Volume 21, Issue 5-6

531The lack of a European Deposit Insurance Scheme (EDIS) – often referred to as the ‘third pillar’ of Banking Union – has been criticized since the inception of the EU Banking Union. The Crisis Management and Deposit Insurance (CMDI) framework needs to rely heavily on banks’ internal loss absorbing capacity and provides little flexibility in terms of industry resolution funding. This design has, among others, led to the rare application of the CMDI framework, particularly in the case of small and medium sized retail banks. This reluctance of resolution authorities weakens any positive impact the CMDI framework may have on market discipline and ultimately financial stability. After several national governments pushed back against the establishment of an EDIS, the Commission recently took a different approach and tried to reform the CMDI framework comprehensively, without seeking to erect a ‘third pillar’. The overarching rationale of the CMDI Proposal is to make resolution funding more flexible. To this end, the proposal seeks to facilitate contributions from (national) deposit guarantee schemes (DGS). At the same time, the CMDI Proposal tries to broaden the scope of resolution to include smaller and medium sized banks. This paper provides an assessment of the CMDI Proposal. It argues that the CMDI Proposal is a step in the right direction but cannot overcome fundamental deficiencies in the design of the Banking Union.

563The Digitalisation Directive II (DigiD II) signifies a major expansion and upgrade of EU business registers. It introduces significant reforms which address two key issues: transparency of company data and cross-border use of company data. Regarding transparency of company data, DigiD II not only upgrades the existing framework for limited liability companies, but also for the first time establishes harmonised provisions concerning commercial partnerships. Regarding cross-border use of company data, DigiD II introduces sweeping reforms to improve the existing system of business registers concerning the application of the once-only principle, scrutiny of information, mutual recognition of register data, and reliance on registered information. This paper provides an overview and critical assessment of the key elements of these reforms.

604The introduction of the Prosta Spółka Akcyjna (P.S.A.) in 2021 represents a transformative shift in Polish company law, signaling the willingness to diverge from traditional, continentally rooted frameworks. The P.S.A. is envisioned as a versatile corporate vehicle capable of addressing the diverse needs of contemporary business structures, both the demands of start-ups and innovative businesses, as well as traditional enterprises. The P.S.A.’s financial structure eschews the traditional fixed share capital, allowing for flexible equity management and distributions to shareholders. It also accepts labor and services as contributions, with shareholder rights represented by dematerialised no-par-value shares. The P.S.A. grants founders considerable autonomy in choosing a governance model and structuring shareholder rights and obligations. Consequently, the enactment of the P.S.A. may serve as a blueprint for legislative innovation in the field of company law, exerting pressure on the modernisation of other corporate forms in Poland and in Europe.

636Given the complexity of sustainability issues in finance, ESG financial market information intermediaries have emerged as a way to overcome asymmetries between firms and investors. These infomediaries offer various types of ESG ratings, scores and benchmarks (indices). Like traditional index funds and credit ratings, ESG infomediaries have a gatekeeper function in the market. However, their role is arguably even more complex given the multi-faceted nature of the “E”, “S” and “G” and the difficulty of processing the vast amounts of information supplied by issuers. In this context, however, greenwashing risks loom large. To fully capture the governance uses of ESG infomediaries, this article develops a framework that differentiates between exit-, voice- and coercion-enabling regulatory instruments. The regulation of ratings and benchmarks may facilitate the “exit” of customers and investors from firms that fall short of ESG credentials through market mechanisms, give “voice” to critical constituencies or introduce mandatory “coercion”. Our analysis identifies the different ways in which existing and developing EU rules shape the supply and demand for ESG financial market infomediaries and explores the “external governance” levers with regard to firm sustainability.

671 Technology keeps evolving, offering opportunities to the private sector to develop new products and systems to exchange funds or value (i.e. crypto assets). In the quest to exploit technological advancement and keep up with an increasing digitized financial market, central banks have been exploring the possibility to issue a digital form of the traditional fiat currency (so-called central bank digital currency – “CBDC”). As CBDC projects are progressing and shaping up, a host of legal and regulatory questions arise. This article aims to examine the regulatory implications of CBDCs vis-à-vis the European Anti-Money Laundering (AML) regulatory framework. It explores the recent developments of the European AML regulatory framework spurred by financial innovation and technology, taking into account both the current (i.e. Directive 2018/843/EU (“AMLD4”), as amended by Directive 2015/849/EU (“AMLD5”) and upcoming (i.e. Regulation (EU) 2024/1624 – the “AMLR”) legislation. It emphasizes the coordination between the EU AML legislation with the new substantive EU regime on crypto assets (the “MiCAR”) as well as with the new “payment services package” (the European Commission proposal for a “PSD3” and “PSR”). The analysis delves into the European Commission Proposal for a regulation on the establishment of the Digital Euro, adopting a functional approach that explains the diversified AML treatment of the “offline” (bearer-based) and “online” use (account-based) of the digital euro. In so doing, the article examines the legal characterization of “cash” for AML purposes and the potential consequences for the Digital Euro.

705The alignment of interests between managers and owners has always been a central topic of the European and international corporate governance discussion. For financial investors, who are frequently engaged in the business of buying and selling participations and companies, a key instrument to ensure such alignment is adequate incentivisation of managers through compensation. As these investors typically realise the most significant part of their return when they exit an investment through a sale, it seems obvious for them to seek remuneration structures that link the amount of compensation to the success of an exit transaction. In particular, the amount of a distinct bonus payment by the company can be linked to the return achieved by the investor through the exit from the investment (exit bonus). In this paper, we explore the legal permissibility of such exit bonus structures if they are part of the remuneration system for management board members, including structures with a personal investment component and exit bonuses directly paid by the investor. The analysis focuses on German stock corporations (AG) with a two-tier governance structure. In this context, we also analyse to what extent members of the supervisory board can be exposed to conflicts of interest (or even personal liability) in approving such bonus schemes. As a successful exit mainly depends on a high valuation of the company from a long-term perspective, our analysis shows that exit-related bonus structures primarily incentivise managers to advance the long-term interests of the company. The key arguments underlying this analysis are of general nature and are also relevant for other legal corporate forms and jurisdictions.

738The article addresses the role assumed by the banking sector in the transition towards a more sustainable economic system, i. e. one that combines the pursuit of profit with due consideration of other objectives aimed at mitigating the negative impacts of entrepreneurial activity on human rights and the environment. Known by the acronym “ESG”, we refer of course to so-called “Environmental, Social and Governance” objectives. The research focuses principally on the corporate governance “tools” that banking institutions must equip themselves with to facilitate an approach that considers “ESG” factors not only as elements of risk to be contained, but also as an opportunity to be managed and included in industrial plans. With the emphasis being on the means to integrate sustainability into the business of the banking, the analysis looks at recent European legislation on sustainability reporting, which introduces the principle of “double materiality”, and pays particular attention to Italian legislation and the doctrinal debate therein.

762This article examines the British Academy’s Future of the Corporation research programme (“Programme”), focusing on its “legal” pathway and “law” principle, in the context of a thought experiment involving the UK. The law principle is that company law should require companies to state a corporate purpose in the articles of association. The Programme advocates for an “institutionally” focused corporate purpose. However, attendant examples the Programme furnishes to illustrate how the law principle could be operationalised by national policymakers showcase other manifestations of corporate purpose, specifically the “pluralistic stakeholderism” and the “mission statement” approaches. These alternative approaches are presented by the Programme as if they are consistent with an institutional corporate focus when they are not. UK policymakers must distinguish between these three different conceptions to avoid mandating corporate purposes misaligned with the Programme’s definition. These alternative approaches are problematic not only because they diverge from the Programme’s institutional articulation, but also because they introduce serious directorial accountability deficiencies. If adopted by companies, these deficiencies could lead to increased agency costs and resource waste, undermining the Programme’s core concern with corporate accountability. This article argues that policymakers should draw from social enterprise law, particularly the UK “community interest company” regulatory regime, to develop a government oversight registration mechanism. Such a registration mechanism would screen provisional corporate purpose statements, ensuring they align with the Programme’s specifications.