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Internet-Influence on Corporate Governance – Progress or Standstill?

Published online by Cambridge University Press:  17 February 2009

Ulrich Noack  and
Michael Beurskens
Ulrich Noack
Affiliation:
Professor of law, Heinrich Heine University of Düsseldorf, Germany.
Michael Beurskens
Affiliation:
Assistant, Heinrich Heine University of Düsseldorf, Germany.
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Extract

In the emerging 21st Century the Internet has become an all-encompassing part of our lives. At least a third of all people in Germany and the UK have access to the Internet. In the US estimates go up to 50%. No successful company may safely ignore the web; “e-commerce” is everywhere. The Internet required many changes to the various legal systems, in private, criminal and public law. While some of these changes happened fast and drastically, certain areas have only carefully been adapted. Among these slowly evolving parts is the law of corporations. Therefore, even though business contacts are already made online, it is still common practice to base shareholder communications and the filing of information with public registers on paper.

Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 3 , Issue 1 , March 2002 , pp. 129 - 156
Copyright
Copyright © T.M.C. Asser Press and the Authors 2002

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References

1 http://www.nua.ie/surveys/how_many_online/index.html>.

2 EC Commission, Conference on the Internal Market and Company Law, December 15/16, 1997.

3 see <http://www.microsoft.com/billgates/speeches/industrytech/iayf2005.asp>.

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6 Regarding the legislators' considerations concerning the NaStraG (Gesetz zur Namensaktie und zur Erleichterung der Stimmrechtsausiibung – Namensaktiengesetz), § 135, see <http://www.jura.uni-duesseldorf.de/dozenten/noack/nastrag>.

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8 Entwurf eines Gesetzes zur weiteren Reform des Aktien- und Bilanzrechts, zu Transparenz und Publizität (Transparenz- und Publizitätsgesetz), see <http://www.jura.uni-duesseldorf.de/dozenten/noack/transpug.doc>.

9 UK Department of Trade and Industry (DTI), Modern Company Law for a competitive economy: Final Report URN 01/942 and URN 01/943, Number 3.30 – see <http://www.dti.gov.uk/cld/final_report/index.htm>.

10 Corporate management– Corporate governance – Modernization of corporate law – Report of the German Government Panel on Corporate Governance, Marginal Numbers 252-266; see <http://www.shearmansterling.com/documents/government_panel.pdf> (English version of the Summary of Recommendations) and <http://www.jura.uni-duesseldorf.de/dozenten/noack/cg/> (full German version).

11 By means of Directive 1999/93/EC, OJ [2000] L 13/12-20 (19.1.2000); see <http://europa.eu.int/eur-lex/en/lif/dat/1999/en_399L0093.html>.

12 E.g., Denmark, Finland, Italy – Wymeersch, The Use of ICT in Company Law Matters (Working Paper 2000–11)Google Scholar; see <http://www.law.rug.ac.be/fli/WP/wp2000-11.pdf>.

13 Chapter c.7; see <http://www.hmso.gov.uk/acts/acts2000/20000007.htm>.

14 Gesetz über elektronische Register und Justizkosten für Telekommunikation, Bundesgesetzblatt (BGB1.) I 2001, 3422; see <http://217.160.60.235/BGBL/bgb11f/b101066f.pdf>.

15 Noack, supra n. 7.

16 Report of the German Government Panel on Corporate Governance, supra n. 10, Marginal Number 252.

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23 Möllers, , “Anlegerschutz durch Aktien- und Kapitalmarktrecht”, ZGR (1997) 334, 358Google Scholar; Noack, , “Moderne Kommunikationsformen vor den Toren des Unternehmensrechts”, ZGR (1998) 592, 608.Google Scholar

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25 E.g., Microsoft – see <http://www.microsoft.com/msft/speech/archiveanalystmtg2000.htm>; Intel – see <http://webevents.broadcast.com/intel/nyanalyst0499/home.html>.

26 See Boros, , “Disclosure of Information on Company Websites”, Company and Securities Law Journal (1999) 522 for an empirical study.Google Scholar

27 Like Germany, France, Belgium and the Netherlands.

28 Like the UK or the US.

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31 E.g., Sweden, see Aktiebolagslagen 9 Kap 13 §; Skog, , “The institution of the general meeting and new communication technology – a few considerations de lege lata and de lege ferenda”Google Scholar – <http://www.jura.uni-duesseldorf.de/service/hv/nts.doc>.

32 Proxy Voting and the Use of New Technology, Aktiespararna (Swedish Shareholders Association), p. 30.

33 Lommatzsch, “Vorbereitung der HV durch Mitteilungen und Weisungen nach §§ 125,128 AktG n.F., Neue Zeitschrift für Gesellschaftsrecht (NZG) (2001) 1018.Google Scholar

34 See <http://wwwl.oecd.org/daf/govemance/principles.pdf> p. 13.

35 Report of the German Government Panel on Corporate Governance, supra n. 10, Marginal Numbers 115-120.

36 Fleischhauer, , “Hauptversammlung und Neue Medien”, Zeitschrift für Wirtschaftsrecht (ZIP) (2001) 1133, 1135Google Scholar; Noack, , “Die internetgestützte Hauptversammlung: Stand der Dinge und wichtige Reformvorschläge”, NZG (2001) 1057.Google Scholar

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38 Proposed by Noack, supra n. 7.

39 See Byng v. London Life Association Ltd., [1989] 5 BCC 221 (Court of Appeal, Civil Division).

40 Modern Company Law: Final Report, supra n. 10, number 7.7.

41 http://www.abb.com/global/ABBZH/ABBZH259.nsf/viewUNID/A221047E49DlCA7C4125679E006320D8!OpenDocument>.

42 Proposed by Noack, supra n. 7.

43 See Goldman, et al. , “Corporate Law's Challenge To Keep Pace With Technology”, <http://www.potteranderson.com/publications/corporate/corporate_law.html> about the previous situation.+about+the+previous+situation.>Google Scholar

44 § 211 of the General Corporate Law of Delaware states that “(2) If authorized by the board of directors in its sole discretion, and subject to such guidelines and procedures as the board of directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

a. Participate in a meeting of stockholders; and

b. Be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy-holder, (ii) the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxy-holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.”

45 See Omar, , “Company Law Reform in France”, EBLR (2001) 76; <http://www.andersenlegal.com/websitelegal.nsf/con-tent/ResourcesLegalServicesForumCorpGovernFranceReddingHotIssue!OpenDocument>>Google Scholar

46 Report of the German Government Panel on Corporate Governance, supra n. 10, Marginal Numbers 115-120.

47 Modern Company Law: Final Report, supra n. 9, number 7.11.

48 supra n. 8.

49 Wymeersch, supra n. 12, No. 34, p. 19.

50 see infra 3.2.2.3.1.

51 For example, the company “Real Networks”, that publishes the popular RealPlayer-application, has been on the market since 1995.

52 International Law Journal (1997) p. B 16; Corrigan, , “Annual Shareholders' Meetings Go Online”Google Scholar, <http://www.fool.eom/rogue/1997/rogue970822.htm>.

53 Wymeersch, supra n. 12, No. 33, p. 19.

54 Skog, supra n. 31.

55 Report of the German Government Panel on Corporate Governance, supra n. 10, Marginal Number 109.

56 § 118 Abs. 3 Aktiengesetz-draft, supra n. 8.

57 Balz, “Die Tele-Hauptversammlung”, <http://www.jura.uni-duesseldorf.de/service/hv/tele-hv.htm>.

58 see Baums, /Wymeersch, et al. (eds.), Shareholder Voting Rights and Practices in Europe and the US (<The Hague: Kluwer 1999), for a comparative analysisGoogle Scholar

59 See supra 2.3.

60 See Winter, supra n. 37, p. 27.

61 Proxy Voting and the Use of New Technology, supra n. 32, p. 14; see also Wymeersch, supra n. 12, No. 37, p. 21.

62 “Company General Meetings and Shareholder Communication”, A consultation document from the Company Law Review Steering Group, DTI, London, October 1999, p. 20; see <http://www.dti.gov.uk/cld/1840shar.pdf>.

64 Wymeersch, supra n. 4.

64 Modern Company Law: Final Report, supra n. 9, number 7.6.

65 Article L225-107 I.

66 Hasselbach, / Schumacher, , “Hauptversammlung im Internet”, ZGR (2000) 258, 282.Google Scholar

67 In Sweden a proposal has been discussed to amend the law to the effect that companies might allow voting by mail in their statutes, Prop. 1997/98:99, p. 102; in Germany this was explicitly mentioned in the Legislators' considerations of the NaStraG, § 135, supra n. 6.

68 Wymeersch, supra n. 12, No. 39, p. 22.

69 See infra 3.2.2.3.3. (2) regarding the requirement of binding instructions for company-appointed proxies.

70 see supra 3.2 (n. 34).

71 Proxy Season Results, see <http://ics.adp.com/public_site/about/stats.html>.

72 see <http://www.corpmon.com/IntCM.htm>.

73 Study of the Deutsche Schutzvereinigung für Wertpapierbesitz e.V. (German Shareholders Association) 2000 (unpublished).

74 E.g., the UK Companies Act 85 §§ 372f. by means of the Electronic Communications Act 2000. The German § 134 III Aktiengesetz was amended by means of the NaStraG, supra n. 6, to allow other forms when stated in the charter.

75 E.g., in Sweden (Aktiebolagslagen 9 kap § 22).

76 see supra n. 11.

77 see Bunke, , “Fragen der Stimmrechtsvertretung nach §§ 134, 135 AktG”, Die Aktiengesellschaft (AG) (2002) 57.Google Scholar

78 For a detailed explanation of German voting practice and its legal basis see Baums, in: Baums/ Wymeersch, supra n. 58.

79 Spindler, / Hüther, , “Das Internet als Medium der Aktionärsbeteiligung in den USA”, Recht der intemationalen Wirtschaft (RIW) (2000) 329.Google Scholar

80 E.g., in Germany explicitly by the recently passed NaStraG (§ 134 III 3 Aktiengesetz, supra n. 6. This is different in Sweden, where it is still prohibited for the management to solicit proxies from the shareholders.

81 See, e.g., Swiss Code of Obligations, 689c.

82 Report of the German Government Panel on Corporate Governance, supra n. 10, Marginal Number 122.

83 As mentioned above, supra n. 52.

84 § 131 I, IV Aktiengesetz.

85 E.g., France, Art. 162 L 1966; DTI, Company General Meetings and Shareholder Communication, supra n. 62.

86 Wymeersch, supra n. 12, p. 20.

87 Noack, supra n. 7.

88 Noack, ibid.; Beurskens, , “Neue Medien im Unternehmensrecht”, <http://www.jura.uni-duesseldorf.de/service/hv/beurskens.doc>..>Google Scholar

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90 Dow Jones Newswires, July 18, 2000; Washington Post, August 27, 2000 Page H01; see <http://www.socialfunds.com/news/article.cgi/article296.html>.

91 In detail, see <http://www.state.de.us/corp/fal100-2.pdf>.

92 § 211 of the General Corporate Law of Delaware states that “(a) (1)… If, pursuant to this paragraph or the certificate of incorporation or the articles of incorporation of the corporation, the board of directors is authorized to determine the place of a meeting of stockholders, the board of directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by paragraph (a)(2) of this section…”

93 Company General Meetings and Shareholder Communication, a consultation document of the Company Law Review Steering Group, DTI, London, October 1999, p. 12.

94 See Balz, supra n. 57.

95 see infra 4 (n. 102).

96 Report of the German Government Panel on Corporate Governance, supra n. 10, Marginal Number 117.

97 Wymeersch, supra n. 12, No. 29, p. 17.

98 Noack, supra n. 7.

99 see Kobler, , “Shareholder Voting Over the Internet: A Proposal for Increasing Shareholder Participation”, 49 Alabama Law Review (1998) No. 2, <http://www.law.ua.edu/lawreview/kobler.htm>.Google Scholar

100 Section 9017 3. When authorized by the organization certificate of incorporation or the by-laws, any one or more members of the board, or any committee thereof, may participate in a meeting of such board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

101 Hasselbach/ Schumacher, supra n. 66, at p. 283.

102 Article L 225-37 of the Code de Commerce.

103 § 108 Abs.4 Aktiengesetz in form of the NastraG, supra n. 6.

104 Noack, supra n. 36.