Legal Capital Rules and the Structure of Corporate Law: Some Observations on the Differences Between European and U.S. Approaches
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Description
Legal capital rules are just one element of the general legal regime of creditor protection. Even though the rules on legal capital in the United States are extremely lax, fraudulent transfer law addresses, in a more general way, the very issue addressed by legal capital rules: distributions by companies to shareholders which harm creditors. Unlike legal capital rules, however, fraudulent conveyance law uses flexible standards, rather than fixed accounting figures, to distinguish permissible from impermissible distributions. Such standards are more sensible than the one-size-fits-all approach of legal capital rules in addressing this complex issue. A similar standard-based approach is used in the U.S. to limit the ability of corporate boards to issue shares for improper purposes. In this area, as well, the high quality of the judicial system in the U.S. and the relative infrequency in which the issue arises probably makes a standard-based approach preferable, at least for the U.S. This commentary will address the two papers, by Professors Friedrich Kubler' and Eilis Ferran, presented at the conference on the Rules on Capital under the Pressure of the Securities Markets.
Source Publication
Capital Markets and Company Law
Source Editors/Authors
Klaus J. Hopt, Eddy Wymeersch
Publication Date
2003
Recommended Citation
Kahan, Marcel, "Legal Capital Rules and the Structure of Corporate Law: Some Observations on the Differences Between European and U.S. Approaches" (2003). Faculty Chapters. 950.
https://gretchen.law.nyu.edu/fac-chapt/950
