Enforcement of Corporate Governance Codes

26 Pages Posted: 19 Jul 2005 Last revised: 4 Feb 2010

Eddy Wymeersch

Ghent University - Financial Law Institute; ECGI

Date Written: June 1, 2005

Abstract

Corporate governance codes have been published in several European jurisdictions. Most are of a self regulatory nature, others are rooted in the law. In both cases the provisions of the codes apply on a comply and explain basis. Enforcement mainly takes place through market mechanisms, including by shareholders using their legal and factual rights within the company. Moreover, the legal system will normally absorb these rules through blank norms, such as liability or contract rules. In states where the law has expressly referred to the code - in Germany and in the Netherlands, additional questions arise.

The role of the market supervisors and of the auditors have expressly been discussed in these jurisdictions. The analysis concludes that market led enforcement, along with a strengthening of company law mechanisms constitutes the best equilibrium for developing adaptive but nevertheless effective corporate governance practices.

Keywords: corporate governance codes, enforcement, legal system, comply and explain,market supervisors, company law

JEL Classification: K20, K22

Suggested Citation

Wymeersch, Eddy, Enforcement of Corporate Governance Codes (June 1, 2005). ECGI - Law Working Paper No. 46/2005. Available at SSRN: https://ssrn.com/abstract=759364 or http://dx.doi.org/10.2139/ssrn.759364

Eddy O. Wymeersch (Contact Author)

Ghent University - Financial Law Institute ( email )

Universiteitstraat 4
Gent, B-9000
Belgium
+32 9 264 68 27 (Phone)
+32 9 264 68 55 (Fax)

HOME PAGE: http://www.law.ugent.be/fli

ECGI ( email )

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

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