European Company and Financial Law Review 

About: European Company and Financial Law Review is an academic journal published by De Gruyter. The journal publishes majorly in the area(s): Corporate law & Corporate governance. It has an ISSN identifier of 1613-2548. Over the lifetime, 307 publications have been published receiving 1836 citations. The journal is also known as: ECFR (Internet) & ECFR (Print).

The Effectiveness of Corporate Governance in One-Tier and Two-Tier Board Systems – Evidence from the UK and Germany –

Abstract: Germany and the UK are paradigms of systems in which the control of managing directors of companies either lies in the hand of a separate supervisory board (two-tier system) or is an additional task of the board itself (one-tier system). This paper provides for an empirical test of the effectiveness of both systems of corporate governance. The analysis of the financial performance and board turnover of the largest companies listed on the stock exchanges in Frankfurt and London over a total of 400 financial years establishes that both systems are effective means of control. Yet the analysis also demonstrates that it is not possible to assign superiority to either of them. Therefore, the often raised question as to whether one of the two systems will finally prevail and whether there will be ultimate convergence of both systems, has to be answered in the negative. As the discussion of the strengths and weaknesses will show, however, there is still scope for improvements in each of the two board models.

Board Models in Europe. Recent Developments of Internal Corporate Governance Structures in Germany, the United Kingdom, France, and Italy

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 fl exible 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 specifi c garment. Path dependent system development especially depends on shareholder structures and banking systems. The trend to greater structural fl exibility 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.

Crypto-Securities Regulation: ICOs, Token Sales and Cryptocurrencies under EU Financial Law

Abstract: Cryptocurrencies, such as bitcoin and ethereum, have not only risen to public attention as novel means of payments, but also as facilitators of initial coin offerings (ICOs, also called token sales). In these entirely online-mediated offerings, entrepreneurs sell tokens registered on a blockchain in exchange for cryptocoins. Buyers receive tokens that can be understood as cryptographically-secured coupons which embody a bundle of rights and obligations. In July 2017, the SEC released an investigative report that highlighted that such tokens can be subject to the full scope of US securities regulation. It is unclear, however, to what extent EU securities regulation is applicable to ICOs and, particularly, whether issuers have to publish and register a prospectus in order to avoid criminal and civil prospectus liability in the EU. In conceptual terms, this depends on whether tokens are considered “securities” under the EU prospectus regulation regime. Against this background, this paper develops a nuanced approach that distinguishes between three archetypes of tokens: currency, investment, and utility tokens. It analyzes the differential implications of each of these types, and their hybrid forms, for EU securities regulation, and develops policy proposals for their regulation.

New EU Directive on the Disclosure of Non-Financial Information (CSR)

Abstract: In October 2014 the EU adopted new rules on the disclosure of non-financial information, otherwise known as corporate social responsibility (CSR) information. The new requirements bring the CSR disclosure regulation in the EU in line with the current best practices and constitute a huge step forward compared to the existing rules on the disclosure of non-financial information.This article analyses the likely impact of the amended Accounting Directive; its scope of application, what should be disclosed and how the directive should be enforced. In doing so, the article compares the new requirements to current best practices and experiences, especially using the experiences with mandatory CSR reporting in Denmark and the experiences with corporate governance reporting in the EU. Based on these experiences the article also makes predictions of whether the new requirements are likely to increase the quantity of the non-financial information disclosed and the consistency and comparability of the reports.

The Global Financial Crisis and the Disclosure Paradigm in European Financial Regulation: The Case for Reform

Abstract: The global financial crisis has exposed the many limits of disclosure as an effective regulatory tool in the context of financial markets. Most of the risks that led to the creation of the 2008 catastrophe were often fully disclosed but the markets failed to understand what was disclosed and appreciate the implications. The reasons for this failure were product complexity and the impact of sociopsychological factors such as bounded rationality, strategic trade behaviour (herding), and cognitive biases. Yet much of European Financial Regulation is based on the disclosure paradigm to remedy market failure and prevent abuse. Therefore, the EU needs to devise strategies that make disclosure work under actual (not hypothetical) market conditions. It is argued that only through the use of experiments, as a complement to empirical studies, EU policy-makers will be able to measure the actual impact of disclosure on investor protection. A conclusion that may be drawn from past studies is that default options in a variety of financial contracts are a better alternative to disclosure for retail investors with low levels of financial sophistication. If future studies confirm this finding, then the EU should consider whether an independent EU financial products committee is a better investor protection strategy than increased disclosure in the case of unsophisticated investors.