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

Abstract

Improving European corporate governance after Enron requires company and capital market law reforms. This article discusses shareholder decision-making; the choice between the onetier 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 liability is proposed. A key problem is the need for loyal and competent intermediaries. If the 13th Directive on takeovers fails, then hopes will be pinned on the Court to continue its golden share case law. The German Volkswagen Act will be the test case.