (the majority of them involved in some of the leading conglomerates) have encouraged a paradigm shift towards a stakeholder-oriented approach. The long-standing focus on the governance of corporations must now be also supplemented by the growing concern in the past decade with the role that corporations play concerning climate change and social inequality. This leads us to the current intense debate about the merits of the ESG (environment, social and governance) approach to corporate reporting and investing. In this context, this research will aim at discussing corporations’ purposes and the need to switch to a stakeholder approach to meet ESG objectives. Additionally, it will address what should be directors’ duties in this regard. If the topic of corporations’ purpose is as old as corporate governance itself, this research will present new examples in a reform-oriented way with a particular focus on amending Section 172 of the UK Companies Act. From comparative company law in light of recent developments in international environmental law, to the degrowth movement, the latest BRT statements and Patagonia’s example, this research will draw upon the freshest developments in the corporate governance sector to reform the purpose of corporations to meet ESG concerns while referring to and analysing the foundational shareholderist theories of influential scholars such as Friedman, Smith, Bebchuk and Mayer. Current scholarship is lacking and needs this contribution: the latest contributions from lead authors are highly partisan, and a more nuanced assessment of the current state of corporate governance is required.

  1. Peter Underwood, University of Exeter

Title:        In-corporating Crisis: Time to shift the Paradigm Away from Shareholder Primacy

Abstract:     Corporations play a fundamental role in society; the focus historically has been on shareholder wealth maximisation under the guise of capitalist economic theory. The 2008 financial crisis was catastrophic to the global economy, as are large-scale crises. The focus on short-term gains adds pressure to boards and exacerbates short-termism. A global pandemic and environmental challenges necessitate meaningful change for the corporation’s long-term future.

The paper deconstructs the foundations upon which the leading shareholder primacy model is built, and proposes a progressive method, the pluralist approach, to advance the ‘new’ modern corporation. Pluralism rose to significance from the Company Law Steering group in the 2000s, where it was contrasted with ESV. For many reasons, ESV was favoured as ease of implementation, with a significant challenge as to how it could be implemented, proving the stumbling block. Peter Drucker, in 1991 wrote that the best way to predict the future is to create it. Given that the corporation exists by concession of the state, the paper argues that the pluralist model can be created as a framework for the modern corporation to operate in following the failure of ESV.

Many scholars have debated the shareholder vs stakeholder positions dating back to the Berle and Dodd debate in 1932. Colin Mayer has more recently advanced the purpose of being at the corporation’s heart, for which Davis argued that any mandatory purpose requirement would be largely ineffective by itself. This paper argues that these are false dichotomies, and unless the fundamental conception of the corporation is changed, shareholder interests will continue to reign supreme and suppress broader interests.

  1. Adefolake Adeyeye, University of Durham

Title:        Certified B Corps: An Examination of a Standard Based Approach to Stakeholder Governance

Abstract:     In 2015, B Corp certification was launched in the UK.  Since then over 800 companies have adopted certified B Corps status.   Most certified B Corps in the UK are small and medium sized with SME’s accounting for 99.9% of businesses in the UK.  The B Corp movement seeks to change the economic system from a shareholder capitalism to a stakeholder economy. Certified B Corps adopt a stakeholder-driven mode towards ‘high standards of social and environmental performance, accountability and transparency’.  The paper explores the growth of the B Corp movement; issues around its standards; certification process including the legal requirement; transparency; and governance. It examines the effectiveness of this standard based approach for stakeholder governance. It argues that the certified B Corp creates the avenue for stakeholder governance. However, to achieve the full realisation of the shift towards stakeholder governance, there is the need to create enforceable rights for stakeholders.


27th April 2023

Panel 3 – The Mechanics of Paradigm Shifts

3.15 – 5.15pm

  1. Christian Witting, National University of Singapore

Title:        A Systems Model of the Company

Abstract:     This paper proffers a model of the company for use in considering problems of corporate liability. The model is constructed upon not just an ‘analysis’ of individual company components (such as the board) but upon a ‘synthesis’ of internal and external relationships as well. This is achieved by employing systems theory. The argument is that the company is a managerial system composed of multiple structural and functional components that management coordinates in pursuit of profits. The company’s profit-making activities inevitably impact upon persons and entities in the company’s environment. The company learns about happenings in its environment (including harming of others) and about external threats (including judgments against it) through its feedback mechanisms.

Systems modelling reveals important points about corporate liability. First, it points to a deficiency in corporate governance arising from obsessive focus by lawmakers upon the role and responsibilities of the board. Companies are run day-to-day by managers and greater focus should be applied to devising an appropriate liability regime for them. Second, common law jurisdictions need to promote mechanisms by which externally imposed conduct standards can be transposed reliably into internal company policies, procedures, routines, and cultures. The Caremark duty allows for societal/legal feedback about wrongdoing, which is conveyed to the company’s directors and managers through liability awards. Third, systems thinking confirms the correctness of vicarious liability rules limiting corporate responsibility to the torts of employees, who fall within the managerial hierarchy, and excluding independent contractors, who do not.


  1. Claudia Paduano, University of Edinburgh

Title:        Environmental Tort Victims: How Effective is Parental Liability Based on a Duty of Care?

Abstract:     An estimated 12.6 million people die each a year as a result of “unhealthy” environments (World Health Organization, 2016). Environmental hazards, such as land and water contamination, pollution, and chemical exposures, are mainly caused by irresponsible companies, most of which care more about profits than the negative impact of their business on the environment and surrounding communities. Today large-scale businesses that are organised in multinational corporate groups are responsible for various instances of individuals and communities being exposed to toxic substances that lead to health risks. However, they are not often legally responsible for paying compensation to those affected. This is due to the fact that environmental victims will need to cross the line between tort law, which creates a path for those individuals to seek compensation for their harms, and company law, which shields parent companies from environmental tort liabilities whilst receiving the profits of risky activities. Recently, UK courts seem to have caught up with the issue of holding parent companies liable in order to provide a remedy to environmental tort victims by imposing a direct duty of care. Yet, the future is not as bright as it looks because the courts’ reasonings are not aligned to how multinational corporate groups operate in practice by exploiting the principles of company law.

  1. Douglas Musebenzi, Great Zimbabwe University

Title:        Honoring the Past, Treasuring the Present, Shaping the Future: The paradigm shift in Zimbabwean Corporate Law-the stakeholder and shareholder theory dichotomy

Abstract:    The purpose of this paper is to examine the historical evolution of stakeholder and shareholder perspectives in Zimbabwe corporate law from the 1952 legislation to the legislation of 2020. The evolution is anchored on the colonial period until 1980 when Zimbabwean companies’ legislation largely replicated English legislation. The post-colonial period Zimbabwean corporate law began to shift from its English origins. Early legislation in Zimbabwe during the colonial period to a large extent viewed a company as a private matter with limited focus on non-shareholder constituencies. It was based on the shareholder theory mechanism. This was in line with the role of management in ensuring maximisation of shareholder value. This can be attributed to England’s focus on maximisation of shareholder value during that time. Years following decolonization in 1980, the purpose of the company began undergoing dramatic changes with greater prominence being given to the stakeholders. Recent reforms in corporate law emanating in the enactment of the Companies and Other Business Entities Act, 2020 have firmly buttressed the company within the framework of the stakeholder theory drifting away from a pure shareholder maximisation approach. The paper will interrogate the shareholder theory in Zimbabwean corporate law before independence and the stakeholders’ theory in Zimbabwe corporate law after independence. A desktop based research would be used to examine the legal framework in corporate governance and would submit amendments to the legal framework in Zimbabwean corporate law.

  1. Daniele D’Alvia, Queen Mary, University of London

Title:        From the VOC to the SPAC: at the Root of the Corporation

Abstract:     This paper aims to provide a thorough analysis of the evolution of the corporate form starting from the invention of the first public company, namely the United East India Company (VOC) until the modern expression of a novel form of cash-shell company that in recent years has taken Wall Street by storm: the Special Purpose Acquisition Company (SPAC).

The story of the ‘company’ had its origins in the efforts of the Dutch merchants to wrest control of the lucrative Asian spice trade from Portugal and Spain. By 1600 there were around six fledgling East India Companies operating out of the major Dutch ports. This business model could not suffice. The VOC was the answer to enjoy a monopoly on all Dutch trade efforts in the unknown Asia’s trade routes. The VOC was supposed to last for a fixed period (21 years), and the scale of enterprise was unprecedent: it raised 6.45 million guilders in a primordial form of initial public offering. Centuries later in New York, the SPAC was born as a cash-shell company to be listed on public markets in order to pursue an unknown acquisition.

The paper argues that both the VOC and the SPAC have similarities. They are both financial innovations to sustain progress, and they both follow special purposes whose achievement is not known at the time of their incorporation. In such comparison lies one of the biggest lessons in financial history, namely that the corporation was not made to serve the interest of directors, but the common good of society.

  1. Jarosław Turłokowski, University of Warsaw

Title:        Evolution of Corporate Management – a Mixed System?

Abstract:     At present in European countries (not necessarily EU members), in national legislation on companies, there are several approaches to regulating the corporate management system. In general, there are two systems: monistic and dualistic. Traditionally, in some Central and Eastern European countries, the dualistic approach has been dominant, requiring a strict separation of the executive and supervisory body. At most, depending on the type of company (e.g. in limited liability companies), it was possible, under certain conditions, not to appoint a supervisory board or an audit committee. Nevertheless, even then the supervisory function was carried out by the shareholders and not by a separate part of the executive body.

In the last few years, in the movement that can be considered an intra-European legal convergence, there have been corporate legislation reforms. While the dualist system has not been abandoned, an alternative option of organ formation has been introduced in selected companies, modelled on certain case law jurisdictions. Within a single legal system, the freedom to form corporate bodies has been deepened. I would like to show the evolution and reasons for such a process and assess its effectiveness. My presentation will not be purely dogmatic, and the amendment of the Polish CCC and selected provisions of the new Law of Ukraine on Joint-Stock Companies will serve as the reference point. I would like to address the more profound question of whether there is any sense to maintain in national legislation an exclusively monistic or dualistic approach to corporate management.



28th April 2023

Panel 4 – Re-examining Capital Markets

9am – 11am

  1. Sarah Morley, Newcastle University

Title:        Reorientation of the UK’s Takeover Regulations

Abstract:     The UK’s takeover regime stands out as increasingly distinctive. First, its mode of regulation relies heavily on ‘soft law,’ and in particular on the Takeover Code. Second, the substance of the regulation – the norms the Code applies in policing takeover contests – remains firmly pro-shareholder in its orientation. This stands in contrast to other countries’ regulatory regimes, which often afford managers, rather than shareholders, significantly more say in takeover contests, and allow stakeholders’ interests significantly more influence on their outcome.  


Unsurprisingly, the distinctive features of UK takeover regulation have generated a vigorous debate. Painting with a broad brush, the tendency is to see mode and substance as an inseparable package, and to applaud or condemn both elements of that package together. This paper seeks to challenge this dominant – orthodox – story about UK takeover regulation.


The UK’s distinctive mode of regulation is indeed one of its great strengths. However, the mode and substance is not necessarily interdependent. The UK’s superior mode of regulation does not entail that shareholder interests must be prioritised over stakeholder interests, and those particularly of employees. The UK can, and should, retain its distinctive mode of regulation, with its central reliance on the Code and Panel, whilst reforming the substantive orientation of the Code to protect non-shareholder interests as much as they currently protect shareholder interests. Thus this paper defends the merits of the UK’s reliance on the Code and Panel, whilst championing a radical, stakeholder oriented, reorientation in the substance of takeover regulation. 

  1. Verity McCullagh, University of Lincoln

Title:        From Information Disclosure to Adapting Corporate Strategy: Real Change or More of the Same?

Abstract:     Information disclosure has been around for some time, yet this area of corporate transparency has evolved to require companies to change their business strategy. More recently this has predominantly been through mandatory due diligence requirements. In the UK, the reporting framework of the Companies Act 2006 refers to ‘any due diligence process implemented’, while the Modern Slavery Act 2015 requires companies to publish a modern slavery statement which may include information about due diligence processes. However, it is often a lack of enforcement that weakens such provisions.

In 2022 the European Commission proposed a Corporate Sustainability Due Diligence Directive, following the creation of due diligence legislation by individual Member States. The proposal presents obligations for companies regarding any actual or potential adverse human rights and environmental impacts, as well as liability for violation of such obligations. Additionally, an Independent Review of the Modern Slavery Act 2015 has led to proposed amendments to increase the accountability of corporations.

This paper explores the recent developments in due diligence and reporting obligations and the latest proposals for change. Particularly, it analyses the challenges and prospects of regulation in this area. Further, it explores whether there is a fundamental shift in how the law interacts with companies in this area, examining whether developments are similar to the incremental changes that have been seen over the years, or a more substantial step forward in establishing corporate accountability.

  1. Ciara Hurley,  LSE

Title:        'Comply or Comply', What Happened to 'Explain'? The Perception of Compliance Options Available Under the UK’s Corporate Governance Code

Abstract:     The UK’s Corporate Governance Code contains best practice guidelines for the governance of public companies trading on the Main Market of the London Stock Exchange. This soft law Code is based on a ‘comply or explain’ enforcement mechanism: companies can either comply by adopting the Code’s recommendations or explain their alternative arrangements in a statement, produced by the board, addressed to the company’s shareholders, who are expected to engage and respond accordingly.

The success of the Code in practice is contested, with the quality of reporting and level of shareholder engagement being two prominent bugbears. This paper seeks to add to our understanding by providing insight into the operation of the Code in practice. Drawing on a unique set of qualitative interview data, conducted with 93 FTSE 350 board members and other actors in the governance system, it outlines the ‘comply or comply’ phenomenon: the perception by company directors that the Code is not a neutral system of ‘comply or explain’. Rather, ‘explain’ sends a negative signal to the market and is liable to be penalised by shareholders. Hence, ‘explain’ is not freely available, making the Code ‘comply or comply’.

The perceived threat of shareholder rebuke, however, ends here. Directors often reported that once they send the ‘comply’ signal they do not apprehend follow up. For Code provisions that carry a degree of discretion, it is thus possible for boards to retain control over the meaningfulness of any claimed compliance. The contribution of this paper to the literature is that is enriches our understanding of how boards and shareholders interact with the Code.

  1. Dov Solomon, College of Law & Business et al

Title:        Does Wedge Size Matter? Financial Reporting Quality and Effective Regulation of Dual Class Firms

Abstract:     Dual-class capital structures, where one class of shares confers more votes per share than the other, create a gap (“wedge”) between voting rights and cash flow rights. While this capital structure is historically permitted in the United States, institutional investors and index providers have recently expressed strong opposition to the use of dual-class structures. By contrast, jurisdictions that traditionally prohibited the use of dual-class stock have faced increasing market pressures to allow this capital structure. London’s, Hong Kong’s, and Singapore’s stock exchanges have recently revised their listing rules to facilitate the use of dual-class shares. However, the current binary restrict-or-allow regulation of dual-class firms does not consider the size of the wedge between voting and cash flow rights.


We use a comprehensive sample of dual-class firms publicly traded between 2012 and 2019 to examine whether the quality of financial reports changes across the wedge size spectrum. The analysis indicates that the larger the wedge, the higher the quality of financial reporting, reflecting a tradeoff between the dilution of voting rights and enhancement of the credibility of information provided to investors. It suggests that increasing management’s insulation from the market for corporate control is stronger than agency costs, reducing motivation to manipulate earnings. Moreover, better quality reporting allows for attracting second-class investors who agree to a larger wedge. The paper provides policymakers with the missing empirical and analytical framework for regulating financial disclosure by dual-class firms, as we show that restricting wedge size may not be more effective.

  1. Qiang Cai, University of Aberdeen

Title:        Platform Governance via Corporate Governance: A Stakeholder Perspective

Abstract:     This paper attempts to explore the role of corporate governance in platform governance, a phenomenon that has been gaining profile in industrial practice. For example, in 2020, Airbnb, the largest home-sharing platform in the world, established a stakeholder committee on the board of directors amid the media coverage about numerous shootings at Airbnb rentals as well as other regulatory concerns in relation to the platform. In the same year, Facebook, the largest social media platform, set up a privacy committee on its board as a response to the public spotlight on the company’s data privacy crisis. More recently, Deliveroo, a British online food delivery company, ran into a “waterloo” in its initial public offering (IPO) in London Stock Exchange: the share price of the company plunged on the first day of trading and closed 26% below the listing price, wiping almost £2 billion off the company’s opening market capitalization (£7.6bn). Two issues were particularly frowned at by investors. One concerns the legal status of the delivery persons working for the platform; the other involves the dual-class share structure of the company. Despite the increasing awareness in the business circle of “platform governance via corporate governance”, the topic has garnered only minimal attention in the literature.


28th April 2023

Panel 5 - Exploring the “Law” in “Company Law”

11.15am - 12.45pm

  1. Pangyue Cheng,  Yale MacMillan Centre

Title:        AI Leviathan? A Legal Framework for Government-Backed Algorithm Companies

Abstract:  National digital surveillance has contemporaneously expanded with the flourishing of government-backed algorithm companies around the world. Concerns about the health risks posed by the Covid-19 pandemic have further reinforced government digital surveillance through algorithm companies, which has tended to evolve into an “Artificial Intelligence (AI) Leviathan”. In this context, government backed algorithm companies provide significant technical support for AI surveillance, yet most previous research in the literature has examined governments with little focus on the role of companies. This paper attempts to provide a clear understanding of how these algorithm companies conduct AI surveillance in major AI technology-using countries, such as China and the United States. It further investigates the pressing problems caused by advanced technology companies and develops a legal framework for corporate disclosure reporting by algorithm companies that assist states in the surveillance of individuals. The proposed legal framework includes (a) disclosure of the necessity of surveillance data acquisition and transmission; (b) disclosure of the legitimacy of providing data surveillance services to the government; (c) disclosure of fairness and security metrics for surveillance data and the attendant trade-offs; and (d) allowing third-party audits of the storage and usage of surveillance data. Algorithm companies are expected to abide by these principles on a comply-or-explain basis when providing digital surveillance services to the government. In addition, the misuse of surveillance data by these companies should be subject to civil and even criminal liability.

  1. Deniz Canruh,  Queen Mary University of London et al

Title:        Into Reverse: Redesigning Veil Piercing

Abstract:  This paper is about the circumstances in which the corporate veil has been pierced for the purpose of holding the company liable for its controllers’ acts, debts, or obligations – also known as “reverse” veil piercing” (RVP). This variant of veil piercing was, for the first time, considered by the UK Supreme Court in Hurstwood Properties (A) Ltd and Ors v Rossendale BC.  Although, there were hopes Hurstwood would provide some clarity in a notoriously confused area of law, the Supreme Court conspired to disappoint, leaving only further doubt as to the framework that should be applied to veil piercing. However, Hurstwood does contain an important moment in veil lifting historical analysis in that it explicitly introduces reverse veil piercing (RVP) for the first time. This is significant in there is general judicial consensus in the historical case law that RVP is justified in certain circumstances while FVP has been systematically narrowed. RVP is not though without issues, and we propose that the law in this area should be developed by a framework balancing the equities of preventing abuses of the corporate form with ensuring that the interests of non-culpable corporate constituents, such as the creditors, employees and the minority shareholders of a company, are not prejudiced by a reverse piercing claim.

  1. Kayode Akintola, University of Sheffield

Title:        The Private Company in English Law: A Trite Solution for Contemporary Business?

Abstract:  The subject of the private company is not trivial in contemporary company law discourse. Economies are acutely dependent on businesses for growth. These businesses, however, are often structured as limited companies; for limited companies are the principal unit of commercial life. Decidedly, many limited companies are private and/small companies.  Thus, a suggestion that economies are acutely dependent on private companies should be plausible. Indeed, the Companies Act 2006’s “think small first” mantra is supported by provisions designed to make it easier to set up and run a private company and provide flexibility for the future.


Nevertheless, economic climates and resulting business needs are dynamic. This paper asks whether key legal elements of the private company are fit for purpose in the current and reasonably predictable business climate? This paper explores the question from three perspectives. First, it examines the compatibility of the Salomon/one-man company with prevalent commercial risks and the stakeholder governance ideology in Sections 172 of the Companies Act 2006 and 214 of the Insolvency Act 1986. Second, it considers the credit needs of businesses to appraise the alignment of company security with contemporary asset profile of private companies. Third, it examines the utility of some aged and new-fangled insolvency procedures in resolving pecuniary problems of companies. In so doing, this paper appraises legal aspects of each stage in the lifespan of private companies operating in contemporary times.

  1. Peter Gardos, ELTE

Title:        The Flexibility of Company Law

Abstract:  The first Companies Act was introduced in Hungary in 1988. The starting point of this act, with some limitations, was that the act contained model rules from which the parties could freely deviate. The courts and the legislator quickly realised that such a broadly formulated rule raises serious concerns about legal certainty and the protection of creditors and third parties. The second and the third Companies Acts introduced significant changes. The most relevant change was that the acts contained binding rules. Deviation from these rules became possible only insofar as the legislator allowed such deviation.

2013 marked a turning point in company law legislation in Hungary. Company law became part of the Civil Code. The legislator returned to the principle of freedom of contracts, allowing the parties to deviate from most company law rules of the Civil Code. However, building on the experiences of the earlier court practice, the Civil Code also set boundaries where deviation from the Civil Code’s rules was not possible.

I will explain the limits of freedom of contract in the field of company law and argue that allowing the parties to deviate from the model rules of company law is crucial for the future of company law. Such freedom allows the parties to shape their companies as they see fit. To give one example, this can serve useful in defining corporate purpose. Corporate purpose has been called into question in the last few years. Allowing the parties to formulate corporate purpose, provides the founders of the company to define corporate purpose according to their needs.


28th April 2023

Panel 6 – Corporate Finance & Creditors

1.30pm – 3.00pm

  1.  Angharad James et al

Title:        A New Pre-Incorporation Roadmap to Support the Reduction of Insolvency Numbers?

Abstract:  There is a plethora of sources in England and Wales governing corporate insolvencies for directors of limited companies in financial distress or approaching or entering the insolvency process, together presenting to the company director a legislative framework lacking in coherence. Quite apart from this wide range of statute, there is also a lack of consistency in common law judgments relating to its interpretation, resulting in a lack of certainty for a director facing potential ruin if held personally liable.

None of these factors support the government’s claimed rescue culture, which statistics show is failing. This will become even more apparent over the months and years to come: the Covid-19 pandemic has already resulted in a wealth of companies in financial distress in a wide range of sectors, with post-furlough corporate insolvencies fully expected to rise. 

Access to limited liability is not a right, it is a benefit, one that can adversely impact on creditors when companies approach or enter financial distress; it is only right that the obligations that come with enjoying that access are clearly defined, governed and managed. Drawing on ongoing research, the speakers will present an alternative pre-incorporation roadmap for legislators and directors, geared not only to supporting the government’s rescue culture but also to leaving entrepreneurs free to leverage their sector knowledge and specialisms to maximise shareholder returns, rather than worrying about how best to safeguard their own positions in relation to directorial duties and obligations during periods of financial distress.

  1. Narine Lalafaryan, UCL

Title:        Debt Governance and the Firm

Abstract:     This paper studies how debt governance has influenced and could influence the modern firm’s performance: how modern debt is used to control the firm prior to its financial distress. The paper offers the following insights. First, due to the market changes, debt has become to play an important role in the firm, and the mechanisms of debt governance are and will be evolving. Consequently, the impact of debt on the firm’s performance is of a dynamic nature. Second, pricing and re-pricing of debt (“modern debt governance”), as opposed to the inclusion of restrictive debt covenants (“traditional debt governance”), is a new form of creditors’ control of the firm, enabling them to control and influence the firm prior to its financial distress. This new form of control has significant implications on the incentives and duties of the firm’s managers. Third, the alternative finance providers/shadow bankers (e.g., private equity houses, distressed funds, vulture funds) will play a key role in the dynamic nature of debt governance, as they are competing with the traditional finance providers (commercial banks). Finally, in a modern firm, debt governance and equity governance complement each other: one cannot exist in a vacuum. Consequently, the traditional finance theory on shareholder primacy and the connected legal framework on directors duties, stipulating a “one-size-fits-all approach”, is not always fit for purpose. In a modern firm, directors are incentivised to advance, and their duties de facto evolve and should evolve around promoting the value of the firm’s capital structure.


  1. Philip Gavin, TUD

Title:        Two Roads Diverged: The Emerging Distinction within the Duty to Consider Creditor Interests in Ireland and the United Kingdom

Abstract:     A relative newcomer to the pantheon of director’s duties, the duty to act in the interests of creditors is a puzzling part of corporate governance. This duty is nuanced in its trigger – effective only in financial difficulty – and in scope, neither ignoring financial distress nor requiring immediate liquidation.

While the UK Supreme Court has recently had the opportunity to develop this duty further, the Sequana judgment has largely been an exercise in consolidating and clarifying the existing common law position, doing little to move the needle further. Similarly, there is little political appetite to codify the duty within the Companies Act 2006, which since its inception has left unresolved the question of how to develop the creditor duty further.

In contrast to this timid UK approach, Ireland has taken greater strides to introduce a detailed framework for the creditor duty. Over the past 3 years the Irish Government has introduced two proposals for a codified duty, with the second now enacted as part of EU reform. These statutory frameworks both define a trigger upon which the duty becomes operable and define the nature of the duty and how creditors and corporate viability are to be considered. The differences between these proposals can be examined to explore the varied success of codifying duties to creditors.

Representing the first divergence between Irish and UK law on this question, an examination of these emerging differences sheds light on the paths open to the UK, whether through continued judicial development or future statutory reform.


  1. Arthur Sadami Arelano Ikeda, University of São Paulo et al

Title:        Crony capitalism, public loans and the State as a shareholder: what the BNDES case can tell us about corporate governance and industrial policy?

Abstract:     The Brazilian State-Owned development bank, Banco Nacional de Desenvolvimento Econômico e Social (BNDES), performed from the 2000s to the 2010s a major role in sponsoring, through loans and shares subscriptions, the thriving growth of a small group of companies in segments such as meatpacking and construction. However, by the late 2010s, these companies found themselves involved in major corruption scandals, besides several human rights and environmental violations. By its turn, BNDES found itself indirectly financing such activities, including potential bribery within its own institution. A common feature of those companies was their deeply concentrated corporate power on major shareholders and the lack of governance structures. In fact, more than US$19.2 billion were invested in companies such as JBS, Odebrecht, Andrade Gutierrez, Queiroz Galvão, Camargo Corrêa, and OAS - all of them directly or indirectly controlled and managed by the firm’s founding families, including aggressive expansion through M&A activity. The BNDES case, in this sense, provides a good example of how a naïve approach to these issues can lead to disastrous backfires by weak-governance family-owned companies, through a severe misalignment of public/private incentives. During times when industrial policy is performing a major role in public debate, understanding how corporate structures and governance may impact the performance of state sponsorship may be a key factor in designing and enforcing better mechanisms for government promotion of firms and industries.