Nobel Peter, Corporate Governance und Gesellschaftsrecht – Gleichklang oder Wettlauf zwischen Wirklichkeit und Recht?, in: Forstmoser Peter/Honsell Heinrich/Wiegand Wolfgang (Hrsg.), Richterliche Rechtsfortbildung in Theorie und Praxis , Methodenlehre und Privatrecht, Zivilprozess- und Wettbewerbsrecht, Festschrift für Hans Peter Walter, Bern 2005, p. 397-416.
In this essay, Prof. Dr. Peter Nobel recalls some large corporate scandals (Swissair, Enron, WoldCom, Erb, Ahold, Parmalat) and points out that the fact that there is a call for a solid governance oriented towards a steadier and more trustworthy leadership should not be a surprise. Corporate Governance has become a magical omnibus word of the economically oriented present times. In all its diverse definitions, the term Corporate Governance always involves the management of a company; its primary intention is to be interest-oriented towards shareholders.
Prof. Nobel goes on to illustrate the beginnings and the developments of the Corporate Governance discussion and points out that the basic principles of corporate management organization are still found today in the 1932 epochal work of Berle/Means on “Private Property and the Modern Corporation”. Even at that time, there was a call for a fair treatment of shareholders. However, at its core, corporate law found itself in a searching process for a long time. Also, suspicion grew that managers were “chambering” its royal chambers as mere “agents”. Respectable “Financial Journals” raised the question of the mechanism in connection with “stealing”. Therewith, the mistrust theory of the “agency problem” found new fertile soil.
The “Corporate Governance spring” in Europe is to be seen in connection with the publication of the English Cadbury report “on the financial aspects of corporate governance”. In Switzerland, the Swiss Code of Best Practice (SCBP) and the transparency directive of the SWX Swiss Exchange, as well as the reform package within the transparency-promoting case for company law, are the results of this discussion. In particular the OECD Codex of Corporate Governance must be mentioned as a fundamental document, whereby it must be taken into account that the OECD is a global organization. Almost as a “routine duty”, the stakeholders’ issue is also always brought into the foreground. Furthermore, shareholders should be able to express their “voice” with regard to more subjects. Disclosure is essential and stakeholders’ relationships call for new considerations.
Loud calls for more transparent boards of directors and for ethics are omnipresent. Accordingly, the corporate law control- and Corporate Governance-structures will feature full transparency in all areas. Next to this, special importance is to be given to the right of minority shareholders to instigate a special audit. However, the monistic or dualistic system rooted in the single EU Member States should not be touched. The auditor also plays a key role. Prof. Nobel observes that we live in a time in which, without wanting to sound like saints, we call upon “ethics” from everywhere. If the actions of people are made more public, then they will want to be “good people”.
According to Prof. Nobel, there are three lines of development which should be addressed consistently and always in light of the foreign, European and American regulatory developments. First of all, company law is, to a great extent, still biased by the concept of corporate sole proprietorship; and, it has only partially penetrated into the concern-like reality of special-purpose assets structures. Second, the relationship between company law and stock exchange law, in the broadest sense, (or what can be called “company-stock-exchange-law,” which in German is called “Börsengesellschaftsrecht”), should be tackled more consistently. Finally, it gives the impression that the issue of the corporate constitution has been re-addressed.
The author states that, in particular in connection with today’s concern-like reality in the legal framework, pragmatism alone is not sufficient for the long term. The way towards a solution could be duplication in the sense that the concern will also be considered as a legal entity. In the context of “company-stock-exchange-law” [“Börsengesellschaftsrecht”], it is decisive that, in light of the increasing internationalization of capital markets, the so called international standards will prevail everywhere. These standards are shaped outside the parliamentary chambers and are therefore legally “fragile”. An unsolved question is the one concerning the corporate constitution. In the context of the debate for the “good” Corporate Governance, the so called stakeholders are also brought to the table. Of course, the question must also be considered of the extent to which the focus on “shareholders” has been suitable historically to promote economic efficiency through the exclusion of the other stakeholders.
The author is aware of the fact that new approaches are hard to develop. However, he is of the opinion that something can be done out of the theory of the “firm” developed within “Law and Economics” (or more precisely, the corporation).
You can find a scan (PDF) of the original text here: Nobel Peter – Corporate Governace und Gesellschaftsrecht