Jordan Publishing–Gore-Browne on EU Company Law, Special Issue 2016, SR147-161
Corporate success and corporate failures have a far-reaching impact on the wealth creation in any nation’s economy and on the European economy as a stronger internal market as a whole. Companies are no longer just national but are exposed to international markets. The running of multinational companies with subsidiaries operating in different countries under different legal frameworks in the area of corporate and commercial law under a single management is a reality of today’s economic life. Companies’ internal and external behaviour are of perennial interest and the complacency about the way that listed corporations were organised, financed and governed in the past began to be challenged when criticism arose about relationship conflicts and corporate abuse of resources and misbehaviour. Business leaders and institutional investors, national and European policy-makers and various other international organisations began to challenge the existing forms of corporate governance and drove its development to meet its new truth. Corporate governance rules aim to provide institutional, legal and factual regulatory frameworks for companies to reduce opportunistic management behaviour through both internal control of companies’ structures and external control of their market environment.
This article considers the theoretical frameworks of corporate governance that have developed as a response to corporate misbehaviour and have driven waves of corporate governance regulation in recent decades. The article distinguishes the aspects the European legislator has found most important to regulate in order to achieve its goal of a successful single internal market. It focuses on the European corporate governance approach to fostering corporate governance and convergence in the European Union because national corporate governance rules of Member States fall too short. It will conclude that European corporate governance has emerged in the last few years. Corporate governance, however, is not static; it is dynamic and must adjust to changing times and circumstances.