Volume 16, Issue 4

Usually connecting factors in company law play a decisive role with regard to the corporate governance model of a company and with regard to the level of protection of stakeholders. Their importance generated a long-lasting debate on which connecting factor is “better” and which one is compatible with internal market rules. However, technological developments and digitalisation shed a different light on this discussion. In order to understand how the current developments impact the discussion on company law connecting factors, it should first be clear what is really understood by connecting factors in the jurisprudence of the Court of Justice. It is important to understand the relationship between substantive company law rules and those on conflict of laws. The outcome of the above analysis allows to add the digitalisation/new technologies factor into the equation. In this context, a closer look is given at the use of artificial intelligence applications in company law and the operation of a decentralised autonomous organisation within a blockchain network. It allows to question the effectiveness and usefulness of traditional connecting factors.

In September, 2008, the meltdown of the investment bank Lehman Brothers accelerated the Global Financial Crisis, which affected economies and consumers worldwide. As soon as the Global Financial Crisis broke out, governments and legislators recognized the need for macroprudential reform in order to build a resilient financial system. Today, legislators in every major jurisdiction have finalized almost all major reforms that were envisaged once it had become clear that the crisis was also due to regulatory shortcomings. The reforms especially targeted (over-the-counter) derivatives and the equity base of banks. Following an analysis of the reasons for the Global Financial Crisis and the regulatory failures that contributed to its severity this article will discuss two major legislative responses that intend to make the financial system robust – the establishment of a central dearing obligation for over-the-counter derivatives and the revised Basel Accords on capital requirements for banks.

This paper uses the current proceedings against Volkswagen Aktiengesellschaft for violations of its continuous disclosure obligation as a backdrop for addressing fundamental questions of European market abuse law. Specifically, we ask how the Market Abuse Directive and Regulation (MAD/R) and Member State corporate law together shape management’s disclosure policy vis-à-vis the stock market. Taking the perspective of German stock corporation law, our main findings are twofold: First, while European market abuse law severely limits management’s discretion when market integrity is at stake, Member States can still largely control its influence on internal corporate governance – i.e., on the distribution of information between management and shareholders. Second, MAD and MAR directly draw on conceptions of public interest in Member State law when determining the outer bounds of issuers’ ability to delay disclosure, thereby potentially promoting compliance. Based on these insights, the paper then closes with a note of caution for national legislators and suggests a more profound discussion of their responsibility for the optimal functioning of European market abuse law.