Search

Corporate boards play a central role in corporate governance and are therefore regulated in the corporate laws and corporate governance codes of all industrialized countries. Yet while there is a common core of rules, considerable differences remain, not only in the details, but sometimes also regarding main issues. These differences depend partly on shareholder structure (dispersed or blockholding), partly on path dependent historical, political and social developments, especially on the question of employee representation on the board. More recently, in particular in the wake of the rise of the international corporate governance code movement there has been a clear tendency towards convergence, at least in terms of the formal provisions of the codes. This article analyzes the corporate boards, their regulation in law and codes, and their actual functioning in nine European countries (Belgium, France, Germany, Italy, the Netherlands, Poland, Sweden, Switzerland and the United Kingdom) from a functional and comparative perspective. Issues dealt with are inter alia board structure, composition and functioning (one tier v. two tier, independent directors, expertise and diversity, separating the chair and the CEO functions, information streams, committees, voting and employee representation); enforcement by liability rules (in particular in cases of conflicts of interest); incentive structures (remuneration); and shareholder activism. The article finds convergence in these European countries resulting from the pressures of competition, a pro-shareholder trend supported by government and institutional investors and, to a certain degree, the impact of the EU. This convergence is more visible in the governance codes and the ensuing practice than in the statutory law. Still, considerable differences remain, in particular as a result of the failure to adopt a mandatory "no frustration" rule for takeovers at the EU level, and diverging systems of labor codetermination. The overall result is an unstable balance between convergence and divergence, shareholder and stakeholder influence, as well as European v. national rulemaking. [ABSTRACT FROM AUTHOR]