Germany's Corporate and Financial Law 2007: (Getting) Ready for Competition

Abstract

The paper provides an overview of the status of corporate and financial law making in Germany in 2007 and examines the driving forces behind current reforms. It also considers amendments to tax and accounting law that are related to corporate and financial law. The authors provide brief comments on pending legislative steps and measure the impact of the reforms on the overall structure of German business law.

This paper serves three purposes.

Firstly, it provides an insight into the dynamic development of German corporate and financial law under the influence of European, national, and international reform agendas.

Secondly, it reveals that the German legislature responds to competitive pres-sure in the market for incorporations through service-oriented law making and innovative reforms. Generally speaking, these reforms follow three lines: 1) Simplifying the current law; 2) Increasing flexibility for issuers, investors and market participants; and 3) Opening German law as an option for foreign corporations.

Finally, it develops the working hypothesis requiring further testing in the future that the German legal system has regained strength as a role model for other states. This emancipation comes after almost 20 years of 'permanent corporate law reform' in which primarily provisions stemming from foreign (Anglo-American) jurisdictions were adopted and the German corporate and financial law was turned from upside down.

Keywords: corporate law, financial law, tax, accounting, business law, reform, hedge funds, MiFiD, securities law, co-determination, shareholder rights, take-over, freeze-out, transfer of seats, cross-border mergers, investment funds, transparency directive, disclosure directive, board structure

JEL Classification: F30, G20, G28, K20, K22, K30, K34