Mirosław Cejmer, Jacek Napierała, Tomasz Sójka (eds.)

European Company Law, Vol. III, Corporate Governance, Zakamycze 2006

(in Polish)


The main issue discussed in the third volume of “European Company Law” series pertains mainly to corporate governance matters. The authors – Mirosław Cejmer, Maciej Chruściński, Adam Opalski, Krzysztof Oplustil, Tomasz Sójka, Rafał Stroiński and Christoph Teichmann, analyze a complex system of legal institutions created and developed in the European Community law in order to ensure effective management and control in corporations and to find balance among specific interests of particular groups of their stock- and shareholders. These problems have also been in the centre of attention of many decision-making bodies discerning the direct causal nexus between the economic growth and the improvement of investors’ confidence in the capital markets that follows the consolidation of the corporate governance rules. The most important and significant results of this interest are numerous codes of corporate governance adopted by listed companies all over the world. Not surprisingly analogous initiatives have also been taken within the European Union. The legislative proposals formulated in the official document of the European Commission entitled “The Commission Action Plan on Modernising Company Law and Enhancing Corporate Governance in the EU” are successively being realized and first pieces of legislation, e.g. the Commission’s recommendation on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board, have already been enacted. Legal proceedings on specific duties and liabilities of executive directors and members of the board are also well under way (e.g. the lately-published Directive 2007/36/EC of 11 July 2007 on the exercise of certain rights of shareholders in listed companies).
The book presents in an accessible way the most important issues connected with the broad reform of corporate structures on integrated capital markets of the European Union.



Table of contents

Christoph Teichmann
Corporate governance – between the law and the market

1. Introduction
2. Corporate governance – the answer for the principal-agent problem
    2.1. The basis of the principal-agent conflict
    2.2. The principal-agent problem in a listed company
        2.2.1. Dispersed shareholders
        2.2.2. Listed company with a dominant shareholder
3. The economic steering mechanisms
    3.1. Market incentives for the management
    3.2. The result-based remuneration
    3.3. The market for corporate control
4. The role of the law
    4.1. Unreliability of the market
        4.1.1. Problem of information asymmetry
        4.1.2. Externalities
    4.2. Justification for legal interferences
        4.2.1 Iuris dispositivi
        4.2.2 Iuris cogentis
        4.2.3 Corporate governance codes
5. Centralized and decentralized legislation in Europe
    5.1. General evaluation of centralized legislation
        5.1.1. Benefits of centralized legislation
        5.1.2. Costs of centralized legislation
    5.2. Subject matter areas of centralized legislation
        5.2.1. Internal relations among managers and shareholders
        5.2.2. Investor protection on capital market
        5.2.3. Stockholders-protecting regulations
        5.2.4. Existence of possibility of selection of different corporate law solutions
6. Final conclusion

Rafał Stroiński
Good practices in the companies listed on the Warsaw Stock Exchange – presentation of selected legal issues on the comparative basis

1. Introduction
2. Reasons for the creation of corporate governance codes
    2.1. The European Union and the United States of America
        2.1.1. Financial scandals
        2.1.2. Capital markets competition
        2.1.3. Polish capital market and company law of the transition period
3. Structure of corporate governance codes
    3.1. The preambule
    3.2. Repetition of statutowy regulation
    3.3. The most important issues regulated in corporate governance codes
   3.4. General provisions of The Polish Corporate Governance Code vs. Polish company law
4. The comply or explain rule
    4.1. The comply or explain rule and the enforcement of corporate governance codes
    4.2. Addressees of the comply or explain rule
    4.3. Information – the core of the comply or explain rule
5. Corporate governance codes - an example of soft-law
6. Observance of the CGC Code by companies listed on WSE
7. Reduction of agency costs – basic economic function of the CGC
8. CGC impact on the companies listed on the Warsaw Stock Exchange and potential directions of their further development
9. Summary

Mirosław Cejmer, Marcin Chruściński
The European reform of corporate status of shareholders of the companies listed on the regulated market

1. Introduction
2. The Group of Experts’ recommendation
    2.1. Prefatory remarks
    2.2. The role of the minority shareholder in corporate relations
    2.3. Corporate communication during the preparation of the general meeting phase
    2.4. Up-to-date forms of participation in the general meeting
    2.5. Cross-border voting
    2.6. Recommended legislative measures
3. The Commission’s Action Plan
    3.1. Prefatory remarks
    3.2. Improvement of shareholders rights as one of the basic intentions of the reform
    3.3. Directions of the legislative actions
4. The draft of the Directive on the exercise of shareholders’ voting rights
    4.1. Prefatory remarks
        4.1.1. Accomplishment of guidelines made during the consultation phase
        4.1.2. Justification for the Communities-level action
    4.2. The scope of the Directive
    4.3. Determination of the ultimate investors
    4.4. The preparation of the general meeting phase
        4.4.1. Announcement of the general meeting
   4.4.2. Supplementation of the general meeting agenda and submission of resolutions’ projects by shareholders
        4.4.3. General meeting accessibility – share blocking prohibition
    4.5. Shareholders rights during the general meeting
        4.5.1. Participation in the general meeting by electronic means
        4.5.2. Right to ask questions
        4.5.3. Proxy voting
        4.5.4. In absentia voting
    4.6. Securities intermediaries’ status in a cross-boarding voting procedure
    4.7. Information after the general meeting
5. Summary

Tomasz Sójka
Disclosure requirements of the listed companies and the corporate governance

Part I
Information requirements of listed companies

1. Introduction
2. Function of the disclosure requirements of listed companies
    2.1. The role of information for investors
    2.2. Information asymmetry between shareholders and the corporation
    2.3. Justification for the legislative action
3. Disclosure requirements connected with public offering or admission to trading on a regulated market
    3.1. Legal character and content of the prospectus
    3.2. Formation of obligations pertaining to the prospectus
    3.3. Exceptions to the prospectus obligation
        3.3.1. No information obligations
                Public offerings without prospectus obligation
                Admission to trading on a regulated market without prospectus obligation
        3.3.2. Simplified disclosure obligations – information memorandum
    3.4. Publication of the prospectus
    3.5. Prospectus information and information revealed during promotion
4. Disclosure requirements pertaining to trading in shares on regulated market
    4.1. General overview
    4.2. Periodic information disclosure requirements
    4.3. Inside information disclosure requirements
    4.4. Current information disclosure requirements
5. Sanctions for failure to obey disclosure requirements

Part II
The management and supervisory board members liability for publication of false information in periodic reports

1. Corporate governance after Enron – significance of reliable finance reporting
2. Comparative outline
    2.1. US law
    2.2. European law
3. Civil liability of the management and supervisory board members for the content of periodic reports under the Polish law
    3.1. Civil liability of the management board members
    3.2. Civil liability of the supervisory board members
    3.3. Legal consequences of transposition of amended accountancy Directives into the Polish law

Adam Opalski
The supervisory board as a strategic linkage of corporate governance in joint-stock companies

1. The supervisory board prerogatives in a joint-stock company competence layout
2. Composing of the management board
3. Supervising the management board
4. Participation in managing of the company the affairs vs. prohibition of issuance of binding instructions to the management board
    4.1. Legal boundaries of the management non-interference rule
    4.2. Practical aspects of management board – supervisory board relations
5. Legal basis for the management board’s right to grant consent for managerial decisions
    5.1. Comparative remarks
  5.2. Decision-making prerogatives of the supervisory bard as an indication of resemblance between dualistic and monistic system
    5.3. De lege ferenda remarks
6. Conclusions

Krzysztof Oplustil
Independent members of the supervisory board as an instrument of corporate supervision improvement in listed companies

1. The origin and functions of the institution in various models of corporate supervision
2. Place of regulation
    2.1. The Commission’s recommendation
    2.2. Polish Corporate Governance Code
3. The notion and criterions of independence
  3.1. Comparison of general definitions of independence contained in the Commission’s recommendation and the CGC
    3.2. The nature of independence
    3.3. Detailed criterions of independence
4. Appointment and dismissal of the independent members of the supervisory board
    4.1. Initial selection of candidates
    4.2. Ways of appointing and dismissing independent members of the supervisory board
    4.3. Comparative digression: cumulative voting in US law
5. Procedures of determination and monitoring of independence of the supervisory board members
6. Number of independent members of the supervisory board
  6.1. The Commission’s recommendation and regulations of foreign corporate governance codes
    6.2. The CGC
7. Independent members’ prerogatives and their place in the supervisory board’s structure
    7.1. The Commission’s recommendation
    7.2. Polish law and the CGC
8. Conclusions

Mirosław Cejmen

The Commission’s recommendation on the regulated market companies directors’ remuneration

1. Introduction
2. The Expert Group Report and The Commission Action Plan
    2.1. The Expert Group Report
    2.2. The Commission Action Plan
3. The Commission’s recommendation
    3.1. Prefatory remarks
    3.2. The scope of regulation
    3.3. Remuneration policy
        3.3.1. Remuneration policy disclosure
        3.3.2. Shareholders voting
    3.4. Remuneration of individual directors
    3.5. Remuneration based on shares
        3.5.1. Shareholders approval
        3.5.2. Information prior to the general meeting
4. Summary