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

AFTER ENRON, IMPROVING CORPORATE LAW AND MODERNISING SECURITIES REGULATION IN EUROPE AND THE U.S., pp. 445-496, J. Armour, J. A. McCahery, eds., Oxford (Hart), 2006

ECGI Law Working Paper No. 05/2002

ECGI Finance Working Paper

58 Pages Posted: 11 Dec 2002 Last revised: 6 Dec 2009

Klaus J. Hopt

Max Planck Institute for Comparative and International Private Law; European Corporate Governance Institute (ECGI)

Date Written: January 1, 2007

Abstract

Improving European corporate governance after Enron requires rethinking company and capital market regulation and law reforms. This article - which is an updated version (footnotes and references only, summer 2006) of an earlier one published in (2003) 3 Journal of Corporate Law Studies 221-268 - 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 liabilty is proposed. A key problem is the need for loyal and competent intermediaries. Since the 13th Directive is only a compromise solution, the hopes are pinned on the Court to continue its golden share case law. The German Volkswagen Act will be a test case.

Keywords: European corporate governance, company law, board structure, corporate disclosure, control by shareholders and auditors, capital markets law, corporate control, Enron, European corporate governance, 13th Directive

JEL Classification: G18, G3, G38, K22

Suggested Citation

Hopt, Klaus J., Modern Company and Capital Market Problems: Improving European Corporate Governance after Enron (January 1, 2007). AFTER ENRON, IMPROVING CORPORATE LAW AND MODERNISING SECURITIES REGULATION IN EUROPE AND THE U.S., pp. 445-496, J. Armour, J. A. McCahery, eds., Oxford (Hart), 2006; ECGI Law Working Paper No. 05/2002; ECGI Finance Working Paper. Available at SSRN: https://ssrn.com/abstract=356102 or http://dx.doi.org/10.2139/ssrn.356102

Klaus J. Hopt (Contact Author)

Max Planck Institute for Comparative and International Private Law ( email )

Mittelweg 187
D-20148 Hamburg
Germany
+49 40 41 90 02 05 (Phone)
+49 40 41 90 03 02 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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