Presentation for Swedish Chamber of Commerce in Lithuania.

1. EU Company Law & Corporate Governance
Vilnius, 2016.05.17
1
Gintautas Bartkus

2. Purpose of EU rules
• Enable businesses to be set up anywhere in the EU
• Provide protection for shareholders and other
parties with a particular interest in companies
• Make business more efficient and competitive
• Encourage businesses based in different EU
countries to cooperate with each other.
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3. Players
• DG Internal Market
• DG Justice
• Informal Company Law Expert Group - the group
assists the Commission in the preparation of new
company law initiatives
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4. Action Plan 2012
• Enhancing transparency: different board
structures, board diversity, supervisory board
role
• Engaging shareholders: improving “comply or
explain”, shareholders identification, oversight
of remuneration policy, related party transactions,
employee shares
• Supporting companies’ growth and their
competitiveness: transfer of seat, cross border
mergers, legal forms for SME, group of
companies, codification
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5. Instruments
• Recommendations
• Directives
• Regulations
• Court of Justice
• Soft law
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6. 6

7. Digitalization of company law
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9. Group of companies
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Įmonių grupės pavadinimas
Pajamos
2011 m.
(tūkst. Lt)
Pelnas
2011 m.
(tūkst. Lt)
1. Orlen Lietuva, AB grupė 20.274.499 -7.477
2. Vilniaus prekyba, grupė 8.910.950 n.d.
3. Koncernas Achemos grupė, UAB 4.070.188 n.d.
4. Lesto, AB grupė 2.245.484 -73.572
5. Linas Agro Group, AB (20 bendr.) 1.793.667 13.328
6. Lietuvos dujos, AB grupė 1.840.012 104.273
7. Sanitex, UAB grupė 1.676.071 n.d.
8. Lietuvos energija, AB grupė 1.429.507 2.275
9. Scaent Baltic, UAB grupė 1.394.000 n.d.
10. Koncernas MG Baltic, UAB 1.391.335 n.d.
11. Neo group, UAB 1.346.919 n.d.
12. Agrokoncerno įmonių grupė ( 29 bendr.) 1.267.543 n.d.
13. INTER RAO Lietuva, grupė (5 bendr.) 1.251.282 n.d.
14. KG Group, įmonių grupė 1.229.784 33.757
15. Swedbank, AB grupė 1.025.697 664.456
16. SEB bankas, AB grupė (4 bendr.) 996.642 529.790
17. TEO LT, AB įmonių grupė 749.784 172.013
18. SBA koncernas, UAB 748.556 n.d.
19. Rokiškio sūris, AB (su antrinėm įm.) 689.336 25.148
20. ARVI, įmonių grupė 686.999 n.d.
21. Lytagra, grupė 572.362 n.d.
22. City service, AB grupė (30 bendr.) 547.843 33.940
23. Agrokoncerno grūdai, UAB 508.653 n.d.
24. Žemaitijos pienas, AB grupė 494.426 10.565
25. Lietuvos kooperatyvų sąjunga, KB (49 bendr.) 492.226 14.163
26. Girteka logistics, UAB 485.778 n.d.
27. Imlitex Holdings, UAB (14 bendr.) 479.140 14.371
28. Avia Solutions Group, AB 476.769 10.864
29. Nacionalinė farmacijos grupė, UAB (Limedika ir
Gintarinės vaistinės) 467.287 n.d.
30. LITGRID, AB grupė (5 bendr.) 434.806 -19.714

10. Group of companies
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11. Interest of the group
Member States that do not recognize the interest of the group (10)
• MS which have a legislative regime (5) : Germany, as well as some MS
which have followed closely the German model (Portugal, Slovenia,
Croatia, Latvia)
• MS which do not have a legislative regime (5) : Austria, Slovakia, Finland,
Lithuania, Greece
Member States that, at least in certain circumstances, recognize the
interest of the group (14)
• Case law (10) : France, Belgium, Netherlands, Luxembourg, United-
Kingdom, Ireland, Malta, Poland, Denmark, Sweden
• Legislative regime (4) : Italy, Czech Republic, Hungary, Spain (legislative
proposal)
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12. Rozenblum doctrine – EMCA rule
If the management of a subsidiary takes a decision which
is contrary to the interests of its own company, it shall not
be deemed to have acted in breach of their fiduciary duties
if :
• the decision is in the interest of the group as a whole,
and
• the management may reasonably assume that the loss/
damage/disadvantage will, within a reasonable period,
be balanced by benefit/gain/advantage and,
• the loss/damage/disadvantage, referred to in the first
sentence hereof, does not include any which would
place the continued existence of the company in
jeopardy.
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13. Board diversity
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Two Highest Decision Making Bodies
Number of Companies CEO Executives Non-executives
Covered With data
Women
(%)
Men
(%)
Women
(%)
Men
(%)
Women
(%)
Men
(%)
EU-28 615 615 4 96 15 85 25 75
Denmark 18 18 6 94 8 92 26 74
Estonia 15 15 0 100 18 82 8 92
Latvia 25 25 0 100 22 78 30 70
Lithuania 23 23 9 91 18 82 16 84
Finland 23 23 0 100 16 84 29 71
Sweden 26 26 8 92 24 76 34 66
Iceland 15 15 7 93 17 83 44 56
Norway 21 21 0 100 17 83 39 61
All countries 734 734 4 96 15 85 24 76

14. Conflict of interests – related party transactions
OECD report “Related Party Transactions and Minority Shareholder Rights”
outlines six possible approaches:
• shareholders are given a direct say in approving related party transaction,
with interested shareholders excluded
• minority shareholders are able to vote directly for a board member of their
choosing
• the controlling shareholder has a fiduciary duty to other shareholders and
the company. An abusive related party transaction would be against the
interest of the minority shareholders and thus represent the breach of duty
• the board is given the right to approve transactions, with this task typically
passed on to a committee of independent board members or an audit
committee
• the prohibition of self-dealing transactions and other similarly conflicted
deals, such as loans to directors
• the existence of a statutory right to the use of independent experts to
help with valuation issues, etc.
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15. SME
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16. EMCA policies
• simplification of regulation,
• flexibility of regulation,
• reducing agency- and transaction costs
• the choice between mandatory and non-
mandatory (default) rules
• the use of disclosure rules vs. substantive rules
• the choice between codes/self-regulation and
substantive (Model Act) rules
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17. EMCA proposes
• Shareholders’ Democracy: Shareholders are encouraged “to take an
interest in sustainable returns and longer term performance” and also
“to be more active on corporate governance issues”.
• Freedom of movement within Europe: international transfer of the
registered office
• Shares: “Real” no-par value shares are allowed. The principle “one
share one vote” is not adopted; bearer shares allowed
• Groups: provisions about the squeezing-out of minority shareholders,
intra-group transactions, sell-out rights, information and special
investigation rights of shareholders. Two special points: Interest of the
group and binding instructions.
• Restructurings: takeovers, schemes of arrangement, mergers and
divisions (domestic or transnational)
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18. http://law.au.dk/forskning/projekter/
europeanmodelcompanyactemca/
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