This master thesis takes its starting point in The Danish Companies Act and investigates whether this contains an unintended adverse effect causing a risk of limited liability companies being dissolved. In particular, the thesis focuses on the situation where incapacity in the board of directors as a result of conflict of interests eventually causes the limited liability company to be incapable of appointing the management prescribed by the regulation or the company’s articles of association. As a consequence the company may be dissolved by the bankruptcy court on request from the Danish Business Authority. Firstly, the thesis identifies under which circumstances members of the board of directors are considered to be legally disqualified according to § 131 of the Danish Companies Act. Because of a limited amount of relevant case law legal literature is included in the legal analysis to provide a complete interpretation. The analysis shows that in establishing incapacity it is of particular relevance to define the terms “agreement” and “company’s interests”. The legal analysis also identifies the legal consequences of incapacity, for example whether incapacity automatically causes a decision to be invalid. Secondly, as the relationship between the shareholders and the board of directors is regarded a principal-agent relationship, the economic theory Principal-Agent Theory is applied in order to identify specific strategies for the shareholders to avoid conflict of interests proactively. The strategies identified can be carried out either before entering a PA-relation in order to ensure that all applicants are capable, or afterwards in order to avoid the board of directors from “shirking”. Lastly, the thesis combines the findings of the legal analysis with those of the economic analysis in an interdisciplinary analysis. The purpose of this analysis is to evaluate the shareholders’ possibilities to apply the strategies identified in the economic analysis within the relevant, existing legal framework, and to suggest how to adjust the regulation in order to ensure optimal conditions for shareholders in order to avoid the limited liability company being dissolved.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||69|