The struggle for efficient internal management control is the centre of the corporate
governance debate in Europe since the incorporation of the Dutch Verenigde Oostindische
Compagnie in 1602. Recent developments in Europe illustrate a trend towards specialised
rules for listed companies and indicate growing convergence of internal control mechanisms
independent of board structure.
The revised Combined Code in the United Kingdom and also the French revised Principles
of Corporate Governance, both of 2003, strengthen the presence of independent directors
on one-tier boards in Europe. Another systemic break-through for the two-tier board
model is the growing tendency to separate the positions of CEO and board chairman.
For the German two-tier structure, the strengthening of the strategic role of the
supervisory board (Aufsichtsrat) by the new German Corporate Governance Code of 2002
means an attempt to incorporate a key advantage of the one-tier model. Similarly,
the control duties of the
Italian internal auditing committee (collegio sindacale) were extended by the Testo
Unico of 1998 and bring the Italian second board closer to the German supervisory
board. The common trend to stricter standards of independence is challenged in Germany
by its rigid concept of co-determination and, to a lesser extent, by the more fl
exible model of labour participation in France. Director’s duties and liabilities
and also derivative actions are a focus of the reform debate in Germany since 1998
and are currently under review in the United Kingdom. After the Enron debacle the
interplay between internal control devices and independent external auditing has
become a major focus of interest in all
countries considered. Driven by Anglo-Saxon codes of conduct audit committees today
serve as a common denominator for good corporate governance.
Though formal convergence is strong company organs in each country take on their
own specifi c garment. Path dependent system development especially depends on shareholder
structures and banking systems. The trend to greater structural fl exibility on board
level is strongly triggered by the introduction of a threefold board model choice
under the French Loi Nouvelle Régulations Economique of 2001 and under the Italian
Vietti-Reform that is in force since January 2004.