The Law of Groups of Companies According to the European Model Company Act (EMCA)

La disciplina dei gruppi di società nel progetto di EMCA

di J.M. Countinho De Abreu *

Download pdf []

Il capitolo XV del progetto di EMCA è il risultato di un commendevole tentativo di elaborare un modello di disciplina generale dei gruppi di società in Europa. Tuttavia, ad avviso dell'autore, il modello appare allo stato sbilanciato, in quanto considera principalmente poteri e doveri della capogruppo, mentre dedica una minore attenzione alla protezione dei soci minoritari e dei creditori delle società controllate, per cui, in generale, non sembra offrire una soluzione ottimale nell'alternativa tra la regolazione del fenomeno (secondo uno dei modelli di disciplina attualmente esistenti) e la sua non-regolazione.

Chapter 15 of EMCA is the result of a laudable effort to present a model of global regulation of the groups of companies in Europe. However, in the perspective of the article's author, the model appears unbalanced in subjects of the controlling companies' powers and duties, it does not protect the controlled companies, their minority shareholders and creditors enough, and, in general, it does not seem the best alternative between the current experiences of global legal regulation and non-regulation.


University Of Coimbra, Faculty Of Law

1. Introduction.

1.1. It is not the same thing for a controlling shareholder to be a (non-entrepreneurial) natural person or a company. In both cases conflicts of interests between the controlling shareholder and the minority shareholders and/or the company are or may be present. But, normally, the content, intensity and nature of the diverging interests or purposes in each of the cases are different.

In general, the ultimate interests of the natural person-controlling shareholder are convergent with those of the minority shareholders: all of them want to earn as much as possible in the same company; the diverging interests are normally sporadic and circumstantial. This is normally not the case in groups of companies (in an ample sense).

The controlling company acts in accordance with business strategies that count on the controlled companies; the shareholder(s) of the controlling company wish to earn as much as possible in their company, even if at the expense of the controlled companies; if the controlling company, by carrying out its influential power, loses or earns less in a controlled company it is because it is trying to earn more inside itself or in another controlled company; the diverging interests are normally systematic, structural.

Not rarely, for example, do the controlling companies impose non-compensated prices on one or another controlled company in intra-group transactions or in licenses for intellectual property rights; determine free financing or financing with low interest rates or with an unreasonable risk; transfer the activity of one of the controlled companies to another which is formed in another country or region; directly or indirectly, exploit the business opportunities of the controlled companies.[1]

If the danger of possibly caused damage by the controlling company in a controlled company is a danger of (indirect) damage for the minority shareholders of the controlled company, it is also a danger for the controlled companies' creditors and other third parties: if the net assets of the controlled company decrease, its security to current and potential creditors will also decrease. And the danger increases when multiplication of companies composing the group means the fragmentation of a homogeneous enterprise in sub-capitalized units of limited liability.


1.2. So, it is not surprising that (the few) legislations which intended to globally regulate the groups of companies (the GermanAktiengesetzfrom 1965 - AktG - in the first place) have a main tendency to defend against abuses: at the same time as ascribing the right to manage the subsidiary companies to the parent company, they establish protection mechanisms for the interests of the minority shareholders and/or the creditors of the controlled companies.

However, the majority of national legislations do not present any special or exceptional and systematic regulation for groups of companies, so it seems that those general rules and principles of company law are enough. Also it seems that this pleases groups of companies (better, it pleases the controlling companies and shareholders): they do not want to be subject to special laws, unless they gain benefits from such laws.


1.3. Chapter 15 of the EMCA (European Model Company Act)[2] is entirely dedicated to groups of companies. Maybe what is provided there will please groups. So, as is stated in the chapter's General Comments, it does not fundamentally look to the protection of controlled companies, of their minority shareholders and creditors, but, instead, looks to establish rules that facilitate and reinforce "the flexibility of the formation, organization and functioning of this leading form of business organization nowadays".

Chapter 15 "legalizes" what controlling companies have been doing, but (according to company law in general) do not have the right to do - namely, give instructions, which may inclusively be unfavourable, to the management of controlled companies - and, without prescribing, on the other hand, significant protection rules of minority shareholders and/or creditors of the controlled companies. In the words of the quoted General Comments: "theright of a parent company to give instructions to a subsidiaryis recognized, without creatinga specific liability or burden on the parent company, as this power corresponds to reality". This is the "reality", these are the facts, the reality of the facts imposing itself, as such, over the law. As if that reality was simply natural or spontaneous, without legal coverage or tolerance; as if a certain business reality could not or should not be conformed-altered politically-legally… It is true that the political-legal has revealed strong "factodependency" or "factosubservience", that it has normalized the "reality" of the economic-corporate power (especially financial). But, should it not do anything more? "Is there no alternative"?

2. Definition of group of companies.

According to section 1 of Ch. 15 of the EMCA, a group is the entity, comprising of the parent company and all its national or foreign subsidiaries or entities. A subsidiary is a company subject to direct or indirect control, whole or not, by the parent company (Sections 2 and 3). Control is defined as the power of the parent company to "govern, alone or with other shareholders, the financial and operating policies of a subsidiary" (Section 4). It may be de jure- the control exists, normally, if the parent company, directly or indirectly, detains more than half of the voting rights of the subsidiary (Section 5) - or de facto, if the parent company, besides holding half or less than half of the voting rights, has the possibility, by other means, to determine the subsidiary's policies (Section 6).[3]

The standard used to define (vertical) groups of companies seems appropriate. And is more simple than the standards of "unitary management", "subordination contracts" or "integration" and "whole control".

It is interesting to note that Section 1 speaks of a group as an "entity". Although without attribution of legal personality, the set of composing members of the group seems to be understood as something with an individual identity. If to this we added the perception of the group as an enterprise[4], we would hope for an assertion of a common liability for the debts of each of the members towards third parties - the liability of all the companies in the group or, at least, the liability of the parent company for the debts of its subsidiaries.[5]But we would look for the mentioned liability in Ch. 15 of the EMCA without success.

3. Right of a parent company to give instructions and group interest.

3.1. According to the general rules and principles of company law, no shareholder has the right to give instructions to the management of its company. Be it a natural person or a legal entity, or be it a controlling or a non-controlling shareholder.

It is within the management board's power to manage and represent the company. According to the law and the articles of association, in matters of management, the board may be subject to decisions and instructions of the general meeting. In the general meeting, the controlling shareholder may, evidently, determine the legal will imputable to the company. But, outside the general meeting, he does not have the power to,de jure, determine directors' behaviour. Of course he has the power to do sode facto. But if he does, he will be subject to penalties (mainly when his influence is revealed as a harm to the company).

This is also the same, in general, for single-person companies. The sole-shareholder carries out the powers the law or the articles of association give the general meeting of the corresponding type of company. He does not have the right to give instructions to the management board outside of those powers and of the pertinent organic procedure.[6]

However, this is not so in de juregroups of companies. The laws with special regulation for groups give the parent companies the right to give instructions[7], including unfavourable ones to the controlled companies (v.g.,AktG, §§ 308, 323, Portuguese Company Code - CSC -, art. 503). It is a special and exceptional right, a "privilege". But justified or balanced, since such laws impose special obligations towards controlled companies (and minority shareholders, if they exist) and/or creditors of controlled companies.


3.2. EMCA's perspective is different. The attribution to the company - note, not to any natural person-controlling shareholder - of the right to give instructions to the management of the controlled company does not have, as in compensation, the imposition of a special liability.

In all honesty, the Comments to Section 9 state: "The approach chosen in EMCA is to consider groups and the power of direction of the parent companies over subsidiaries as a reality which has not to be formally 'legalized' or 'declared'. Why would the parent company form a 'legal group' with their subsidiaries, if the price for obtaining a legitimation of its power of direction is so high? Why would the parent enter into such  'unilateral declaration', whereas as a matter of fact, it can already instruct the subsidiary, and face increase risk of liability?"


3.3. After establishing in paragraph (1) of Section 9 the right of the parent company (national or foreign) to give instructions to the management board of the subsidiaries - governing body, which, in general, must comply with such instructions (paragraph (2)) -, in paragraph (3) it establishes that some of the members of the subsidiary companies are not bound by these instructions: directors who are not appointed by the parent company, "independent directors" (as qualified by the applicable corporate governance code) and directors who are employee representatives.

These exclusions raise doubts. The instructions are given to the management board as such (even if through any of its members), not to each of its members. It should be the management board that is bound by the instructions, and so consequently it should execute them through director(s) necessary (in number) to represent the company. If one of the mentioned directors in paragraph (3) receive instructions, even though he is not obliged to comply with them, does he not have the duty to pass them on to other directors or the board? If the number of directors not included in that paragraph is insufficient to resolve or represent the subsidiary, will the subsidiary become free of the duty to carry out the instructions? ...


3.4. Meanwhile, the management board of the subsidiary is only obliged to comply to instructions from the parent company if they are in conformity with the "interest of the group" (paragraph (2) of Section 9, referring to Section 16).

Section 16 (entitled "interest of the group"), paragraph (1) states: "If the management of a subsidiary, especially as a result of an instruction issued by the parent company, takes a decision which is contrary to the interest of its own company, it shall not be deemed to have acted in breach of their fiduciary duties if:

(a)    the decision is in the interest of the group as a whole, and

(b)   the management may be reasonably assume that the loss/damage/disadvantage will, within a reasonable period, be balanced by benefit/gain/advantage and,

(c)    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."


(a) The rule does not state what the group interest is. The Comments to Section 16 explain why: "a satisfactory definition would be very difficult, if not impossible, to find given the almost infinite diversities of situations in groups".

It would be reasonable to refer to "interest of the group" as a simplifier or easy summary-phrase meaning that the interest of the controlling company and/or (if present) of other companies in the group justifies the sacrifice of the interest of the controlled company.[8] It is in this sense that the expression is used in regard to certain legal rules (v.g.,§ 308(1) of the AktG and art. 503(2) of the CSC).

Sub-heading (a) of paragraph (1) of Section 16 does not give any signs that this is the aimed meaning. Nor does it give sufficiently clear signs of another meaning. Such indefiniteness would potentiate the legitimization of the infringement of fiduciary duties by directors. Calling upon the abracadabra, the magic formula "interest of the group", which indicates very little and is able to nearly justify everything, the directors of the controlling company and of the controlled company will easily reach a "safe harbour" of unaccountability (civil, etc.).

Further more, Section 16 (1) allows the directors of the controlled companies, in name of the interest of the group, to decide against the interests of their own company, even if they do not receive instructions from the parent company to decide in that way. It would be logical to think that the parent company has the power to define the "interest of the group". Since it is this one, as "head" of the group, which has the right to give instructions to the controlled companies (Section 9) and (also because of that) the right to demand information from the controlled companies (Section 10)…[9] So, how can the management of a company - without a similar right to information[10] - decide against the interests of its own company in name of the "Interest of the group"? In the absence of instructions, the directors of controlled companies should observe duties of care and loyalty towards their own company, they should act in its interest - interest that they should know and/or define. As directors of a controlled company they do not define or do not even have to know the interest of the controlling company or other companies in the group (sometimes, very numerous), or the "interest of the group". Besides, managing a controlled company in its own benefit normally results in a (direct or indirect) benefit for the parent company.

Nevertheless, it is a very diffused idea that "interest of the group" means - as a simile of the "overriding" interest of a (autonomous) company - a common interest to all companies in the group prevailing above the interests of each of them[11], or the interest of a superior entity, based on an entrepreneurial unity, to which the interest of each of the constituents of the group are subject to.

I think this is a fragile idea. A (vertical) group of companies is not a group coordinated for the attainment of common ends, rather it is based on subordinate or dependent relations for (primarily) unilateral ends (of the controlling company); neither is it a new (legal) entity of a superior level with its own corporate nature and interests different and superior to those of the grouped entities. Normally a company in control of another tends to use the power of control to its own benefit. Therefore, it would compete the law to establish measures for the protection of minority shareholders and for the creditors of controlled companies.  


(b) In relation to sub-heading (b) of paragraph (1) of Section 16[12] I ask: what, how much and when? - what are the losses/damages/disadvantages and benefits/gains/advantages to take into account; how are they proven and what are the ways of quantifying ones and the others; what is the "reasonable period" to carry out the compensation? In this regard, it seems to me that the proposals of the FECG, especially the ones applicable to "service companies", are more reasonable: "A Service Company must observe all directions coming from the parent company, unless the directions have the effect of precluding the Service Company from fulfilling its obligations falling due within a 12 month period following the direction. Alternatively, a guarantee may be provided by the parent company, another company of the group or a third party covering the debts of the subsidiary falling due within a 12 month period at all times, i.e. on a revolving basis."[13]


(c) Sub-heading (c) of paragraph (1) of Section 16 - the detrimental decision of the management of the controlled company, be it autonomous or heteronomously determined, that jeopardizes the existence of the company is not licit - deserves, it seems, a general reception.

Nevertheless it may occur that an irreversible insolvency situation of a controlled company is caused not only by one sole detrimental decision, but also by a series of unfavourable decisions more or less undetermined in time…


3.5. Here it is important to mention, very briefly, the rules on transactions between a (listed) company and related parties provided for in article 9-C of the Directive 2007/36/EC, article added by the Directive (EU) 2017/828, from 17th May 2017. Transactions between controlling and controlled companies are, certainly, amongst the most relevant transactions with related parties.

According to article 9-C, number 2, the company must publicly announce the material transactions[14] with related parties at the latest at the time of the conclusion of the transaction. The announcement shall contain information "necessary to assess whether or not the transaction is fair and reasonable from the perspective of the company and of the shareholders who are not a related party, including minority shareholders".

Member-States may establish that the referred public announcement is accompanied by a report assessing whether or not "the transaction is fair and reasonable from the perspective of the company and of the shareholders who are not a related party, including minority shareholders" (article 9-C, number 3).[15]

Article 9-C, number 4, states that related party transactions have to be "approved by the general meeting or by the administrative or supervisory body of the company according to procedures which prevent the related party from taking advantage of its position and provide adequate protection for the interests of the company and of the shareholders who are not a related party, including minority shareholders".

The fairness and reasonability of the transactions from the perspective of the company and of the shareholders who are not a related party are the purpose of the referred public announcement and the guidance for the eventual assessment report and for the approving resolutions. The same criteria are valid for the transactions between a company and other companies in its group (companies in a controlling relation), also the "interest of the group" does not have and autonomous relevance,[16] diverging, therefore, from the idea present in Chapter 15 of EMCA.

However, article 9-C, number 6 (a) establishes that Member-States may exclude, or may allow companies to exclude, from the requirements mentioned in numbers 2, 3 and 4 "transactions entered into between the company and its subsidiaries provided that they are wholly owned or that no other related party of the company has an interest in the subsidiary undertaking or that national law provides for adequate protection of interests of the company, of the subsidiary and their shareholders who are not a related party, including minority shareholders in such transactions". Nevertheless, this exclusion, besides being a permission to Member-States (not an obligation), does not comprise each or every group of companies.[17]

4. Protection of controlled companies, their minority shareholders and creditors.

Although Ch. 15 of EMCA does not establish special regulations of parent companies' liability, it contains some provisions that protect (or can protect) controlled companies, their minority shareholders and creditors.


(1) When a subsidiary company is not wholly owned, its corporate opportunities should not be exploited by the parent company, directly or through another subsidiary, unless there has been authorization from the "disinterested directors" of the subsidiary or, if there aren't any, from its non-controlling shareholders (Section 13).

A corporate opportunity belongs to a subsidiary when it is insertable in its activities, or when it receives a business proposal from a third party or it is in negotiations with him for the conclusion of a contract.

The provision in Section 13 does not seem in perfect tune with the provisions that grant the controlling company the right to give instructions in the "interest of the group". And may cause complex questions.

Imagine subsidiaryA, seated in countryX, receives a very beneficial business proposal from a third party domiciled in countryY(adjacent toX), where subsidiaryBis seated. Will the parent company with seat in countryZbe forbidden to exploit this corporate opportunity throughBin case of no approval from the "disinterested directors" or from the minority shareholders ofA, when it is known, for example, that countryYis more relaxed on tax matters or on labour legislation?

On the other hand, if the parent company does not respect Section 13, will it only have to pay damages to the subsidiary to which the corporate opportunity belonged?


(2) Section 14, which refers to Section 12, which in itself refers to Ch. 11 of EMCA, establishes the right of the shareholders of a subsidiary to request a special investigation in the parent company relating to decisions that have affected the subsidiary.


(3) The expression present in Section 15's heading -Right to sell-out -has been used for cases like those established in its paragraph (1): "When a parent company owns directly or indirectly more than 90% of the shares and of the voting rights, the others shareholders may request that their shares be purchased by the parent company".

The provision in paragraph (2) - "The shareholders of a subsidiary can request that the parent company or another person designated by it purchases their shares" - is largely undefined. Through the respective Comments, it is understood that it is applied to shareholders who consider "that they are victim of an abuse by the majority shareholders", for example "unfair prejudice, the lack of payment of dividends for a long period, the existence of detrimental related party transactions, etc."

Paragraph (3) establishes rules on the procedures for determining the terms of sale, namely the price. And, strangely, paragraph (4) establishes that the provisions in Section 15 do not apply to foreign subsidiaries.

In regard to paragraph (1), what is there stated seems reasonable. When a company acquires shares corresponding to more than 90% of the share capital and the voting rights, the minority shareholders see the value of their shares reduced: they lose rights or possibilities of participation in the conduction and control of the company (its functioning will, largely, start to be determined extra-organically by the controlling company) and the sale to third parties at a good price will become more difficult.

Nevertheless, it would have been preferable to enlarge the possibilities of sell-out.[18] In accordance with EMCA's definition of group: if control is enough for a company to be able to conduct the life of the controlled company, with potential harm being caused to it and to its minority shareholders, the right to sell-out should be ascribed without demanding the quoted 90%.

The right to sell-outis seen as the "equivalent" of the right to squeeze-outprovided for in Section 11.[19]

It is not easy to justify that a shareholder with more than 90% of the shares and of the voting rights has the right to acquire the shares of the minority shareholders.[20] Less so in the EMCA. Not only because it is applied to public companies as well as private companies, but also because it is satisfied with the simple control for a controlling company to be able to conduct and give instructions to the controlled company. What is stated in the Comments to Section 11 does not seem enough: "The possibility to squeeze-out minority shareholders is the counterpart of the sell-out rights included in the EMCA. It is also a way to facilitate the formation of fully integrated groups".


(4) Under the title "Wrongful trading", Section 17 starts by stating that, if a subsidiary company which has been managed in accordance with instructions of the parent company does not, at a certain moment, have any reasonable prospect, by means of its own resources, avoiding insolvency, then the parent company is obliged to, without delay, perform a fundamental restructuring of the subsidiary, or initiate its winding up procedure.

Paragraph (2) then states that if the parent company does not promote any of those procedures (restructuring or winding up), or if it has managed the subsidiary (meanwhile fallen into insolvency) to its own detriment, it shall be liable for any unpaid debts the subsidiary incurred in before the moment (crisis point) where the parent company became aware of or should have become aware of the critical situation.

The interpretation of Section 17 raises many doubts.

If the parent company, which managed the subsidiary in the interest of the group, restructures it after crisis point or initiates procedures for its winding up, is it not liable for the referred debts? It seems more reasonable to affirm the liability towards the subsidiary's creditors…

If after crisis point, the subsidiary continues to act unduly until it has been declared insolvent, does the parent company, which knew of or should have known of the situation, not also answer to the debts incurred after that moment? It very well seems so.

It seems that section 17 makes the liability of the parent company towards creditors (voluntary or involuntary) of the subsidiary depend on the moment it enters into insolvency. Suppose that a subsidiary, formed and managed by the parent company, operates in a country (to whose law it is subject to) with relaxed environmental, labour, etc. rules. Due to a lack of security or of health conditions of the mine or the factory exploited by the subsidiary, some people are gravely hurt, or contract a grave illness, or die. According to that country's legal system, the victims do not have a right to damages or have the right to a poor compensation. The subsidiary does not have to pay, or has to pay manifestly unjust compensations and continues perfectly solvent in order to operate. In cases like these is it fair that the parent company continues free of any liability? Suppose still that the subsidiary operates in a developed and more demanding country. Due to poor conservation of dangerous waste, the subsidiary causes damages to third parties. In order to make the parent company liable, would it be necessary to verify if the compensation of the damages causes the insolvency of the subsidiary? Would it be reasonable to subject the injured to the wait of insolvency proceedings? Would it be fair that the subsidiary be extinct, with all the harmful consequences this could result in, when the parent company continues in a prosperous situation?

5. Between the EMCA regulations and the non-general regulations of groups of companies.

5.1. Between the proposed legal model of the EMCA and the German legal model ofKonzernrecht, I believe that, besides its imperfections, this last one is preferable. For it gives more protection to those who need it: controlled companies and their minority shareholders and creditors.


5.2. In civil liability, if you give (like EMCA does) a controlling company the power/right to manage the controlled company, there should be a corresponding liability.[21]

If, because a company has the right to manage its own business, it assumes the responsibility for the obligations that emerge from that business, a company, which dominates another and has the power to manage its business, should also assume the corresponding obligations. When the legal-subjective autonomy of a (controlled) company is only formal, whoever detains the materially derogating power of that subjectivity should be liable. Just as an autonomous company answers, with all its assets, for obligations originated in any of its business branches or departments, so should a controlling company answer for the obligations created in a company materially converted into a business branch or department of the controlled company.

Does this go against the "Holy Grail" of limited liability? Yes, but justly. Besides, limited liability became widespread in the middle of the nineteenth century. And only at the end of that century were inter-corporate stock ownership and the constitution of holding companies admitted.[22] Allowing a group of companies with multiple layers of limited liability to insulate the group as a whole and externalize the risk for the involuntary creditors is "a consequence unforeseen when limited liability was adopted long before the emergence of corporate groups".[23]


5.3. With regard to civil liability, I doubt the EMCA's regulatory model is more beneficial than the regulation of groups of companies in the rules and principles of company law in general (and of civil law).

In fact, in a large number of national legal systems, in order to make the parent company liable (besides various difficulties) it is possible to resort to means such as de factodirectors (including shadow directors), piercing the corporate veil[24], the liability resulting from abusive resolutions (of the general meeting and the management board).[25]


5.4. It would be recommendable for a legal model of groups of companies for European countries to take into account consolidated European case law on the subject of groups of companies within competition law.

Amongst the most recent examples of this type of case law, one should note the decision of the European Court of Justice from 8/5/2013 (C-508/11, Eni/Commission). The decision reads: "it is established case-law that the conduct of a subsidiary may be imputed, for the purposes of the application of Article 101 TFEU, to the parent company particularly where, although having separate legal personality, that subsidiary does not autonomously determine its conduct on the market but mostly applies the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links which unite those two legal entities". "It also follows from settled case-law that, in the particular case in which a parent company holds all or almost all of the capital in a subsidiary which has committed an infringement of the European Union competition rules, there is a rebuttable presumption that that parent company exercises an actual decisive influence over its subsidiary."

* University Of Coimbra, Faculty Of Law


  • 1) This does not mean that the controlled companies, or at least some of them, cannot extract benefits from the fact that they belong to a group of companies - the (good) image of the group could facilitate obtaining external credit, the complementarity of company affairs would promote the enlargement of markets, the transference of technology and shared services could potentiate productivity. But what is typical is the instrumentalization of the controlled companies by the controlling companies, for the promotion of their own ends. Normally, whoever possesses (economic) power uses it primarily to their own interest.
  • 2) Available at
  • 3) Section 7 contains special rules on the calculation of the voting rights, relevant and irrelevant, to the determination of control. 
  • 4) See the first paragraph of no. 2 of the General Comments: "the group of companies - and not the single company - is the prevailing form of modern enterprise".
  • 5) The "enterprise" theories developed by case law and doctrine in the USA are on the same track - See for ex. K.A. STRASSER, "Piercing the Corporate Veil in Corporate Groups", Connecticut Law Review, 2004-2005, 646 et seq.
  • 6) Nevertheless, the proposed Directive on single-person limited liability companies (Societas Unius Personae - SUP) - COM (2014) 212 final - in no. 1 of article 23 expresses that: "The single-member shall have the right to give instructions to the management body". But no. 2 adds: "Instructions given by the single-member shall not be binding for any director insofar as they violate the articles of association or the applicable national law".
  • 7) Or the controlling "enterprise". 
  • 8) As the interest of the controlling company is the ultimate reference - the satisfaction of the controlled companies' interests is instrumental for the overall satisfaction, ultimately, of the interest of the controlling company (primarily, the common interest of its shareholders). 
  • 9) The shareholders of the parent company also have the right to information about the relations between companies in the group (Section 12).
  • 10) However, controlled companies should, in some cases, have the right to be informed about the compatibility of certain behaviours demanded by the parent company in the "interest of the group" - P.O. MÜLBERT, "Auf dem Weg zu einem europaischen Konzernrecht?", Zeitschrif für das gesamte Handelsrecht und Wirtschaftsrecht (ZHR), 2015, 660, et seq.
  • 11) This seems to be the understanding of the so-called Rozenblum doctrine (on which the EMCA is inspired - see Comments to Section 16), risen on 4/2/1985 in a decision of the french Cour de cassation's criminal section - see for ex. M. E. BOURSIER, "Le fait justificatif de groupe dans l'abus de biens sociaux: entre efficacité et clandestinité - Analyse de vingt ans de jurisprudence criminelle", Revue des Sociétés, 2005/2, 279, 295 et seq. But it should be added that the majority of the decisions of the same section that confronted the same question did not apply the justifying fact of a group - see ibid., 281.
  • 12) According to paragraph (2) of the same Section, this is not applicable to wholly owned companies - so it does not caution the interests of the company's creditors.
  • 13) Forum Europaeum on Company Groups, "Proposal to facilitate the management of cross-border company groups in Europe", Direito das Sociedades em Revista (DSR) 14 (2015), 16 and 23, no. (11) - the text appears in Portuguese and in the original English version. Various members of the Forum are also members of the EMCA group.
  • 14) Contrary to the Proposal of Directive altering the Directive 2007/36/EC COM (2014) 213 final, of 9/4/2014), article 9-C, number 1 now grants Member-States the task of defining the material transactions. 
  • 15) This report was generally mandatory in the referred proposal of Directive from 2014.
  • 16) With a similar understanding, see A. TARDE, "Die verschleierte Konzernrichtlinie - Zu den neuen EU-Vorgaben für related party transactions und ihren Auswirkungen auf das deutsche Recht", Zeitschrift für Unternehmens-und Gesellschaftsrecht (ZGR), 2017, 382, 387-388.
  • 17) Note that in the proposal of 2014 the possibility of exclusion was only foreseen for wholly controlled groups.
  • 18) See also T. H. TRÖGER, "Corporate groups", SAFE Working Paper n. 66 (2014), 40.
  • 19) See the Comments to Section 15.
  • 20) Critically analysing various justifications, see J. M. COUTINHO DE ABREAU/A. SOVERAL MARTINS, in Código das Sociedades Comerciais em Comentário (Directed by Coutinho de Abreu), vol. VII, Almedina, Coimbra, 2014, 143 et seq. (in regard to art. 490 of the CSC).
  • 21) In this line of thought, see for ex. Nina A. Mendelson's proposal, "A control-based approach to shareholder liability for corporate torts", 102 Columbia Law Review, 2002, 1271 et seq.
  • 22) P. MUCHLINSKI, "Limited Liability and Multinational Enterprises: a Case for Reform?", Cambridge Journal of Economics, 2010, 34, 916 et seq.
  • 23) P. MUCHLINSKI, (nt. 22), 922, quoting Philip Blumberg (author of the transcript in the text). Note, in this regard, Muchlinski's regulatory proposal (ibid., p. 926-7): based on the enterprise liability principle, a statutory rule should attribute liability to the parent company for negligent acts of the subsidiary.
  • 24) K.A. STRASSER, (nt. 5), 645: "Piercing the veil is the most familiar and most frequently used tool to limit parent company shareholder liability".
  • 25) About these tools, J.M. COUTINHO DE ABREU, "Responsabilidade civil nas sociedades em relação de domínio", Scientia Iuridica, 329, (2012), 223 et seq. On some of them and on others see K. J. HOPT, "Groups of companies - A Comparative Study on the Economics, Law and Regulation of Corporate Groups", 2015 (available at Note still MUCHLINSKI's reference (nt. 22), 229, to (minority) case law in Australia and the USA that in some circumstances makes the parent company liable for violating the duty of care towards third parties; it should also be added that, in 2012, the British courts recognized a duty of care of the parent companies towards the employees of the companies in the group - see L. TALBOT, Critical Company Law, 2nd ed., Routledge, London/New York, 2016, 84-85.