Klaus J. Hopt
Max Planck Institute for Comparative
International Private Law and ECGI
Corporate Governance in Europe : A Critical Review of the European Commission’s Initiatives on Corporate Law and Corporate Governance
European corporate law and corporate governance are moving ahead beyond expectation. Some British voices called this “a renaissance in the past decade”. In December 2012, the European Commission came forward with an Action Plan that combines both corporate law and corporate governance rules and contains sixteen disparate initiatives partly to be implemented through Directives, partly through non-legal measures. Meanwhile a fight on the Draft Shareholder Rights Directive is going on in the European Council and the Parliament, with major compromises pending in 2015. Further corporate law harmonization measures are under way, in particular the proposal of Single-Member Private Limited Companies. The European Court of Justice’s case law has a far-reaching impact on the free movement of corporations in the European Union, but is not able to singlehandedly create European corporate law with decisions based on the freedoms of the Treaty. On this background the article analyzes seven critical areas of European Corporate Law and Governance as of 2015: Empowering shareholders and institutional investors; controlling shareholders, groups of companies and related party transactions; new European corporate forms; corporate and bank governance; free transfer of seat without new incorporation; corporate finance and capital maintenance and European takeover law reform. The article ends with looking into the goals, methods and scope of European corporate law-making. Free mobility and minimum protection have to be balanced. Transparency as a method of regulation strengthens private autonomy and supports market forces. Harmonization must be limited to the core areas of corporate law, and national and European corporate law will need to complement one another. It remains to be seen whether the codification plans of the Commission and the private model law initiatives will produce convincing results. In sum any step to more European law in the before-mentioned core areas should not only be left to the forces or deadlocks of political compromise, but in order to be really useful will need to be addressed in a careful, ongoing, policy-oriented, economic and comparative law discussion.
I. European Corporate Law and Corporate Governance Moving Ahead: The EU Commission’s Action Plan of December 2012, The Draft Shareholder Rights Directive as of 2015 and Further Ongoing Harmonization Projects
1. Corporate Governance, the Renaissance of European Corporate Law and the Timing of the New Initiatives of the EU Commission Parallel to the 2015 Vision of a European Capital Market Union
“(N)ext to addressing the financial crisis,” corporate governance was “the central leitmotif of the year 2012” in Germany and other European countries. While in the early 1990s, corporate governance was still in its infancy, this subject matter is now an established field in academia, practice, and legislation also in Europe, both at the European Union and the Member States level, one that is not identical to corporate law but is closely linked to it. In 2010/11 the EU Commission jumped on the bandwagon of the international corporate governance movement and highlighted it as urgent in Green Papers on the corporate governance of financial institutions, on audit policy and on corporate governance in general. After the public Consultation on the Future of European Company Law,5 which garnered numerous responses from nearly all the Member States and some other countries from outside the European Union,6 on 12 December 2012, the EU Commission presented its (second) Action Plan on European Company Law and Corporate Governance7 and thereby highlighted the importance it attributes to European corporate law. This importance has been reflected in two statements from England and Germany: “European corporate law has enjoyed a renaissance in the past decade. Fifteen years ago, this would have seemed most implausible.”
And European corporate law is the “first and most important field of legal harmonization” and “the area of private law … whose Europeanization is developed the furthest.” This view is widely shared in Europe, and by the author of this paper, though it is not undisputed. In the meantime the EU Commission (also in its new composition of 2014) has pursued some of its proposals in the Action Plan, in particular by proposing (i) a new Directive reforming the Shareholders Rights Directive of 2007 with far-reaching proposals12 and (ii) a Directive on single-member private limited liability companies.13 Both of these are very controversial, have led to considerable changes by the European Council in 2015, and will be analyzed in detail in this article.