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Corporate Governance 2011 a Practical Cross-Border Insight to Corporate Governance

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Corporate Governance 2011 a Practical Cross-Border Insight to Corporate Governance The International Comparative Legal Guide to: Corporate Governance 2011 A practical cross-border insight to corporate governance Published by Global Legal Group with contributions from: Aivar Pilv Law Office Ashurst LLP Avbreht, Zajc & Partners Ltd. Badri and Salim El Meouchi Law Firm Beiten Burkhardt Rechtsanwaltsgesellschaft mbH Colin Ng & Partners LLP Debarliev, Dameski & Kelesoska Attorneys at Law Dr. K. Chrysostomides & Co LLC Egorov Puginsky Afanasiev & Partners Elvinger, Hoss & Prussen Georgiev, Todorov & Co. Goñi y Cajigas Abogados Kunz Schima Wallentin Rechtsanwälte OG Lenz & Staehelin “Liepa, Skopina/ BORENIUS” Attorneys at Law Linklaters LLP LOGOS Legal Services Marić & Co Law Firm Nishimura & Asahi NOMOS Law Firm Norton Rose South Africa Osler, Hoskin & Harcourt LLP Pachiu & Associates Roschier, Attorneys Ltd. Schulte Roth & Zabel LLP Shuke Law Slaughter and May Tilleke & Gibbins Vasil Kisil & Partners Yigal Arnon & Co. Law Firm The International Comparative Legal Guide to: Corporate Governance 2011 General Chapter: 1 Directors’ Duties in the “Zone of Insolvency” - Simon Baskerville, Ashurst LLP 1 Country Question and Answer Chapters: Contributing Editor 2 Albania Shuke Law: Enyal Shuke & Mariola Saliu 6 Bruce Hanton, Ashurst LLP 3 Austria Kunz Schima Wallentin Rechtsanwälte OG: Georg Schima & Natalie Seitz 14 Account Managers Monica Fuertes, 4 Belgium Linklaters LLP: Paul Van Hooghten & Jan Vandermeersch 22 Dror Levy, Florjan Osmani, Oliver Smith, Rory Smith, 5 Bosnia & Marić & Co Law Firm: Branko Marić & Dijana Ivanović Toni Wyatt Herzegovina 30 Sub Editors 6 Bulgaria Georgiev, Todorov & Co.: Alexander Katzarsky 36 Jodie Mablin Suzie Kidd 7 Canada Osler, Hoskin & Harcourt LLP: Mark A. Trachuk & Andrew J. MacDougall 41 Senior Editor 8 Cyprus Dr. K. Chrysostomides & Co LLC: Chryso Pitsilli-Dekatris & Penny Smale Stelios Hadjilambris 47 Managing Editor 9 Estonia Aivar Pilv Law Office: Häli Jürimäe & Ilmar-Erik Aavakivi 53 Alan Falach 10 Finland Roschier, Attorneys Ltd.: Manne Airaksinen & Mia Hukkinen 59 Deputy Publisher George Archer 11 Germany Beiten Burkhardt Rechtsanwaltsgesellschaft mbH: Dr. Jack Schiffer & Publisher Dr. Axel Goetz 65 Richard Firth 12 Greece NOMOS Law Firm: George Chatzigiannakis LL.M & Maria Vastaroucha LL.M 71 Published by 13 Iceland LOGOS Legal Services: Óttar Pálsson & Ásgeir H. Reykfjörð 75 Global Legal Group Ltd. 59 Tanner Street 14 Israel Yigal Arnon & Co. Law Firm: Shiri Shaham & David H. Schapiro 80 London SE1 3PL, UK Tel: +44 20 7367 0720 15 Japan Nishimura & Asahi: Nobuya Matsunami & Eri Sugihara 86 Fax: +44 20 7407 5255 16 Latvia “Liepa, Skopina/ BORENIUS” Attorneys at Law: Zane Džule 92 Email: [email protected] URL: www.glgroup.co.uk 17 Lebanon Badri and Salim El Meouchi Law Firm: Chadia El Meouchi & Samia Cover Design El Meouchi 97 F&F Studio Design 18 Luxembourg Elvinger, Hoss & Prussen: Pit Reckinger & Philippe Prussen 105 Cover Image Source 19 Macedonia Debarliev, Dameski & Kelesoska Attorneys at Law: Elena Miceva & istockphoto Emilija Kelesoska Sholjakovska 112 Printed by Ashford Colour Press Ltd 20 Qatar Badri and Salim El Meouchi LLP: Chadia El Meouchi & June 2011 Marie-Anne Jabbour 119 Copyright © 2011 Global Legal Group Ltd. 21 Romania Pachiu & Associates: Marius Niţă & Elena Andriescu 127 All rights reserved No photocopying 22 Russia Egorov Puginsky Afanasiev & Partners: Andrey Mashkovtsev & Alexey Kokorin 132 ISBN 978-1-908070-01-2 ISSN 1756-1035 23 Singapore Colin Ng & Partners LLP: Lisa Theng & Ong Wei Jin 138 24 Slovenia Avbreht, Zajc & Partners Ltd.: Andrej Kirm & Barbara Knez Kostrevc 143 25 South Africa Norton Rose South Africa: Kevin Cron & Ismail Laher 149 26 Spain Goñi y Cajigas Abogados: José Manuel Cajigas & Laura del Rio 156 27 Switzerland Lenz & Staehelin: Patrick Schleiffer & Andreas von Planta 164 28 Ukraine Vasil Kisil & Partners: Denis Y. Lysenko & Anna V. Babych 170 29 United Kingdom Slaughter and May: William Underhill & Oliver Harris 176 30 USA Schulte Roth & Zabel LLP: David E. Rosewater & Marc Weingarten 185 31 Vietnam Tilleke & Gibbins: Michael K. Lee & Tu Ngoc Trinh 192 Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720 Disclaimer This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice. Global Legal Group Ltd. and the contributors accept no responsibility for losses that may arise from reliance upon information contained in this publication. This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified professional when dealing with specific situations. www.ICLG.co.uk Chapter 30 USA David E. Rosewater Schulte Roth & Zabel LLP Marc Weingarten 1 Setting the Scene – Sources and Overview requirements on public companies, is part of the Exchange Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) added provisions to 1.1 What are the main corporate entities to be discussed? the Exchange Act granting regulators broader discretion to regulate corporate governance matters, including executive Because the majority of U.S. publicly-traded companies are compensation and proxy access. The Securities Act applies incorporated in Delaware (more than 50% of all publicly-traded principally to the offer and sale of securities, and regulates companies, and approximately 63% of the Fortune 500 companies, the form and content of disclosure to investors in connection are incorporated in Delaware. Source: Delaware Department of with a sale of securities to the public. The SEC issues rules and regulations under the Exchange Act and the Securities State, Division of Corporations), this article focuses on Delaware Act. corporations with shares registered with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 3. A corporation’s organisational documents. An additional important source of corporate governance procedures and 1934, and listed and traded on NYSE Euronext (“NYSE”), the requirements is the organisational documents of the world’s largest equity market, and/or the Nasdaq Stock Market corporation. Each Delaware corporation will be governed by (“Nasdaq”), the other major U.S. exchange. a minimum of two documents: the certificate of incorporation, or “charter”, and the bylaws. Either or both of 1.2 What are the main legislative, regulatory and other these documents will contain important provisions regarding corporate governance sources? board composition, annual meetings, stockholder rights, and other aspects of the entity’s corporate governance. In addition, reporting companies with listed securities are The U.S. regulatory scheme applicable to public companies is required to have written charters for various committees of comprised of a mix of state and national legislation, as well as the the board of directors that specify the functions of such rules and regulations of quasi-governmental institutions such as committees in detail, and in some cases companies may have stock exchanges. The principal sources of corporate governance additional governing documents setting out additional rights related requirements are as follows: and obligations of stockholders, such as the documents 1. State law of a company’s state of incorporation. U.S. governing a particular class of shares or convertible corporations are incorporated under the laws of the securities. individual states, and accordingly, every U.S. corporation is 4. Other sources. The NYSE and other exchanges require governed in the first instance by the laws of its state of companies with securities that trade on these exchanges to incorporation and corresponding case law interpreting these abide by certain corporate governance standards and laws. As noted above, this chapter will focus on the regulations. Additionally, industry groups, stockholder requirements of the Delaware General Corporation Law (the advisory services (which provide advice to large institutions “DGCL”) and the Delaware case law interpreting the DGCL regarding how to vote at stockholder meetings) and, in some because of the widespread use of Delaware as a state of cases, institutional investors may also publish non-binding incorporation. However, each state has its own distinct set of corporate governance guidelines and recommendations. corporate statutes and case law, and in cases where the state of incorporation is other than Delaware, the law of that jurisdiction must be consulted. 1.3 What are the current topical issues, developments and trends in corporate governance? 2. Federal statutes and the rules and regulations adopted pursuant to these statutes by the U.S. Securities and Exchange Commission (the “SEC”). All public companies Majority voting for directors. Most states’ laws (including are subject to regulation by the SEC pursuant to two Delaware) provide for the election of director candidates by a principal statutes: (i) the Securities Exchange Act of 1934 plurality, where the winning candidates are those receiving the (the “Exchange Act”); and (ii) the Securities Act of 1933 (the highest number of votes. Under this standard, directors who are “Securities Act”). The Exchange Act requires annual, running unopposed are elected regardless of how few votes they quarterly and periodic reporting by public companies, receive, and votes which are “withheld” (intended as votes against) requires stockholders of such companies to file reports
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