5.4 The Legal Capital Regime Under EU Company Law 157discretion. (a) Member States were made able to permit public limited-liability
companies to allot shares for consideration other than in cash without requiring
them to obtain a special expert valuation in cases in which there is a clear point of
reference for the valuation of such consideration.^121 (b) Member States can allow
public limited-liability companies to acquire their own shares up to the limit of the
company’s distributable reserves (the upper limit of 10% was thus abolished). The
period for which such an acquisition may be authorised by the general meeting
was increased (from 18 months to five years).^122 (c) Member States were made
able to permit public limited liability companies to grant financial assistance with
a view to the acquisition of their shares by a third party up to the limit of the com-
pany’s distributable reserves.^123
Directive 2006/68/EC is not a departure from the fundamental objectives of the
legal designed capital regime. In Europe, the legal capital regime not only protects
creditors. It plays an important role in corporate governance. However, it was in-
dicated in the Directive that it is necessary to “proceed without delay to a general
examination of the feasibility of alternatives to the capital maintenance regime
which would adequately protect the interests of creditors and shareholders of a
public limited liability company”.^124
Basically, Directive 2006/68/EC reflects an unfortunate change into Anglo-
American thinking. Under continental European laws, the management of the firm
is constrained by shareholders’ pre-emptive and veto rights. Shareholders’ rights
and the governance structure of the company are expected to contribute to the
long-term survival of the firm. The Anglo-American way of thinking is that share-
holders should have weaker rights and that management should be constrained in
other ways, in particular by disclosure and the capital market (see Volume I).
Legal capital regime for SPEs. The core components of a legal capital regime
can be found even in the proposal for a SPE Regulation. The SPE Regulation pro-
vides for staggered constraints on the distribution or use of certain asset classes in
the balance sheet. Those constraints are nevertheless less restrictive compared
with the legal capital regime for public limited-liability companies.
First, the SPE Regulation requires the existence of legal capital. There must be
capital divided into shares and that capital must be fully subscribed. The statutory
minimum capital requirement is reduced to €1. The company can also have re-
serves according to its articles of association.
Second, the use and distribution of capital is constrained by the SPE Regulation
and the articles of association. (a) The articles of association of an SPE will con-
tain many provisions relating to capital and its use. The SPE Regulation lays down
how articles of association can be amended. (b) Shareholders decide on increase
of share capital, reduction of share capital, distribution to shareholders, and
amendments to articles of association. (c) There are restrictions on the reduction
of capital. (d) In addition, the SPE Regulation regulates distributions to sharehold-
(^121) Recital 3 of Directive 2006/68/EC.
(^122) Recital 4 of Directive 2006/68/EC.
(^123) Recital 5 of Directive 2006/68/EC.
(^124) Recital 2 of Directive 2006/68/EC.