Band 21, Heft 3-4

This article intends to provide an overview about the latest sustainability-related developments of European corporate governance. As a theoretical background it interprets the concept of sustainability and compares the competing theories regarding the purpose of public corporations in this context. The article attempts to provide an overview about the ‘interests of the company’ in European company law and the relevant interests that corporate directors should consider in EU Member States. It emphasizes the importance of corporate sustainability reporting in EU legislation; hence the Non-Financial Reporting Directive and the recently adopted Corporate Sustainability Reporting Directive are examined in detail. The article also pays attention to the latest sustainability-related requirements of important European corporate governance codes and summarizes the emerging best-practice rules. It recognizes numerous promising developments and highlights the proposed Corporate Sustainability Due Diligence Directive as it would make the EU regulatory system more coherent. The article concludes that the dominance of anti-fraud issues in corporate governance standard setting seems to be over and there is a new regulatory wave which focuses on sustainability. However, no breakthrough can be reached without a proper business environment and economic culture developed in the whole EU, which promotes sustainable corporate governance.270

This article examines how shareholder voting rights can be transplanted from one jurisdiction to another within the European Union. In particular, it traces the spread of the right to vote on defence measures during takeovers, on directors’ remuneration, and on related party transactions, to assess whether the transplantation succeeded or failed. In doing so, this analysis highlights a dichotomy between a process of autonomous convergence undertaken by continental Member States, carried out through adaptive and circumscribed transplants, and a process of harmonisation promoted by the European Commission, that transplanted the rights in its proposals attempting to mandate them at the supra-national level. Eventually, this article sheds light on how corporate law-making can take place in the EU: in a multi-polar context where distinct corporate law systems coexist ‘horizontally’, Member States can borrow legal provisions spontaneously, while the European Commission can endorse country-specific provisions that considers to be the best corporate governance arrangements, disruptively seeking to extend them to all jurisdictions. As a consequence, the imitated Member State carries virtually no interest in exporting its rules, but is in turn interested in resisting any deviation from the Commission’s proposal to limit the changes that it will undergo in the implementation of the instrument. The other Member States, on the other hand, may actively engage within the Council of the EU to resist and water down the proposal, to avoid reforming their corporate law system and tilt their domestic allocation of corporate power towards a particular constituency.

Forward casting is a method that has been developed in U. S. securities fraud class actions to establish the (amount of) economic loss that investors suffer due to material misrepresentations on the stock market. More specifically, forward casting can be used to construct the hypothetical price path of a specific stock, which is the price path of that stock in the hypothetical situation where no misrepresentations were made. This article will explain how forward casting is applied in, respectively, situations where the misrepresentation consists of a single misstatement and situations where the misrepresentation consists of several successive misstatements. In the latter situations, one of the complications is how to incorporate into the analysis the fact that future market expectations regarding the stock (price) would have evolved differently (as compared to how these expectations have actually evolved) if, on all occasions, correct and complete – rather than misleading – information had been disclosed. It will be explained how to approach this complication and how – by using the so-called ‘analyst forecast revision coefficient’ – the evolvement of market expectations can be reconstructed for the hypothetical situation without misrepresentation. Furthermore, several advantages and disadvantages of forward casting compared to back casting will be discussed.

There is considerable variation among capital markets in the frequency of voluntary and involuntary delistings, which has been attributed by some commentators to differences in the regulatory framework governing delisting decisions. However, there have been few systematic attempts to map these differences across legal systems and quantify the regulatory costs of delistings. This article analyses delisting regimes of major EU jurisdictions and several non-EU countries and develops indices that capture delisting costs. It shows that the delisting regimes of some EU Member States are prohibitively costly. The article then considers whether such delisting regimes are consistent with EU free movement rights. It concludes by critically evaluating a menu of policy options to ensure that delisting rules facilitate corporate mobility and an efficient allocation of capital in the EU.

This paper describes how the regulation of corporate takeovers has developed over time in an increasingly global context, using Sweden – which is now one of Europe’s largest stock markets and one of the most active markets for corporate control – as an example. The paper discusses aspects such as the use of a Takeover Panel as a regulatory tool. It touches upon the economic aspects of corporate takeovers and their role as a corporate governance tool and a tool for the efficient allocation of resources. The policy choice of whether to allocate blocking powers to the board of the target company or to adopt a board neutrality approach is discussed. Protectionist trends as opposed to openness and free trade are also touched upon.

Insolvent companies that meet the conditions of Article 54 of the TFEU and have access to the right of establishment provided for by Article 49 of the TFEU can, in principle, move freely within the European area. However, the cross-border mobility of insolvent companies presents a risk of abuse or fraud and may be detrimental to the rights of third parties. Therefore, the law on insolvency proceedings intervenes to provide a framework for this cross-border mobility by combating forum shopping and law shopping, while protecting local interests by means of private international law rules as well as substantive rules.

The corporate sustainability reporting directive (2022/2464, CSRD) is expected to broaden its scope to include almost 50 000 companies in Europe. The directive sets two key obligations: (1) The annual management report must include information about certain sustainability subjects according to uniform standards; and (2) Sustainability reports must be controlled by an auditor or other authorized controller. This article focuses on examining the topic from an auditor’s perspective. Assuring the reliability of sustainability reports is essential to meet the objective of stakeholders getting reliable and comparable information. The aim of the article is to examine the renewed obligation to assure sustainability reporting, especially the key differences between the limited assurance level of sustainability reporting and the reasonable assurance level of statutory auditing. In addition, the article examines the narrowing of the expectation gap between the stakeholders and the actual content of assurance. If, in the future, sustainability information at the EU level is genuinely intended to be placed in the same category as the audit of financial information, then it is necessary to move from limited assurance engagements to reasonable assurance engagements. However, the issue must be carefully evaluated from the perspective of the administrative burden incurred by the companies, because it significantly increases the costs associated with the assurance of sustainability reporting for the companies. Finally, the goal is to evaluate how the assurance of sustainability reporting is regulated in Finland.443

Despite the tremendous number of studies devoted to the effectiveness of economic sanctions, the unprecedented number of sanctions applied and the recent European Union (EU) reforms on sanctions, sanctions effectiveness should be still a matter of debate. More than a year after Russia’s full-scale invasion of Ukraine, but G7-led sanctions have not materially hindered Russia’s war effort. This study intends to address this problem by focusing on how to make the use and application of EU sanctions against Russia more effective. In doing so, I argue that the main impediments to EU sanctions effectiveness are systemic in nature and inherent to the EU sanctions policy framework. The piecemeal changes of the EU sanctions regulatory framework undertaken so far have not solved these systemic flaws that undermine the effectiveness of EU sanctions. A fundamental revision of the entire system of the EU sanctions policy framework is needed. This study proposes implementing a comprehensive principles-based framework for EU sanctions policy, where harmonisation and the risk-based approach are its foundations, to make sanctions more effective. The proposed sanctions principles-based framework is broader in its scope than is currently the case; it covers a broader set of principles. The proposed frame includes all the stages of the sanctions process, is addressed to a broader number of actors and its foundations are developed. I recommend that this sanctions principles-based framework should be mandatory for use.