Reconciling the European Registered Capital Regime with Modern Corporate Reorganization Law: Experience from the Czech Insolvency Law Reform

In this article, I deal with the apparent conflict between certain provisions of the Second Company Law Directive, in particular its Article 25 regulating increases of the share capital of European joint-stock companies, and the basic logic of non-liquidation insolvency proceedings, usually referred to as reorganization.On their face, the Second Directive's rules that give old equity a de facto veto on the new capital structure of the insolvent company seem to present a serious obstacle to European national legislators wishing to provide their companies with an economically sound reorganization law. Using the ECJ case law on the Second Directive, I conclude that that appearance is incorrect and that the Directive does not in fact present an insurmountable hurdle to the adoption of rational corporate insolvency law at national level. However, in order to reach that conclusion, one needs not only to look beyond the wording of Articles 25 and 29 of the Second Directive but also beyond the first impressions that may arise upon a cursory review of the related ECJ case law.As a side note, I also mention the Prospectus Directive and its disclosure requirements. The results of that review turn out less up-beat and I conclude by suggesting that the European legislator revisits and amends that Directive so that it does not present an unnecessary (duplicative) administrative burden on reorganizing European companies.