国际商法英文版：2 Chapter4.doc

Chapter 4 Multinational Enterprise ContentsSummary2Outline3Questions 16Vocabulary19Part1: SummaryM.N.E. (Multinational Enterprise) is a business organization which has direct investments abroad in different markets. It is a company that sells, markets, and manufactures in many countries. Large firms whose operations and functions span national borders. Operates in different countries and adjusts products and practices to each at a higher relative costs.Shareholders and stockholders who do not intervene in the day-to-day operations of the corporation but the only interest is in the return of their investments. The purpose of the corporation is to make a profit (goals and objectives). The board of directors is responsible to the shareholders with right to dividends not the investment per se, they are the legal representatives, and can be sued. Part2: OutlineChapter 4 - The Multinational Enterprise1.Introductiona.The organization and regulations of a business is a matter of municipal law.A.THE BUSINESS FORM1.Introductiona.The organizational form a business takes is a matter of municipal law.1)States authorize or forbid different business forms based on:a)Political ideology.b)Economic and social needs.2)The company laws of every country in the world are unique in many ways.3)A prudent business investor planning to organize a firm abroad will investigate in detail the company laws of the particular country involved.b. For comparative and general planning purposes, it is useful to know the legal derivation of national company laws in categorizing business forms.1)Most national company laws are derived from:a)The civil law, especially French and German law.b)The common law, especially English law.2.Business Forms in Civil Law Statesa.Company: An association of persons or of capital organized for the purpose of carrying on a commercial, industrial, or similar enterprise.b.Partnership: A company of two or more persons who co-own and manage a business and who are each liable to the full extent of their personal assets for its debts.1)Limited partnership: A company of two or more persons, at least one of whom has unlimited personal liability for the debts of the business and at least one other who is an investor having limited liability.2)Silent partnership: A secret relationship between two or more persons, one of whom carries on a business in his name alone without revealing the participation of the other who has limited personal liability.3)Partnership limited by shares: A company of one or more general partners who have unlimited personal liability for the debts of the company and limited participation by investors in the form of shares. The company is taxed as a corporation.c.Corporation: A company of capital whose owners have limited personal liability.1)Stock corporation: A corporation that can raise money in the public marketplace through the sale of freely transferable shares. Its financial statements have to be disclosed to the public.2)Limited liability company: A corporation owned by members that does not issue negotiable share certificates and is subject to minimal public disclosure laws.3.Business Forms in Common Law Statesa.Company: An association of persons organized for the purpose of carrying on a commercial, industrial, or similar enterprise.b.Partnership: An association of two or more persons who co-own and manage a business for profit and who are each liable to the full extent of their personal assets for its debts.1)Limited partnership: A partnership consisting of one or more general partners who manage the business and who are each liable to the full extent of their personal assets for its debts, and one or more limited partners whose liability is limited to the funds they invest.2)Secret partnership: A partnership in which the participation of one or more persons as partners is not disclosed to the public by any of the partners. All of the partners have unlimited personal liability.c.Joint stock company: An unincorporated association of persons whose ownership interests are represented by transferable shares.1)The shareholders have unlimited personal liability.d.Business trust: A business arrangement in which the owners of a property, known as beneficiaries, transfer legal title to that property to a trustee who then manages it for them.1)The beneficiaries hold transferable trust certificates entitling them to the income generated by the property and a residual equitable share at the time the trust is terminated.2)The trustee has unlimited personal liability while the beneficiaries have limited personal liability.e.Corporation: A separate juridical entity owned by shareholders who may have limited, unlimited, or no liability.1)Public corporation: A corporation that can raise money in the public marketplace through the sale of freely transferable shares. Its financial statements have to be disclosed to the public.2)Private corporation: A corporation that may not ask the public to subscribe to its shares, bonds, or other securities and which is subject to less stringent public disclosure laws than a public corporation.3)Limited liability company: An unincorporated business association.a)Treated as a partnership for tax purposes.b)Provides limited liability for its owners.d.Limited liability for equity investors.1)Unlimited liability corporation: A corporation whose members are liable in the event that it is wound up and its assets are insufficient to cover its debts.2)No liability corporation: A corporation whose shareholders are not obligated to pay any call for contributions made by the firm or to pay any of the firms debts, but who will not receive any dividends if a call is due and unpaid.4.The Importance of the Separate Legal Identity of Companiesa.Juridical entities (such as companies) have legal identities separate from that of their owners.b.Significance:1)The liability of the owners is limited to their investment in the company.2)The owners are neither managers nor agents nor representatives of the company.3)The rights and benefits accruing to the company belong to the company and not its owners.a)The property rights of a company can only be claimed by that company.Case 4-1.Case Concerning Barcelona Traction, Light, and Power Co. (Second Phase)B.THE MULTINATIONAL ORGANIZATION1.The Parent Companya.Note: The following structures are considered in order of their increasing complexity.b.The Nonmultinational.1)Defined: A domestic firm functioning in the international marketplace through a foreign agent.2)Note: Neither the principal nor the agent are truly multinational enterprises because neither operates outside of its home state.c.The National Multinational.1)Defined: A firm in one country the “parent” that operates in other countries through branches and subsidiaries.a)Branch: A unit or a part of the parent (such as an overseas purchasing office, assembly plant, manufacturing plant, or sales office).b)Subsidiary: A company organized as a separate legal entity that is owned by the parent.d.The International Multinational.1)Two or more parent companies located in different states operate through jointly owned subsidiaries in several states.e.Public Transnationals.1)Defined: A government-controlled multinational enterprise created by treaty between two or more states.2.The Subordinate Structurea.Subordinates subject to direct control of the parent:1)Representative office: A foreign contact point where interested parties can obtain information about a particular firm.a)It does not do any business on its own.2)Agent: An individual who is employed as an independent representative of a firm.a)Agents are subject to the supervision of the parent firm (or principal).b)Their authority is limited to what the parent delegates to them.3)Branch: A larger unit of the parent company which involves not only the placement of individuals in a particular locale, but also the establishment of a facility, such as an assembly plant, mining operation, or service office.a)The authority of branch personnel is limited to what the parent has delegated.b.Disadvantages of these subordinates:1)The parent has to assume all of the risk of investing abroad.2)A foreign firm (or its agent or its branch) is often taxed at higher rates than local firms.3)Many developing states require local participation in order for a foreign firm to either invest or expand its local investment.c.Firms not subject to the direct control of the parent:1)Subsidiary: An independently organized and incorporated company.a)Advantages:1The subsidiarys company status insulates the parent from unlimited liability.2Locally organized companies are commonly entitled to certain tax benefits that foreign branches are not.2)Joint venture: An association of persons or companies who are involved in a “collaboration for more than a transitory period.”a)Business form: May be any type of business form (e.g., an association, a partnership, a limited partnership, a secret partnership, or a limited liability company).b)Advantages:1The investors share the risk.2Entry into foreign markets is usually easier for a multinational affiliated with a local joint venturer.3)Holding company: A subsidiary company that in turn owns other subsidiaries.a)Reason for setting up holding companies:1To establish a consolidated management team for a group of subsidiaries or subsidiaries owned by different parents.2For tax advantages.b)Business form: Most commonly a holding company is organized as a limited liability company whose shares are held by its parent or parents.C. INTERNATIONAL REGULATION OF MULTINATIONAL ENTERPRISES1.Several International Organizations Have Promulgated Rules of Ethical Behavior for Multinational Enterprises, including:a.Organization for Economic Cooperation and Development (OECD).b.International Labor Organization (ILO).c.International Chamber of Commerce (ICC).2.These are only Suggested Rulesa.Binding international codes do not exist as yet.Reading 4-1. Proposed ISO Standard for Global Business ConductD.HOME STATE REGULATION OF MULTINATIONAL ENTERPRISES1.Introductiona.The most important forms of home state regulation are:1)Regulation of competition.2)Regulation of injuries caused by defective products.3)Prohibition of sharp business practices.4)Regulation of securities.5)Regulation of labor and employment.6)The establishment of accounting standards.7)Taxation.b.Some of these rules are applied extraterritorially by home state, most notably:1)Regulation of competition.2)Regulation of injuries caused by defective products.3)Prohibition of sharp business practices.c.The country that has been most willing to apply its laws extraterritorially has been the United States.1)The European Union, to a lesser extent, has also begun to apply its internal regulations extraterritorially.2.Unfair Competition Lawsa.United States Unfair Competition Laws.1)Sherman Antitrust Act of 1890 is the principal US law regulating anticompetitive behavior.a)Section 1 of the Act prohibits contracts, agreements, and conspiracies that restrain interstate or international trade.b)Section 2 of the Act forbids monopolies and attempts to monopolize commerce or trade either between the states of the US or in international commerce affecting the US.2)Clayton Act of 1914.a)Defines certain specific acts that constitute unfair business competition, including:1Exclusive dealing agreements and tying clauses.2Mergers that result in a monopoly.3Interlocking directorates.3)Robinson-Patman Act of 1936.a)Makes price discrimination illegal.b.Enforcement Provisions of US Antitrust Laws.1)This is one of the two most controversial aspects of the US antitrust laws.2)The provisions:a)US Justice Department may bring criminal suits for egregious violations.b)US Federal Trade Commission may bring civil actions (notably for injunctions) to ensure full compliance.c)Private persons may sue and recover treble damages for injuries they have suffered.c.Extraterritorial Application of US Antitrust Laws.1)The second controversial feature of American antitrust law.2)Statutorily authorized: The Sherman Act declares that it applies to conduct affecting “trade or commerce among the several states, or with foreign nations.”3)Judicially imposed limits on the extraterritorial application of the US antitrust laws.a)Personal Jurisdiction Requirements.1Jurisdiction may be based on either:aSection 12 of the Clayton Act.(1)Jurisdiction can be extended to a defendant who “transacts business” in the forum jurisdiction.bApplicable state “long arm statutes.”2Due process forbids a court from assuming personal jurisdiction unless a defendant has “minimum contacts” with the forum state.aContemporary rule from Worldwide Volkswagen Corp. v. Woodson (U.S. 1980) requires a showing that:(1)The defendant purposefully did business in the forum state.(2)The defendant reasonably could have anticipated that it would have to defend itself in the forum state.b)Subject matter jurisdiction requirement.1The courts have created two tests for determining when they have subject matter jurisdiction in an American antitrust case.aEffects test.(1)Defined: Companies carrying on business outside of the US will come within the subject matter jurisdiction of a US court if their business activity is:(a)Intended to affect US commerce.(b)Not de minimis.bJurisdictional Rule of Reason test(1)Defined: A court will ask the following three questions before assuming jurisdiction over a foreign business for violation of US antitrust laws:(a)Was the alleged conduct intended to affect the foreign commerce of the US?(b)Was the conduct of such a type and magnitude to violate the Sherman Act?(c)As a matter of international comity and fairness, should a court assume extraterritorial jurisdiction?(2)Application of test: The third of the three questions requires the courts to balance the interests of the US in assuming jurisdiction against the competing interests. The factors the courts balance include:(a)The degree of conflict with foreign law or policy.(b) The nationality of the parties involved.(c)The degree to which other countries will obtain compliance.(d) Relative importance of violations to US commerce as compar