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Abstract:
The struggle for efficient internal management control is the centre of the corporate governance debate in Europe since the incorporation of the Dutch Verenigde Oostindische Compagnie in 1602. Recent developments in Europe illustrate a trend towards specialised rules for listed companies and indicate growing convergence of internal control mechanisms independent of board structure.

The revised Combined Code in the United Kingdom and also the French revised Principles of Corporate Governance, both of 2003, strengthen the presence of independent directors on one-tier boards in Europe. Another systemic break-through for the two-tier board model is the growing tendency to separate the positions of CEO and board chairman. For the German two-tier structure, the strengthening of the strategic role of the supervisory board (Aufsichtsrat) by the new German Corporate Governance Code of 2002 means an attempt to incorporate a key advantage of the one-tier model. Similarly, the control duties of the Italian internal auditing committee (collegio sindacale) were extended by the Testo Unico of 1998 and bring the Italian second board closer to the German supervisory board.

The common trend to stricter standards of independence is challenged in Germany by its rigid concept of co-determination and, to a lesser extent, by the more flexible model of labour participation in France. Director's duties and liabilities and also derivative actions are a focus of the reform debate in Germany since 1998 and are currently under review in the United Kingdom. After the Enron debacle the interplay between internal control devices and independent external auditing has become a major focus of interest in all countries considered. Driven by Anglo-Saxon codes of conduct audit committees today serve as a common denominator for good corporate governance.

Though formal convergence is strong company organs in each country take on their own specific garment. Path dependent system development especially depends on shareholder structures and banking systems. The trend to greater structural flexibility on board level is strongly triggered by the introduction of a threefold board model choice under the French Loi Nouvelle Regulations Economique of 2001 and under the Italian Vietti-Reform that is in force since January 2004.

Auditing, Aufsichtsrat, banking system, board models, comply or explain, Corporate Governance Codes, directors' duties and liabilities, directors' independence, Higgs Report, internal control, labour co-determination, management and control, path dependency, shareholder activism, supervisory board

Abstract:
In a trialogue between Japan, the U.S. and the EU, the corporate governance debate has singled out approaches that strengthen internal controls. With the soft law movement at its core the development points towards more options for the market. The gathering and processing of information by and within boards is the key to the implementation of modern market-based concepts as particularly the compliance with fostered independence requirements for directors. The further development of the more market-based approach should lead to board model choices, strengthen the role of soft law and introduce optional rules including contractual liability gaps for auditors.

Comparative Corporate Governance, Company/Corporate Law, Soft-Law, Corporate Governance Code, Europe, Germany, Board Model , Supervisory Information, Independence, Financial Intermediaries, Co-determination, Takeover, Golden Shares

Abstract:
Conflicts of interest are a fundamental and pervasive issue of the modern service-oriented society. Current developments in the regulation of capital markets and elsewhere demonstrate the need for commonly accepted rules for dealing with conflicts of interest. Taking the conflicts of interest of financial intermediaries in securities offerings as a paradigm, the article sets out a definition of conflicts of interest and analyses the possible and appropriate legal strategies to address them. A conflict of interest arises when a person who has a duty to act in another party's interest has to decide how to act in the interest of that party and another interest interferes with his ability to decide according to his duty. Conflicts of interest can be addressed by organizational duties, disclosure duties or a duty to refrain from acting. Within groups of companies a group wide compliance structure and a policy of addressing conflicts facilitate the management of conflicts of interest. The findings of this article constitute a globally accepted common core of rules on conflicts of interest of financial intermediaries and hence provide a foundation for reliable transaction design, consistent supervisory standards and convergence in judicial application.

Financial intermediaries, banks, finance, securities offerings, IPO, pricing, allocation, distribution, retail advice, inducement, Chinese wall, disclosure

Abstract:
Statutory auditors serve as an integral device to safeguard confidence in European financial markets. The market for corporate auditing is highly concentrated. A collapse of one of the top four auditing firms could cause a severe lack in the availability of auditing services. In a 2007 Staff Working Paper the European Commission proposed to reform auditor liability and to protect auditing firms from catastrophic liability claims. This paper analyses the reform options suggested by the European Commission and pleads, in essence, for the following liability rules:

1. The company and its auditor may enter into an agreement limiting the amount of liability of the auditor in respect of any negligence occurring in the course of the audit, subject to approval by the general meeting of the audited company.

2. This limitation may not be set below a fair and reasonable amount. The definition of fair and reasonable should be laid down in a European framework, providing a set of basic criteria, including the sum of fees paid to the auditor and the size of the company.

3. If the amount of liability significantly deviates from what would be fair and reasonable, the court which decides on a damage claim against the auditor declares the agreement void.

4. In the assessment of the validity of the agreement, the court shall take into account the European framework basic criteria to be considered by the parties and additional factors such as auditor independence and the applicability of institutional and individual insurance excesses.

auditor liability, liability cap, general meeting, auditor independence