“DISCOVER YOUR TALENT” SUMMER

WEEK: LAW

INTRODUCTION TO GLOBAL
BUSINESS LAW CONCEPTS

Universita’ Commerciale Luigi Bocconi

Patrick J. O’Malley, Esq.
June 2013
© 2013 Patrick O’Malley
 A bit about
b t me

 -US attorney-at-law (NY, FL, MA) & Solicitor in

E l d&W
England Wales
l
 -Focus on international capital markets work (IPOs)
 -Also,
Al corporate and d VC iinvestments
 -Work in Providence, Spain, Boston, Palm Beach,
London and Milan
 -Now, independent int’l legal consultant & law prof:
 -To
To date,
date 13 countries on 4 continents for
universities, professional training bodies and
corporations
p
 A bit about you

 Who here is considering majoring in law /

legal studies?
 Who is considering other disciplines?

 Be forewarned, one way or another, you

cannott escape the
th law….
l
4
 Study of the Law: GOALS
 Gives you sense of importance of law and how it
permeates contemporary lifelif on all
ll levels
l l (directly
(di l &
indirectly business)
 Do you recognize the saying, “Ignorance of the law is
no excuse”?
 Gives a chance to reflect on how law has developed
and how it affects public life (e.g. political, economic,
cultural) and private life (e.g. contracts)
 Gives you sense of the extensive legal universe (very
useful for future, both in business and other spheres)
 Comparative
i Law Methodology
h d l

 Beware of comparing specific points (i.e. Consumer or

investor protections
protections, creditors rights) without taking into
account whole legal system
 Realise various legal
g systems
y have base/radical
philosophical differences (e.g. France vs UK/US re:
“freedom”)
 Legal systems
s stems also result
res lt from local history,
histor culture,
c lt re
politics and language
 Often, “false
false friends
friends” or different terminology: “notary”,
notary ,
“liability”, “responsibility, “public”, “sentence”,
“doctrine” etc.
 This
Thi even affects
ff t ththe Anglo-American
A l A i law
l world ld
 The Law

 That which is laid down,

down ordained or
established.
 Generically, a body of rules of action or
conduct pprescribed byy controllingg authority,
y
and having binding legal force.
 That which must be obeyed & followed by
citizens subject to sanctions or legal
consequences isi a law.
l
 The Law (cont’d)

 Law is a solemn expression of the will of the

supreme power of the State
 “Law” of a state is found in its statutory &
p
constitutional enactments, as interpreted byy
its courts and, in absence of statutory law, in
the rulings of its courts
courts.
 Comprises both statutory & case law
(j i
(jurisprudence)
d )
 The Law (cont’d)
 Body of principles, standards & rules promulgated
by government or authority of some sort (positive
law v. natural law: inherent rights, conferred not by
act of legislation but by "God, nature or reason.")
 Command which obliges g a person
p or persons
p &
obliges generally to acts (e.g. Duties- taxes) or
forbearance of a class ((e.g.
g Crimes,, torts))
 Includes body of recognized rights which can be
enjoyed and enforced in some way (e.g. civil rights,
contracts)
 The Law (cont’d)
 General rule of human action (cognizance of only
external acts), enforced by a determinate authority
which authority is human, and among human
authorities that which is paramount in a political
society (as opposed to idea of natural or divine law)
 With reference to its origin, it is derived either from
jjudicial precedents,
p , from legislation
g or from custom
 The Rule of Law
 Definitions:
 a state of order in which events conform to the
law
 the doctrine that no individual is above the law and
that everyone
y must answer to it
 principle that every member of a society, even a
ruler must follow the law
ruler,
 one of the cornerstones of democratic society,
meaning that everyone is subject to the law
 Rule of Law cont’d

 A legal system in which rules are clear,

clear well-
understood, and fairly enforced, including
property
t rights
i ht andd enforcement
f t off contracts
t t
 The extent to which agents
g have confidence
in and abide by the rules of society, and in
particular the quality of contract
enforcement, the police, and the courts, a
well as the likelihood of crime and violence
 The Rule of Law is a sine qua non to the
ability of a given society to properly do
b i
business, trade,
t d commerce…
 In its absence, chaos and lack of due human
development
 If interested,
interested see what Transarency
International says about this:
transparency.org
 The “Why?”
Why? of studying
law
 You may be future lawyers, business managers, directors,
entrepreneurs
t & professional
f i l investors
i t - who
h will
ill regularly
l l
make key legal &/or business decisions on many matters –
or you may be gov
gov’tt officials or working in organisations
(incl. NGOs) dealing with law in some way
 To make good decisions, you need to be familiar & feel
comfortable with business legal framework (laws &
regulations)
g ) applicable
pp to yyour situation, whether in
Europe, the US or elsewhere globally
 Globalization has also led to extensive legal convergence*
 The “Why” of studying law
 You need not always be the specialized legal expert, but you do
need to be proactive in ISSUE SPOTTING & seeking good legal
counsel/advice depending on the facts of your situation
 Explosion
p of “legal
g risk”: both US & EU legal
g frameworks
constantly changing, more complicated than ever; thus more
difficult than ever to be a lawyer, manager, director,
entrepreneur or professional investor
 Most of you will see this further complicated by extensive US &
EU company lawsl applicable
li bl to your multinational
l i i l or
subsidiaries (ergo comparative viewpoints- convergence &
coordination )
coordination*)
 Globalized business laws: today
ultimately a question of good “corporate
g
governance”

 All those considerations that a company and

its agents need d to actively
l consider
d on an
ongoing basis as they involve exposure, both
on a personal/individual and a corporate level,
to either civil, administrative or criminal
liability, or administrative, regulator, stock
market or private party enforcement action
(in addition to serious reputational damage) ...
 Key areas of business law

 Basis: idea about both US & EU

company/securities laws a good start

 However, need to be attentive to related areas, such as:

 IIntellectual
ll lPProperty LLaw (EU & national,l US)
 Tax Law
 Labour/Employment Law (US, EU & national)
 Antitrust/Competition
p Law (M&A,
( JJVs, ppricing,
g
contracts/sales distribution, etc.)
 Contract law
 Commercial Law (including nat’l/regional
sanctions & import/export
p p restrictions,,
sanctions, anti-bribery/corruption)
 A few key areas of business
law
 Tort Law (multi
(multi-jurisdictional:
jurisdictional: plaintiff &
defendent): consumers, investors &
competitors
 Environmental/Health-safety Laws
 Banking laws
 Money laundering
 Insurance laws
 Anything else?
 Defining the Legal Aspects of Corporate Law- a few
select SOURCES

 Laws (“hard” and “soft”)-

 national (French, Italian, UK), “transnational” (EU Directives &
Regulations), sometimes international (OECD, WTO, UN, other
treaties),
) sometimes local ((autonomous regions,
g federal states- länder,
etc.)
 Regulations (i.e. those enacted pursuant to national or EU
l
laws))
 Listing Rules (i.e. NYSE Euronext [Paris], Deutsche Börse or
AIM lilisting
ti rules)
l )
 Contractual (i.e. List of limitations, reporting obligations
imposed on distressed company pursuant to a high-yield
high yield bond
offering).
“Deputization”
Deputization
 Key point: “DEPUTIZATION”
DEPUTIZATION - Interplay btw EU &
national company laws, as well as federal/state rules
in US

 Idea is for law & regulations

g to strengthen
g
national company law systems as well (US
originated deputization, self-reporting, etc.):
 US & EU sense of “subsidiarity”:
“ 4 lines of “defense”
“
against corporate malpractice that destroys wealth (1st
internal company
p y controls, 2d independent
p third pparties,
3d Supervision, 4th law enforcement)
 In US coordination btw state & federal officials, key
roles assigned to various “Gatekeepers”
Gatekeepers – later in course
will look at federal reform of fin. law & impact on CO
GO – 3-pronged approach
 C
Current
t global
l b l legal
l l approachh
(e.g. bribery, insider trading)

Remedying
(internal)
Self-reporting &
Prevention
Cooperation

Monitoringg&
Whistleblowing
Whi tl bl i
Control (“top Deputization
(”bottom up”)
down”)
 4 corporate governance lines of
defense

1st line: insiders &

monitoring/controls

2d line: independent
professional gatekeepers

3d line: external supervisory

b di
bodies

4th line:
li lawl enforcement
f &
regulators
 Wh do
Why d we needd laws
l & regulations?
l ti ?
i.e., Why do they exist?

Let s discuss this point.

Let’s point
Are
Are there legal principles that
transcend individual legal systems?
 Natural law

 Or jus naturale, originally posited by Roman

jurists
 Originally
O i i ll denoted
d t d a systemt off rules
l &
principles to guide human conduct which,
apart from any enacted law or legal systems
particular to one people,
p p p , might
g be discovered
by rational intelligence of man/woman
 Natural law
 Law that grows out of and conforms to his/her
nat re ((whole
nature hole mental
mental, moral & ph
physical
sical
constitution)
 In the
h ethical
hi l realm,
l consists
i in
i practical
i l universal
i l
judgments- express necessary & obligatory rules of
h
human conduct
d promulgated
l d through
h h human
h reason
by author of human nature
 Rules applicable to all women/men in all times
periods, everywhere, regardless of culture, religion
or other specific status**
 Ultimate rationale of the law
– capital
p markets example
p
 Since people/companies imperfect,
dishonest, prone to error, etc., the law /
regulations try to “bridge the gap” to
ensure a level of trust for investors,
lenders and working g capital
p markets
(based on disclosure, accounting &
g
auditing\”Co Go”);
); thus ensuringg access
to needed finance for businesses to grow
p
& operate
 Law applied: in the news
 Insider Trading:
http://dealbook.nytimes.com/2012/06/15/raja
t-gupta-convicted-of-insider-trading/
g p g
 http://online.wsj.com/article/SB10001424052
702303822204577468470878668722 ht l#
702303822204577468470878668722.html#a
rticleTabs_video
 Corruption:
http://www youtube com/watch?v=g1n0kat
http://www.youtube.com/watch?v g1n0kat_ii
4s&feature=related
 THE END

Thank you
o

© Patrick J. O’Malleyy 2013