European and International Insolvency Law
Choose any quoted company that operates in BOTH Germany and the UK. a) Determine with reasons where the Centre of Main Interest (the COMI) is. You may assume that it becomes Insolvent.
b) Critically discuss whether the German two-tier board system is better for shareholderAccountability than the UK unitary board system.
ThyssenKrupp AG is the biggest Steel- and armaments manufacture in Germany and it is an international quoted company that operates, amongst others, in Germany and in the UK. ThyssenKrupp AG has 199.000 employees around the world and about 560 ThyssenKrupp AG associated companies abroad .The turnover in the business year 2006/ 2007 was 51,723 billion €.
ThyssenKrupp AG works as German concern around the complete globe and generates in Germany about 36% of the concern turnover, and 64% abroad. The member states of the EU, without Germany, are the focus of their foreign business.
With a turnover of circa 2 billion € a year, is the UK on place 5 of the ThyssenKrupp AG international markets. All segments of the ThyssenKrupp AG concern are represented in the UK with local associated companies. Most of the engaged employees in the UK are salaried by “Steel” and “Elevator”.
ThyssenKrupp AG has welcomes the German Corporate Governance Code introduced in 2002 and complies with all the recommendations of the updated June 2008 version thereof. Executive Board and Supervisory Board of ThyssenKrupp AG issued an unqualified Declaration of Conformity in accordance with Art. 161 AktG on October 1, 2008.
Corporate Governance stands for responsible business management with the aim of long-term value creation. It requires efficient cooperation between executive and supervisory boards, respect for the interests of the shareholders and directness and transparency in corporate communication. The target of the German Corporate Governance Code is to make Germany’s corporate governance rules transparent for both national and international investors, thus strengthening confidence in the management of German corporations.
The Code addresses all major critiques, especially from the international community, levelled against German corporate governance. That is the inadequate focus on shareholder interests, the two-tier system of executive board and supervisory board, the inadequate transparency of German corporate governance, the inadequate independence of German supervisory boards and the limited independence of financial statement auditors. Each of these five points is addressed in the provisions and stipulations of the Code, also taking into consideration the legal framework. Certainly the Code cannot cover every detail of every single issue; instead it provides a framework which the individual companies will have to fill in.
Where is the COMI?
One of the performances of cross-border insolvency is that debtors may seek to open proceedings in a state having insolvency legislation more favourable to their particular circumstances. This is labelled as “forum shopping”.The Regulation attempts to stop forum shopping by requiring that the main proceeding be opened in the member state where the debtor’s “centre of main interests” (COMI) is situated.
According to Art. 3 EU Insolvency Regulation, the international Courts of the particular Member state are responsible for the opening of an insolvency proceeding, where the debtor’s centre of main interest is. The European Court of Justice (ECJ) assumes that this is basically there, where „the debtor’s registered office “is. It’s where the administration of its interests "on a regular basis“is and it must be „therefore ascertainable by third parties." However, this should not be consider, if the companies active trade behaviour suggest an outsider the meaning that the COMI is on another place, such as a letterbox company. On the place, where the COMI is, and if cross- border complexities exists, the main insolvency proceeding will be opened.