In this paper, I analyse some of the policy issues concerning the formation of pan-European securities markets, as well as the regulatory responses which are discussed at EC level with reference to regulated markets and issuers disclosure. By “pan-European securities markets” I intend to refer to those regulated markets which have many intermediaries connected, via remote access, from several European countries and offer trading services with respect to securities issued by companies domiciled in several Member States. I use the same concept to indicate also the primary markets where pan-European securities offers take place. My purpose is to assess the impact of some of the reforms included in the Financial Services Action Plan on the development of pan-European (primary and secondary) markets.

The question of how to optimise corporate governance with regard to the structure of remuneration systems and, particularly, executive compensation is presently more hotly debated than ever. Since flawed executive pay structures are considered to have contributed to the financial crisis by encouraging short-term risk-taking at the expense of long-term security, remuneration systems are re-evaluated at national, European and international level. The analysis of current regulatory and legislative reform initiatives of selected countries in Europe (United Kingdom, Switzerland and Germany) and the United States shows the fundamental common objective to sustain market confidence and promote financial stability by removing incentives for inappropriate risk-taking by firms. The internationally emerging remuneration model strives to ensure, to the widest extent possible, congruency between incentives and risks. The need for firms to concentrate on long-term rather than short-term performance is a recurring theme of the reform movement. However, a closer look at the different national regulatory and legislative initiatives reveals that the structural approaches to how to design a well-balanced remuneration system vary significantly as to the scope of application and the intensity and detail of the new regulation and legislation.

Post-trading activities such as clearing and settlement (C&S) constitute a central element in the integration of European financial markets. However, unlike other areas of financial services, C&S has received little legislative and regulatory attention and, as a result, important barriers to the cross-border provision of C&S services persist in the European Union. In order to remove some of these barriers, the financial industry created, under the auspices of the European Commission, the European Code of Conduct for Clearing and Settlement, a self-regulatory instrument aimed at achieving a smoother provision of cross-border C&S services. This paper uses the concepts of input/output legitimacy to analyse the Code's representative nature and effectiveness. It shows that, first, the Code has not received input from all the relevant constituencies potentially affected by C&S, and second, that there are serious threats to future compliance with the Code related to the competitive pressures of European financial markets. The paper also identifies the proposals to regulate C&S facilities at EU level as well as the new European supervision authorities in the financial field as elements which may highly contribute to the input/output legitimacy of cross-border C&S rules in the EU.

Europe has historically lagged behind the United States in viewing the primary role of company law as being to facilitate the operation of businesses in corporate form. In this respect, the report of the High Level Group of Company Law Experts (HLG) to the European Commission of November 2002 marks a distinct break with the past. In facilitative corporate law systems, disclosure is a key mechanism for the regulation of corporate governance agency problems. This paper questions the merits of singling out directors' disqualification as a pan-European sanction for the enforcement of corporate governance disclosure requirements. It argues that a more effective strategy for promoting consistency in enforcement could be to pay closer attention to the institutional allocation of regulatory responsibilities for corporate governance disclosure. It suggests a model in which responsibility for the monitoring and enforcement of corporate governance disclosure is located with securities regulators. Making securities regulators the primary regulators of corporate governance disclosure would promote pan-European consistency in monitoring and enforcement. Looking beyond disclosure to the actual exercise of internal control by shareholders, this paper also casts a sceptical eye over the HLG's views on the need for urgent EC intervention to address the problem of investor disenfranchisement. British market participants have made ingenious use of proxy mechanisms to ensure that underlying investors retain control over the exercise of voting rights attached to shares held on their behalf by nominees. This evidence suggests that the case for EC company law intervention to address problems that the market has proved unable to solve is weak. While the situation may be different in other Member States, the existence of such differences militates against top-down EC intervention.

When the European Commission published its “White Paper on modernisation of the rules implementing Articles 85 and 86 of the EC Treaty” in spring 1999 it triggered a broad discussion on the future legal framework of the enforcement of competition law in the European Union. The most important change, which the Commission suggested, consists in the decentralisation of the application of Article 81 section 3 EC. While anti-competitive agreements and concerted practices, which are prohibited by Article 81 section 1 can only be exempted, for the time being, by a Commission decision taken under Article 81 section 3 and Regulation 17/62 the Commission wants to give up that monopoly. According to the White Paper both national competition authorities and national courts of law will be in a position to directly apply Article 81 section 3. Among the first reactions to that proposal was that of ErnstJoachimMestmäcker to whom this paper is dedicated in longstanding respect and gratitude to celebrate his 75th Anniversary. He published an extensive, severe and outspoken critique as early as September 1999. His analysis has had a strong impact on academic discussions and public opinion in Germany, although it has not persuaded the European Commission which drafted a proposal for a regulation along the lines of the White Paper in late 2000. Again, Ernst-JoachimMestmäcker has reacted by a striking and even more elaborate critique which resumes and extends the discussion.

Alan Greenspan, the former Governor of the Federal Reserve, remarked in the context of the financial crisis that ‘even sophisticated investors got things badly wrong’. This comment throws a spotlight on quite how out of step and unrealistic general assumptions can be as regards markets and market regulation. From a consumer perspective, we may wonder what chance the average consumer has of getting things right, if sophisticated investors can get things so badly wrong?

Much of the legislation governing financial products and financial services is based on the classical view that economic agents, including consumers, are essentially selfish by nature, seeking to maximise their personal financial benefit, by acting in a rational manner and through making independent choices.

Of course, nobody pretends that this view is an accurate reflection of the economy, and even less so an accurate portrayal of human beings. Yet this forms the standard profile for modelling and thus the basis for assumptions which underpin much of the regulation governing the economy.

The European capital markets law imposes no precise requirements as to its enforcement. The four Framework Directives only state that Member States are to ensure that appropriate sanctions are imposed. This article analyses the different approaches to supervision of stock markets in Europe and the enforcement through private law.

The Forum Europaeum Konzernrecht (hereafter the Forum Europeum) in its Corporate Group Law for Europe puts forward principles and proposals for a harmonised European corporate group law.

A large number of new rules which rely on disclosure requirements have been introduced in EU corporate governance in recent years, to the extent that disclosure requirements seem to be the predominant if not the only regulatory method used. This article takes a critical look at this development with the aim of assessing whether too much reliance has been put on disclosure as a regulatory instrument in this area. The arguments in favour of disclosure requirements are studied, as are those situations where disclosure is most likely to prove an ineffective or insufficient tool. Furthermore, it is examined how the current disclosure regimes in EU corporate governance can be improved to ensure that they will be more effective.

The consequences of recent decisions of the European Court of Justice are that the Member States may not impose instant taxation on companies based only on their migration, but the Member States still do so. Secondary EU law provides tax neutrality only for a migrating SE. The prerequisites under which this tax neutrality is granted are so restrictive that their conformity with freedom of establishment is doubtful. As the European Court of Justice does not deny the right of Member States to tax increases in value at the time of realisation, a tax deferral concept might be a future solution.

Globalisation requires a competition law regime since this is an important element of the overall state economic policy. For countries in the developing world that are facing globalisation, a sound framework of competition law is crucial for solving the problems of private restraints on trade, such as boycotts against foreign firms, and of economic concentration. In particular, competition law plays a prominent role in ensuring that the rule of law is followed in a competitive market in modern society. This article discusses the issues arising in the development of the Korean economy and competition law, as an example of success in the progress of competition policy, and suggests proposals for further development.

The purpose of this paper is to illustrate – in an argumentative style – that once we refrain from the usual neoclassical assumptions and integrate transaction costs, imperfect foresight and bounded rationality into present neoclassical (spot and futures) market theory, we get a more realistic perception of the decentralisation of intertemporal economic decision making. The failure of most futures markets for goods and services is compensated by firms (‘hierarchies’), which are led by entrepreneurs in the sense of Knight (1921) who may be seen as surrogate forward traders of goods and services. We claim that the ‘more realistic assumptions’ of New Institutional Economics, inter alia, provide a better perception of what takes place behind the veil of ‘money and finance’ than neoclassical economics, and why it makes sense to occasionally limit liability and, as a consequence, apply forms of private or public regulation. It might also help to explain some aspects of the financial crisis of 2008.

In the Cartesio decision of December 2008, the European Court of Justice has legitimated the real seat theory for those Member States that require the presence of the administrative seat and the statutory seat in their territories as a condition for a company's valid formation. The Court, by an obiter dictum, has also put forward the idea that the transnational conversion is included in the freedom of establishment of Articles 43 and 48 as a form of international mobility. This article analyses the possible consequences of the Court's decision for regulatory competition in company law in Europe, taking into consideration both aspects.

The workforce in the EU is decreasing significantly compared to the US and Japan. This problem can to some extent be solved by having more women at the workplace. The European Commission is currently contemplating the introduction of obligatory quotas for women in the boardroom of private companies. In order to have a better understanding of the controversial and currently highly debated issue of obligatory gender diversity programmes in corporate governance, the Commission released a Green Paper on the EU Corporate Governance Framework in April 2011. By means of this Green Paper, the Commission invites all interested parties to submit their views on some important questions such as: should recruitment policies be more specific about the profile of directors to ensure that the board is suitably diverse? If so, how could that be best achieved and at what level of governance, i.e., national, EU or international? The present paper seeks to give an answer to these questions of the Commission. It examines at what level of governance gender diversity in the boardroom can be best achieved and also studies the effectiveness of obligatory and voluntary gender quotas in corporate governance as a tool to increase gender diversity in the boardroom.

The many legal forms for business organisations that first appeared in the United States during the last thirty years – the limited liability company (LLC), the limited liability partnership (LLP), the limited liability limited partnership (LLLP) and the statutory business trust – all combine the pattern of creditors' rights, or asset partitioning, that is traditional to the business organisation with the freedom of contract among investors and managers that is traditional to the partnership. To view these new entities as partnership-like is to treat the degree of freedom of contract as the essential difference between the traditional corporation and partnership forms; to view them as corporation-like is to treat the pattern of creditors' rights as the essential difference. While recent scholarship often takes the former view, the latter seems more accurate. History shows that much of the contractual inflexibility in the traditional corporation served merely to buttress its pattern of creditors' rights and that this inflexibility fell away upon the development of substitute sources of investor protection. The new forms are thus better understood as part of the continuing development of the corporate form rather than as entities more akin to the traditional partnership, which has in fact been evolving in a different direction. This article first develops this argument in terms of the trade-off between contractual freedom and the form of asset partitioning that to date has received the most scholarly attention, that is, limited liability. It then explores the evolution of the new forms from a less familiar perspective, focusing on the entity shielding component of asset partitioning.

The purpose of this article is to offer a wide-ranging consideration of the policy objectives underlying the derivative action. More specifically, it inquires into an indefinite, but fundamental, question that has received inadequate attention in the literature on corporate law theory in European and English law: what rationale or rationales justify the use of derivative actions? First, an initial analysis of the merits and demerits of the derivative action is presented. The article then analyses the role derivative actions may assume in enforcing corporate accountability. The question addressed is whether its purpose is primarily to deter misconduct or simply to compensate the company for the wrongdoing. The possible benefits and limitations of these rationales are explored. The article then examines the public image, or expressive value, of the derivative action. The purpose is to determine if some of the features inherent in the derivative action procedure enhance or detract from derivative actions being understood as a positive social force. Finally, it briefly considers strategies that can be pursued to reverse the negative effects of those forces that weaken the social meaning of derivative actions so that the action is more likely to be viewed as an instrument that affirms desirable norms in the corporate setting.

What specific corporate governance arrangements matter in the governance of public firms worldwide has been the subject of an ongoing debate in comparative corporate governance. In this debate, the role of cumulative voting has attracted increasing attention. Using a unique, hand-collected dataset of formal adoptions of cumulative voting in 1,060 Chinese listed firms during the period from 2002 through 2012, we extend the growing comparative literature to encompass, for the first time, the case of China. Our empirical inquiry shows that an overwhelming majority of the sample Chinese listed firms have formally embraced cumulative voting. Whereas cumulative voting is mandatory for blockholder firms (i.e., firms with a blockholder controlling more than 30 per cent of the outstanding shares) and elective for non-blockholder firms, the levels of cumulative voting adoption were similarly high by the end of 2012 (95.7 per cent and 89.3 per cent, respectively). Market reactions to the formal adoptions of cumulative voting have, however, been negative on the whole. As such, we argue that cumulative voting does not matter in China. This, as will be further argued, is attributed in large part to certain defining characteristics of the adopting firms, more specifically, the comparatively small size of their boards, the relatively low shareholding levels of (large) minority shareholders, as well as the pervasive presence of the overwhelmingly dominant shareholder. Weak public enforcement by the regulatory authorities and the near-absence of private enforcement through shareholder lawsuits are also important contributing factors. This research supports the view that the value of a particular corporate governance measure is dependent on the context, at both firm and country level. The research also has implications for the growing discourse on the global proliferation of corporate governance codes.

“A well-drawn stockholders' agreement entered into contemporaneously with the formation of a corporation is (generally acknowledged to be) the most effective means of protecting the minority shareholder”. In authorizing such agreements courts have come to recognize the needs of shareholders in close corporations who want to protect themselves from each other and from hostile invaders. Nowadays, shareholders experience little difficulty in enforcing voting or pooling agreements. But courts feel much more uncomfortable about the implications of shareholder agreements defining the business strategy of the corporation and interfering with the core function of the directors. Both, under German and US states' laws there is uncertainty about the shareholders' freedom of contract and the ground rules governing a contractual relationship between shareholders. This contribution will examine the common intellectual origins of shareholders' agreements under German and US laws. It will demonstrate where German and US corporate laws began to move apart and it will analyze to what extent one legal system might instruct the other.

The present contribution looks at the private international law regimes of EU Member States with regard to companies and their relationship with the provisions of the EC Treaty (“the Treaty”) concerning freedom of establishment. After the Centros judgment of the European Court of Justice (hereinafter usually referred to as “the Court of Justice”) and the avalanche of comments on this case, this issue is more topical than ever. But it would be wrong to say that it is new: the controversy about the meaning of Articles 43 and 48 EC [ex Articles 52 and 58 ECT] for national conflict-of-law rules regarding companies has been dragging on for at least fifteen years and, if anything, the equally illustrious Daily Mail judgment of the Court of Justice only quietened it down for a very brief period.