The Corporate interest in Belgian company law Chaire Hoover UCL 1 October 2007 Prof. dr. Alain François
Key concept in corporate law • Corporate interest = statutory concept • Numerous explicit and implicit references in Belgian CompaniesCode (“BCC”): example • Art. 36 BCC (use of company goods) • Artt. 444 and 602 BCC (contribution in kind) • Art. 510 BCC (transfer restrictions) • Art. 551 BCC (voting agreements) • Art. 540 BCC (right to ask questions at GM) • … • Other statutory references in a.o. financial corporate laws • See eg. Artt. 9 Act of 1 April 2007 on Public Takeover Bidsand 28 Royal Decree of 27 April 2007 on same
Key concept in corporate law(continued) • Innumerable references in case law: • Directors’ liability cases • Validity of corporate decisions • Corporate litigation • … • Clear presence in Corporate Governance Codes • See e.g. principle 2 (provision 2.1) Lippens Code
Corporate interest is a blank concept/rule • Absence of a clear and unambiguousstatutory definition • Absence of a general statutory rule to further the corporate interest • Deliberate non-interference of company legislator
Controversy: definition of corporate interest • No consensus on definition of corporate interest • Central issue is how to deal with partial interests? • At least four possible definitions can be distinguished: • “Narrow” shareholder-oriented definition • “Broad” stakeholder-oriented definition • Variable “mixed” definition - definition varies depending on type of decision, type of company and/or factual circumstances • Negatory definition - corporate interest has no legal relevance
Narrow definition of corporate interest • Classic definition: corporate interest = interest of the shareholders to make profit • Finely tuned definition: corporate interest = dynamic and future-oriented collective profit interest of the shareholders • Finds legal base in Art. 19 BCC: “a company (contract) is to be entered into (incorporated) [and performed] in the common interest of the parties (shareholders)” • Interests of other constituencies may influence collective profit interest, but should be weighed against corporate interest
Broad definition of corporate interest • Several types of broad definitions: • Corporate interest defined as the resultant of the assessment and weighing of all relevant stakeholder interests • Corporate interest = interest of the enterprise • Broad definitions all come down to discounting, in one way or the other, the partial interests of all stakeholders in the definition of corporate interest • Broad definitions are extremely vague and lack a solid legal base de lege lata
Elements of debate • Should the protection of stakeholder interests be organized via the duty of corporate bodies to further the corporate interest? • Should the legislator intervene in the debate on the definition of corporate interest? If affirmative, can such intervention be limited to the introduction of a statutory definition?