European Group Law Reconsidered

Despite several attempts to introduce corresponding legislation, the EU has not yet established rules governing company groups. Given the interest of the European Commission in this topic and the assumed benefits of a European group law, this paper proposes a new concept for a legally binding European group law. This paper aims to develop a proposal that is both, practicable for the parent company in the sense of an enabling law, and which simultaneously protects minority shareholders and creditors. The developed concept bases upon the term “management decisions”. These decisions include both instructions as well as decisions, which have an impact on the subsidiaries. The hereinafter-proposed concept suggests a distinction between subsidiaries with and without minority shareholders. A further distinction is made depending on whether the interests of the parent company and its subsidiaries are aligned or diverge. This results in eight basic constellations (1A to 4A and 1B to 4B). This paper proposes a possible regulatory framework for these constellations. Besides, a differentiation is made according to whether the management decision evidently results in a risk of insolvency for the company or merely reduces its creditworthiness. Within this framework, group solidarity poses an available option for company groups.