Modern Company and Capital Market Problems: Improving European Corporate Governance after Enron

Klaus J Hopt

Max Planck Institute for Foreign Private and Private International Law, Hamburg

jcls Vol 3 Issue 2 (October 2003)

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Abstract

Improving European corporate governance after Enron requires company and capital market law reforms. This article discusses shareholder decision-making; the choice between the one-tier and the two-tier board system; appointment, compensation and audit committees with a majority of independent members; checks on exorbitant payments to the directors; a special investigation procedure and wrongful trading. As to capital markets a European framework rule on prospectus liability is proposed. A key problem is the need for loyal and competent intermediaries. If the 13th Directive on takeovers fails, then hopes will be pinned on the Court to continue its golden share case law. The German Volkswagen Act will be the test case.

Keywords

European corporate governance after Enron; European company and capital market law; Board (one-tier, two-tier), see also directors; directors (non-executive, liability, remuneration); disclosure; prospectus liability; conflict of interest; golden share and Volkswagenact; High Level Group of Company Law Experts; European Commission’s action plan on company law and corporate governance