ICGI Research

Company Groups and Global Networks

Team leaders: Mieke Olaerts & Anna Beckers

In a globalising world, providers of goods and services often operate in groups or global networks, using the same name and creating an image of unity. Their activities are complex to regulate as legal rules often only apply to individual companies forming part of a group or network. Stakeholders may be affected by their operations and regulators are increasingly looking for tools to ensure a responsibility of the group or network as a whole for certain important societal interests that transcendent the legal entity that forms part of the group or network. This development raises several questions, such as: in which situations should the group or network be seen as an economic unity? What legal or regulatory tools can be used to regulate group and network relations? What are the consequences of these developments for the internal governance of company groups and networks, i.e. the role of the board, shareholders and other stakeholders?

This research line focuses on how these issues can be addressed and how company groups and global networks can be regulated. Of particular interest in this research line is also the connection of groups/supply-chains to the overall research at ICGI on the relation between the corporation and its social and natural environment. Accordingly, the research questions regarding the ascription of responsibility in corporate groups and supply-chains also covers the issue of environmental and social responsibility of companies. Central to this research line are: i. the protection of stakeholders and ii. governance aspects of groups and networks. The research focuses on both the internal and the external dimension of groups and networks. The internal dimension relates to the relationship among the members within the group\network, whereas the external dimension concerns the relationship of the group\network vis a vis third parties such as the relevant stakeholders.

The Dynamic between Shareholders and Boards in the Changing Paradigm of Corporate Law

Team leaders: Bastiaan Kemp & Tom Vos

Shareholders are powerful players within the governance of companies. They generally have the power to appoint, suspend and dismiss directors, to amend the articles of association and to change the capital structure of the company (dividend, repurchase, etc.). Nevertheless, the prevailing view within many jurisdictions is that companies should not be solely focused on the interest of shareholders. Instead, the interests of employees, creditors and other constituencies should also be taken into account. This view has been gaining more momentum in recent years and leads to changes in the governance dynamic of the company. This research line is focused on explaining the dynamic and tension between shareholders and boards under corporate law and aims to formulate potential instruments to (re)solve the tension. The research focuses both on the present corporate governance paradigm, in which shareholders and directors are currently interacting when exercising their powers, and on potential future corporate governance regulations that could influence the way in which these actors interact, keeping in mind the more stakeholder focused role that companies are expected to have in society. 

As part of this research line, researchers of the ICGI are working on several topics, including: shareholder activism, the role of the general meeting, related party transactions, takeover defenses, stakeholder governance, etc.

Sustainable corporate governance

Team leaders: Bastiaan Kemp, Mieke Olaerts & Tom Vos

The debate on sustainability in corporate governance is becoming ever more prominent at the national, European and international level, and the ICGI wants to be at the forefront of this debate. Researchers of the ICGI are exploring how corporate governance can contribute to sustainability and long-term value creation. Examples this line of research are: research regarding the impact of shareholder activism on sustainability, whether controlling shareholders can help to combat short-termism and promote sustainability, whether companies include sustainability targets in executive compensation, the role of institutional investors in promoting sustainability, directors’ duties with regards to sustainability, and the debate on corporate purpose.

Current and future research especially in the area of sustainability requires expanding the empirical research results and cooperation with other disciplines, in particular the Maastricht University School of Business and Economics. A prominent example of interdisciplinary research within this research line is the Elverding Chair. This is a co-chair between the Faculty of Law (Professor Mieke Olaerts) and School of Business and Economics (Professor Rob Bauer), which focuses specifically on Sustainable Business, Culture and Corporate Regulation.

Companies in Financial Distress

Team leader: Samantha Renssen

Financial distress: an unpleasant, but common phenomenon amongst companies. Basically, the company falls within a twilight zone: in the vicinity of insolvency. When a company is in financial distress, there are three possibilities: rescue the (viable) parts of the company by means of restructuring, liquidation of the (unviable) company by dissolution or by insolvency. Since liquidation destroys the company and its value, restructuring is the preferable option. It is therefore of great importance that companies in financial distress have access to a framework enabling them to restructure in order to prevent insolvency. Equally important is however that creditors are protected during both restructuring and liquidation proceedings. 

In Europe, national restructuring and insolvency rules vary greatly in respect of the range of procedures available to viable companies in financial distress aiming at restructuring their business. Looking into harmonisation possibilities is thus of importance. Regarding restructuring possibilities, the first step has been taken by the European Commission: Directive 2019/1023 lays down rules for schemes of arrangement. However, it lacks harmonisation rules about another important procedure; the pre-pack. This research line aims to look into harmonisation possibilities in the field of the pre-pack as well as practicalities surrounding this procedure.

When looking into liquidation possibilities (outside of bankruptcy) for unviable companies in financial distress, one will immediately notice that EU harmonisation is lacking. This is alarming, because some Member States have developed methods to liquidate a company very cheaply and quickly (for example the Dutch turbo liquidation). Sometimes these procedures are open invitations to commit fraud. Within this research line, possible law changes on national level as well as harmonisation possibilities at EU level will be explored.