Boards of directors in European companies : reshaping and harmonising their organisation and duties / edited by Hanne S. Birkmose, Mette Neville, Karsten Engsig Sørensen.
2013
KJE2461 .B63 2013 (Map It)
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Title
Boards of directors in European companies : reshaping and harmonising their organisation and duties / edited by Hanne S. Birkmose, Mette Neville, Karsten Engsig Sørensen.
Published
Alphen aan den Rijn, The Netherlands : Kluwer Law International, [2013]
Copyright
©2013
Call Number
KJE2461 .B63 2013
ISBN
9789041141415 (hbk. : alk. paper)
9041141413 (hbk. : alk. paper)
9041141413 (hbk. : alk. paper)
Description
xxi, 399 pages : illustrations ; 25 cm.
System Control No.
(OCoLC)869880682
Bibliography, etc. Note
Includes bibliographical references (pages 367-399).
Record Appears in
Table of Contents
List of Editors
v
List of Contributors
vii
ch. 1
Introduction
1
1.01.
A Renewed Focus on Boards of Directors in the EU / Hanne S. Birkmose Karsten Engsig Sørensen, Mette Neville
1
1.02.
Duties of Directors / Hanne S. Birkmose Karsten Engsig Sørensen, Mette Neville
3
1.03.
Organisation of the Board of Directors / Hanne S. Birkmose Karsten Engsig Sørensen, Mette Neville
7
Part I Duties of Directors / Hanne S. Birkmose Karsten Engsig Sørensen, Mette Neville
11
ch. 2
Mapping Directors' Duties: Strategies and Trends in the EU / Hanne S. Birkmose Karsten Engsig Sørensen, Mette Neville
13
2.01.
Introduction / Edmund-Philipp Schuster Carsten Gerner-Beuerle
13
2.02.
Duty of Care / Edmund-Philipp Schuster Carsten Gerner-Beuerle
14
A.
Regulatory Structure / Edmund-Philipp Schuster Carsten Gerner-Beuerle
16
B.
Behavioural Expectations / Edmund-Philipp Schuster Carsten Gerner-Beuerle
17
C.
Business Judgment Rule / Edmund-Philipp Schuster Carsten Gerner-Beuerle
20
2.03.
Duty of Loyalty / Edmund-Philipp Schuster Carsten Gerner-Beuerle
23
A.
Regulatory Structure / Edmund-Philipp Schuster Carsten Gerner-Beuerle
24
B.
Related Party Transactions / Edmund-Philipp Schuster Carsten Gerner-Beuerle
25
C.
Corporate Opportunities / Edmund-Philipp Schuster Carsten Gerner-Beuerle
28
2.04.
Enforcement / Edmund-Philipp Schuster Carsten Gerner-Beuerle
34
A.
Derivative Action / Edmund-Philipp Schuster Carsten Gerner-Beuerle
36
B.
Ease of Enforcement / Edmund-Philipp Schuster Carsten Gerner-Beuerle
40
2.05.
Directors' Duties in the Vicinity of Insolvency / Edmund-Philipp Schuster Carsten Gerner-Beuerle
43
A.
Duty to File and Wrongful Trading / Edmund-Philipp Schuster Carsten Gerner-Beuerle
47
B.
Changes to the Core Duties Owed by Directors / Edmund-Philipp Schuster Carsten Gerner-Beuerle
48
C.
The 'Re-capitalise or Liquidate' Rule / Edmund-Philipp Schuster Carsten Gerner-Beuerle
49
D.
Additional Elements of a Regulatory Response to Near-Insolvent Trading / Edmund-Philipp Schuster Carsten Gerner-Beuerle
50
2.06.
Conclusion / Edmund-Philipp Schuster Carsten Gerner-Beuerle
51
ch. 3
Directors' Conflicts of Interest: A Contribution to European Convergence / Edmund-Philipp Schuster Carsten Gerner-Beuerle
57
3.01.
Introduction / Dorthe Kristensen Balshøj, Paul Krüger Andersen
57
3.02.
EU Company Law / Dorthe Kristensen Balshøj, Paul Krüger Andersen
59
3.03.
National Models for Regulating Conflicts of Interest / Dorthe Kristensen Balshøj, Paul Krüger Andersen
61
A.
The Duty of Loyalty as the Basis / Dorthe Kristensen Balshøj, Paul Krüger Andersen
61
B.
Legal Paradigms / Dorthe Kristensen Balshøj, Paul Krüger Andersen
62
C.
Duty to Avoid Conflicts of Interest / Dorthe Kristensen Balshøj, Paul Krüger Andersen
62
D.
Disclosing Conflicts of Interest and Approval by Disinterested Directors/Shareholders / Dorthe Kristensen Balshøj, Paul Krüger Andersen
63
E.
Executive Compensation (Remuneration) / Dorthe Kristensen Balshøj, Paul Krüger Andersen
63
F.
Competition with the Company / Dorthe Kristensen Balshøj, Paul Krüger Andersen
64
G.
Appointment and Dismissal of Directors / Dorthe Kristensen Balshøj, Paul Krüger Andersen
65
H.
Transactions Which Need the Approval of the Shareholders / Dorthe Kristensen Balshøj, Paul Krüger Andersen
65
I.
Benefits / Dorthe Kristensen Balshøj, Paul Krüger Andersen
68
J.
Board Composition and the Division of Work / Dorthe Kristensen Balshøj, Paul Krüger Andersen
69
K.
Consequences / Paul Krüger Andersen, Dorthe Kristensen Balshøj
70
L.
Takeovers / Dorthe Kristensen Balshøj, Paul Krüger Andersen
70
3.04.
Some Core Elements Fostering European Convergence / Dorthe Kristensen Balshøj, Paul Krüger Andersen
70
ch. 4
Directors' Duties in Groups of Companies: Legalising the Interest of the Group at the European Level / Paul Krüger Andersen, Dorthe Kristensen Balshøj
75
4.01.
Introduction / Pierre-Henri Conac
75
A.
The Regulation of Directors' Duties in Groups at the European and Member States Level / Pierre-Henri Conac
76
1.
The Failure to Address the Issue of Groups in Company Law at the European Level / Pierre-Henri Conac
76
2.
The Regulation of Groups at the Member States Level / Pierre-Henri Conac
78
B.
The Academic and Commission's Interest for the Regulation of Groups / Pierre-Henri Conac
80
1.
The Academics' Support for the Regulation of Groups / Pierre-Henri Conac
81
2.
The EU Commission's Interest for the Recognition of the Interest of the Group / Pierre-Henri Conac
82
4.02.
The Need to Legalise the Interest of the Group at the European Level / Pierre-Henri Conac
84
A.
The Advantages of Recognising the Interest of the Group / Pierre-Henri Conac
84
1.
The Arguments against the Recognition of the Interest of the Group / Pierre-Henri Conac
84
a.
The Technical Arguments / Pierre-Henri Conac
84
b.
The Political Arguments / Pierre-Henri Conac
85
2.
The Arguments in Favour of Recognising the 'Interest of the Group' / Pierre-Henri Conac
87
a.
Advantages from Cross-Border Perspective / Pierre-Henri Conac
87
b.
Advantages from a Member States Perspective / Pierre-Henri Conac
89
B.
A Cautious Approach to Legalising the Interest of the Group / Pierre-Henri Conac
90
1.
The Nature of the Legal Instrument / Pierre-Henri Conac
90
a.
A Recommendation / Pierre-Henri Conac
90
b.
A Limited Regime Included in a Directive on the SMC / Pierre-Henri Conac
91
2.
The Scope of a Legal Instrument / Pierre-Henri Conac
91
a.
At the European Level / Pierre-Henri Conac
92
b.
At the Member State Level / Pierre-Henri Conac
93
4.03.
The Distinction between Wholly-Owned and Non-wholly-Owned Subsidiaries / Pierre-Henri Conac
94
A.
Wholly-Owned Subsidiaries / Pierre-Henri Conac
94
1.
Directors' and Managers' Liability at the Subsidiary / Pierre-Henri Conac
94
a.
A Safe Harbour / Pierre-Henri Conac
94
b.
A Simplified Rozenblum Test / Pierre-Henri Conac
95
2.
Directors' and Managers' Rights and Duties at the Parent Company / Pierre-Henri Conac
96
a.
When the Risk of Insolvency Is Not Present / Pierre-Henri Conac
96
b.
When the Risk of Insolvency Is Present or Realised / Pierre-Henri Conac
97
B.
Non-wholly-Owned Subsidiaries / Pierre-Henri Conac
97
1.
The Improvement of the Functioning of the Group / Pierre-Henri Conac
97
a.
The Right to Squeeze-Out Minority Shareholders / Pierre-Henri Conac
98
b.
The Right to Give Instructions / Pierre-Henri Conac
98
2.
The Protection of Minority Shareholders / Pierre-Henri Conac
99
a.
Sell-Out Rights / Pierre-Henri Conac
99
b.
Related-Party Transactions / Pierre-Henri Conac
100
4.04.
Conclusion / Pierre-Henri Conac
101
ch. 5
Directors' Duties to Engage Shareholders / Pierre-Henri Conac
103
5.01.
Introduction / Hanne S. Birkmose
103
5.02.
Active Ownership / Hanne S. Birkmose
104
5.03.
Engaging Shareholders in Active Ownership / Hanne S. Birkmose
106
A.
Legal Obligations / Hanne S. Birkmose
107
B.
Soft Law Duties / Hanne S. Birkmose
108
5.04.
Information / Hanne S. Birkmose
109
A.
What Information Should the Board Disclose? / Hanne S. Birkmose
110
1.
Periodical Information on the Financial Performance of the Company / Hanne S. Birkmose
110
2.
Continuous Information Relating to Company Performance / Hanne S. Birkmose
111
3.
Information Relating to the General Meeting / Hanne S. Birkmose
112
4.
Board Members' Conflicts of Interest / Hanne S. Birkmose
114
5.
Corporate Governance Issues / Hanne S. Birkmose
115
6.
Summary / Hanne S. Birkmose
117
B.
How to Disclose Information / Hanne S. Birkmose
117
5.05.
The Annual General Meeting and the Exercise of Shareholders' Rights / Hanne S. Birkmose
118
A.
Agenda / Hanne S. Birkmose
119
B.
Facilitating Shareholder Participation in the General Meeting / Hanne S. Birkmose
121
C.
Cooperation / Hanne S. Birkmose
123
D.
Voting / Hanne S. Birkmose
124
5.06.
Dialogue / Hanne S. Birkmose
126
5.07.
Concluding Remarks / Hanne S. Birkmose
127
ch. 6
The Risk Management Duties of the Board of Directors / Hanne S. Birkmose
129
6.01.
Fiduciary Duties / Christoph Van der Elst
130
6.02.
Specific Industry, Activity, and Compliance Requirements / Christoph Van der Elst
131
6.03.
New Risk Management Duties / Christoph Van der Elst
133
A.
European Risk Management / Christoph Van der Elst
134
B.
National Risk Management Provisions / Christoph Van der Elst
137
1.
Substantive Provisions / Christoph Van der Elst
138
2.
Disclosure Requirements / Christoph Van der Elst
139
3.
Comply or Explain Best Practices / Christoph Van der Elst
141
a.
Refining and Completing the Legislative Provisions / Christoph Van der Elst
141
b.
Disclosure Best Practices / Christoph Van der Elst
143
6.04.
European National Case Law / Christoph Van der Elst
144
6.05.
Assessing the European (Member States) Models of Board Responsibility for Risk Management / Christoph Van der Elst
147
ch. 7
Directors' Duties and Corporate Social Responsibility (CSR) / Christoph Van der Elst
153
7.01.
A Convergence of Crises: Is CSR an Answer? / Beate Sjåfjell Linn Anker-Sørensen
153
7.02.
Duties of the Board / Beate Sjåfjell Linn Anker-Sørensen
156
A.
The Role of the Board / Beate Sjåfjell Linn Anker-Sørensen
156
B.
The Concept of Duty / Beate Sjåfjell Linn Anker-Sørensen
158
C.
Legal Compliance, Business Case and Beyond / Beate Sjåfjell Linn Anker-Sørensen
159
7.03.
European Developments: From Dichotomy to Convergence? / Beate Sjåfjell Linn Anker-Sørensen
162
A.
A Tentative New Understanding / Beate Sjåfjell Linn Anker-Sørensen
162
B.
A New Room for CSR? / Beate Sjåfjell Linn Anker-Sørensen
163
C.
Integrating CSR in the Duties of the Board / Beate Sjåfjell Linn Anker-Sørensen
165
D.
Reporting and Risk Management as CSR Tools / Beate Sjåfjell Linn Anker-Sørensen
169
E.
An Integrated European CSR Approach? / Beate Sjåfjell Linn Anker-Sørensen
173
7.04.
A CSR Role for the EU? / Beate Sjåfjell Linn Anker-Sørensen
174
ch. 8
The Many Roles of Boards of SMEs / Beate Sjåfjell Linn Anker-Sørensen
179
8.01.
Introduction / Metre Neville
179
8.02.
Theories on the Roles of Boards / Metre Neville
180
8.03.
Towards a Multi-theory Approach to the Roles of Boards / Metre Neville
182
A.
The Ownership and Control Structures of SMEs / Metre Neville
183
B.
The Implications of Ownership and Management Structures for a Theoretical Approach to the Role of Boards of SMEs / Metre Neville
184
1.
Agency-Based Roles / Metre Neville
184
2.
Resource-Based Roles of Boards / Metre Neville
189
3.
Stakeholder-Based Roles / Metre Neville
192
8.04.
The Role of Boards of SMEs in Practice: New Empirical Data / Metre Neville
194
A.
The Danish Studies / Metre Neville
194
B.
What Does the Owner-Manager Perceive to Be the Most Important Role of the Board? (Expectation) / Metre Neville
195
C.
Does the Board Enhance Good Governance of SMEs? / Metre Neville
199
1.
Does a Board Contribute to the Performance of the Key Management Tasks of an Undertaking? / Metre Neville
200
8.05.
Do Owner-Managers Regard the Board as a Resource? / Metre Neville
206
8.06.
The Political Implications of the Role of Boards of SMEs / Metre Neville
209
A.
The Role of Boards in Company Law / Metre Neville
209
1.
Involvement in the Strategic Management of the Business / Metre Neville
211
2.
Shareholder Power / Metre Neville
212
3.
The Composition of the Board / Metre Neville
213
B.
Corporate Governance Codes / Metre Neville
214
8.07.
Conclusion / Metre Neville
216
Part II Organisation of the Board of Directors / Metre Neville
219
ch. 9
Independent Directors: After the Crisis / Metre Neville
221
9.01.
Independent Directors and the Financial Crisis / Wolf-Georg Ringe
222
A.
The Regulatory and Quasi-Regulatory Push / Wolf-Georg Ringe
224
B.
A Question Mark behind Independence / Wolf-Georg Ringe
226
9.02.
Why Do We Have Independent Directors? / Wolf-Georg Ringe
227
A.
Criteria of Independence / Wolf-Georg Ringe
228
9.03.
Challenges to Independence / Wolf-Georg Ringe
230
A.
Matching Independence to Industry and Ownership Structure / Wolf-Georg Ringe
231
B.
Empirical Evidence / Wolf-Georg Ringe
233
C.
Incentive Problems / Wolf-Georg Ringe
234
D.
Substitutes for Independence / Wolf-Georg Ringe
235
9.04.
Towards a Functional Understanding of Board Independence / Wolf-Georg Ringe
237
A.
Improving Independence / Wolf-Georg Ringe
237
B.
Combining Independence with Dependence / Wolf-Georg Ringe
238
9.05.
Conclusion / Wolf-Georg Ringe
241
ch. 10
Active Owners and Accountable Directors / Wolf-Georg Ringe
243
10.01.
Introduction / Jesper Lau Hansen
243
10.02.
The 1992 Cadbury Report and the Hegemony that Ensued / Jesper Lau Hansen
243
10.03.
The Emancipation of Management / Jesper Lau Hansen
246
10.04.
The Legacy of US/UK Corporate Governance / Jesper Lau Hansen
249
10.05.
Challenging the Legacy from a Nordic Perspective / Jesper Lau Hansen
250
A.
The Benefits of Dominant Shareholders / Jesper Lau Hansen
250
B.
Hard Ctr. Soft Law / Jesper Lau Hansen
252
C.
Board Composition / Jesper Lau Hansen
254
10.06.
A Reappraisal of Old Truths / Jesper Lau Hansen
258
10.07.
Conclusion / Jesper Lau Hansen
261
ch. 11
Nomination of Members for the Board of Directors: A Swedish Version of Wag the Dog? / Jesper Lau Hansen
263
11.01.
Introduction / Jan Andersson
263
11.02.
The US Model / Jan Andersson
264
11.03.
The Swedish Model / Jan Andersson
268
11.04.
Do We Focus on Model or Facts? / Jan Andersson
270
11.05.
Earlier Research and the Swedish Voice / Jan Andersson
271
11.06.
Substantial Differences? / Jan Andersson
273
11.07.
Conclusion / Jan Andersson
276
ch. 12
The Europe Wide Movement towards a Gender Quota at Board Level / Jan Andersson
279
12.01.
Introduction / Christoph Teichmann Carolin Langes
279
12.02.
Draft EU Directive / Christoph Teichmann Carolin Langes
280
A.
Legislative Basis / Carolin Langes Christoph Teichmann
280
B.
Quota / Christoph Teichmann Carolin Langes
282
12.03.
Legal Situation in Other European States / Christoph Teichmann Carolin Langes
282
A.
One-Tier and Two-Tier Systems / Christoph Teichmann Carolin Langes
283
B.
Legal Comparison / Christoph Teichmann Carolin Langes
284
1.
Norway / Christoph Teichmann Carolin Langes
284
a.
Board System / Christoph Teichmann Carolin Langes
284
b.
The Statutory Quota Provision / Christoph Teichmann Carolin Langes
284
c.
Sanctions If the Quota Is Not Observed / Christoph Teichmann Carolin Langes
285
2.
Denmark / Christoph Teichmann Carolin Langes
286
a.
Board System / Christoph Teichmann Carolin Langes
286
b.
Equality on Company Organs / Christoph Teichmann Carolin Langes
287
3.
Sweden / Christoph Teichmann Carolin Langes
288
4.
France / Christoph Teichmann Carolin Langes
288
5.
Spain / Christoph Teichmann Carolin Langes
289
6.
The Netherlands / Christoph Teichmann Carolin Langes
290
7.
Belgium / Christoph Teichmann Carolin Langes
290
8.
Italy / Christoph Teichmann Carolin Langes
291
9.
Initiatives in Germany / Christoph Teichmann Carolin Langes
292
a.
Self-Regulation / Christoph Teichmann Carolin Langes
292
b.
Statutory Provision / Christoph Teichmann Carolin Langes
292
12.04.
Comparison of the Different Quota Provisions / Christoph Teichmann Carolin Langes
296
A.
Companies Affected / Christoph Teichmann Carolin Langes
296
1.
Major Companies / Christoph Teichmann Carolin Langes
296
2.
Exceptions / Christoph Teichmann Carolin Langes
297
B.
The Quota to Be Achieved / Christoph Teichmann Carolin Langes
298
C.
Sanctions for Non-compliance / Christoph Teichmann Carolin Langes
298
12.05.
Summary / Christoph Teichmann Carolin Langes
300
ch. 13
Understanding the Role of the Board of Directors: What Is the Right Balance between Managerial Oversight and Value Creation? / Christoph Teichmann Carolin Langes
301
13.01.
Introduction / Joseph A. McCahery Erik P.M. Vermeulen Masato Hisatake
301
13.02.
The Role of the Board of Directors in a Three-Dimensional Model of Corporate Governance / Joseph A. McCahery Erik P.M. Vermeulen Masato Hisatake
303
A.
The Current Corporate Governance Debate / Joseph A. McCahery Masato Hisatake Erik P.M. Vermeulen
306
B.
The Shortcomings of the Corporate Governance Debate / Erik P.M. Vermeulen Joseph A. McCahery Masato Hisatake
309
C.
A Three-Dimensional Model of Corporate Governance / Erik P.M. Vermeulen Joseph A. McCahery Masato Hisatake
310
D.
Understanding the Three-Dimensional Dynamics of the Board of Directors / Joseph A. McCahery Erik P.M. Vermeulen Masato Hisatake
312
13.03.
The Three-Dimensional Dynamics of the Board of Directors: Empirical Evidence / Erik P.M. Vermeulen Joseph A. McCahery Masato Hisatake
316
A.
The Data / Joseph A. McCahery Erik P.M. Vermeulen Masato Hisatake
317
B.
Board Dynamics and Composition / Erik P.M. Vermeulen Joseph A. McCahery Masato Hisatake
318
13.04.
Conclusion / Erik P.M. Vermeulen Joseph A. McCahery Masato Hisatake
324
ch. 14
Disqualifying Directors in the EU / Joseph A. McCahery Erik P.M. Vermeulen Masato Hisatake
327
14.01.
Introduction / Karsten Engsig Sørensen
327
14.02.
Harmonising Disqualification in the EU / Karsten Engsig Sørensen
328
A.
Company Law Harmonisation / Karsten Engsig Sørensen
328
B.
Outside Company Law / Karsten Engsig Sørensen
330
14.03.
Overview of National Disqualification Rules / Karsten Engsig Sørensen
332
A.
From Criminal Penalty to Civil Sanction / Karsten Engsig Sørensen
332
B.
Conduct Which May Result in Disqualification / Karsten Engsig Sørensen
333
C.
How Disqualification Orders Are Imposed and How Often / Karsten Engsig Sørensen
334
D.
The Aim and Effect of a Disqualification Order / Karsten Engsig Sørensen
335
E.
Between Company Law and Insolvency Law / Karsten Engsig Sørensen
336
F.
Summary / Karsten Engsig Sørensen
336
14.04.
Imposing Disqualification in Cross-Border Settings / Karsten Engsig Sørensen
337
A.
Which Companies Are Targeted for Disqualification Proceedings? / Karsten Engsig Sørensen
337
B.
Which Persons Can Be Subject to Disqualification Orders? / Karsten Engsig Sørensen
340
C.
The Status of Disqualification Orders in Cross-Border Situations / Karsten Engsig Sørensen
340
14.05.
Enforcing Disqualification in the EU / Karsten Engsig Sørensen
341
A.
Which Companies Are Disqualified Persons Not Allowed to Manage? / Karsten Engsig Sørensen
341
B.
Sanctions for Breach of Disqualification Orders in a Cross-Border Context / Karsten Engsig Sørensen
342
C.
Ensuring Transparency / Karsten Engsig Sørensen
344
D.
Ways to Improve Cross-Border Enforcement of Disqualification Orders / Karsten Engsig Sørensen
345
14.06.
Conclusion(s) / Karsten Engsig Sørensen
346
ch. 15
An Overview of the Executive Remuneration Issue across the Crisis / Karsten Engsig Sørensen
349
15.01.
Introduction / Guido Ferrarini Maria Cristina Ungureanu
349
15.02.
The EU Regulatory Framework / Guido Ferrarini Maria Cristina Ungureanu
351
A.
Evolution of the EU Regulatory Framework / Guido Ferrarini Maria Cristina Ungureanu
351
B.
Say-On-Pay / Guido Ferrarini Maria Cristina Ungureanu
354
C.
Financial Institutions / Guido Ferrarini Maria Cristina Ungureanu
356
15.03.
Remuneration Policies / Guido Ferrarini Maria Cristina Ungureanu
358
15.04.
Conclusions / Guido Ferrarini Maria Cristina Ungureanu
366
Bibliography / Guido Ferrarini Maria Cristina Ungureanu
367