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Corporate governance and public governance raised similar (and very complex) questions :
1/ How to establish or / and restore trust between
CITIZEN & STATE - SHAREHOLDERS/ STAKEHOLDERS & COMPANY?
2/ How to create sound conditions for participation in a MODERN & responsible DEMOCRACY - MODERN & responsible COMPANY?
3/ How a DEMOCRACY listens to civil society and takes into account its opinions --How a COMPANY listens to shareholders/ stakeholders and takes into account theirs interests?
Public and corporate governance a brief comparison
PUBLIC GOVERNANCE AND OR CORPORATE GOVERNANCE
VIVIANE DE BEAUFORT
TENURED PROFESSOR AT ESSEC WITHIN THE JEAN MONNET
FOUNDER AND CO-DIRECTOR OF THE EUROPEAN CENTER FOR
LAW AND ECONOMICS
EXPERT AT « BRUSSELS »
Corporate governance and
A short comparison
Complexity of a global approach
Corporate governance and public governance raised similar (and
very complex) questions
1/ How to establish or / and restore trust between
CITIZEN & STATE
SHAREHOLDERS/ STAKEHOLDERS & COMPANY?
2/ How to create sound conditions for participationin a
MODERN & responsible DEMOCRACY
MODERN & responsible COMPANY?
3/ How a DEMOCRACY listens to civil society and takes into
account its opinions
How a COMPANY listens to shareholders/ stakeholders and takes
into account theirs interests?
A part of the answer depends on :
*QUALITY of managers / of politicians (human factor)
*TRANSPARENCY of decision‐making process inside the Company / inside the State
*STAKEHOLDER’S ABILITY to INTERVENE in the decision of the company
CIVIL SOCIETY’S ABILITY to take part in regulation process of the State
The objective of a good governance (public or private one) is to obtain « the
best decision”. That is, a decision acceptable to everyone, able to include in a
coherent manner complexity of different views and interests of each stakeholder.
At the end of a good process of consultation, the ultimate choice must serve the
“social interest” of the company / the “public interest” of the nation / the community
of States (for European Union).
To solve these complexe issues
The manner in which the corporate governance of a Company is organized
depends on a cultural background, national specificities, company’s specific
capital structure & the role and accountability of companies vis‐à‐vis
stakeholders organised by rules.
In the same way…
The manner in which the public governance is organized in a State depends on
political regime (parliamentary or presidential)…the systems’ maturity
regarding the participation of the civil society in the country : MODERN
democracy gives a role to lobbying in a way that classic representative
democracy does not.
In both case, there should be a coherent system of values, principles and
mechanisms regulating relations with the actors.
Mécanisms are in both cases dependant on
Complexity of the cultural anchoring
European PUBLIC GOVERNANCE
Treaties: EC Treaties, Treaties of revision, Treaties of
adhesion, General Principles of the ECJ (case law),
International Treaties signed by the EU
Constituent regulations of each European
institution (European Parliament, European Commission,
Economic and Social European Council, general principles of
European law PGD from the European Court of Justice
(article 2 ‐ ex: transparency principle) and Enactments
(Directives, Regulations, decisions)
The EU has a specific & autonomous system to produce law.
The European system creates rights for individuals and
proceedings secure the application of these rights. The EU
law is integrated in the national system, more or less directly,
depending on the nature of the legal act (article of Treaties,
regulations, directives, decisions) with the principle of
precedence over national law, and the direct and binding
effect of the “acquis communautaire”.
The Treaty of ROME on the EEC 1957
The SINGLE European ACT 1987
The Treaty of MAASTRICHT 1991 (3 pillars )
The Treaty of AMSTERDAM 1997
The Treaty NICE 2001…2003
The Treaty of Lisbonne…2010
European CORPORATE GOVERNANCE
To make the parallel, there is also sophisticated body of
company law rules and CG principles
at the European scale…
List of EU measures :
– Directive 2006/46/EC of 14 June 2006 on the annual
accounts of certain types of companies, 83/349/EEC on
consolidated accounts, 86/635/EEC on the annual accounts and
consolidated accounts of banks and other financial institutions and
91/674/EEC on the annual accounts and consolidated accounts of
– Directive 2004/109/EC of 15 December2004 on the
harmonization of transparency requirements in relation to
information about issuers whose securities are admitted to trading
on a regulated market and amending Directive 2001/34/EC
– Directive 2007/36/EC of 11 July 2007 on the exercise
of certain rights of shareholders in listed companies
‐ Directive 2004/25/EC of 21 April 2004 on takeover bids
– Commission Recommendations
* 2005/162/EC of 15 February 2005 on the role of non executive or
supervisory directors of listed companies and on the committees of
the (supervisory) board
*2004/913/EC of 14 December 2004 fostering an appropriate regime
for the remuneration of directors of listed companies *2009/385/EC
of 30 April 2009 complementing Recommendations 2004/913/EC
and 2005/162/EC as regards the regime for the remuneration of
directors of listed companies
A large part of rules and CG principles remain at a
national level with national rules or codes.
In both cases, governance is built on several and complex legal
sources – (Binding or not ) Exemple of the EU
Content of European Corporate Governance?
1/ Transparency provisions
Accounting standards, financial reporting, specific declarations (events affecting share
price), annual reporting on CG including, e.g., the question of directors’ remuneration by
example…(say on pay), reporting on CSR ‐Directive of 2014)
2/ Checks and balances
Provisions protecting minority shareholders: strengthening non residents’ rights,
providing the right to ask questions and to propose resolutions , establishing provisions
on fair price during a takeover bid.
Role of Non executive Administrators
Specific protections for certain stakeholders, for example salaries
3/ Accountability provisions : Collective accountability management & auditors
Comparison shows close contents
1. Main principles of a good Corporate Governance.
Checks and Balance:
*The procedure to adopt a rule between the European Commission, the European
Parliament and the European Council
*Several controls at different levels
…This is to ensure checks and balance of different (sometimes opposite) interests
Transparency & Accountability :
A sound dialogue with European Labor Unions and consumer Representatives.
Broad acces to information for Citizen, economic actors, NGOs : open data policies
long in place, high public servants and MP’s are really accessible.
A civil society deeply involved in the process with Green Books, open Consultations
on web (WWW.europa.eu), Meetings, public Hearings, debates with European
think tanks …
Comparison shows very close contents
2. Main principles of the European public governance
Lobbying at Brussels is encouraged and
organized as a key factor of good public
The fact that more and more competences are in the hands of Europe,
then any actor, any citizen may be concerned by a European regulation,
therefore a concerned person will try to monitor European regulation and
influence the decision process.
The European Union has become the focal point for lobbyists. These
interest and pressure groups represent national or international economic
but also social and cultural stakeholders (NGO, associations) coming from
the public and the private sector.
They play a part in the decision‐making process.
To go further …What about
Lobbying in EU ?
Lobbying could be defined as “a process aiming to influence and
secure policy and legislative outcomes to the benefit of a specific
interest or cause”.
It requires a two‐way transparency (openness of policy‐making &
participation of private actors )
It integrates an “Ethical dimension” …There ‘s a need to have
a clear identification of the interests represented…Therefore there’s
an official Register .
a common Code of Conduct for all lobbyists whatever it is total or
Greenpeace or the ECLE‐ESSEC
a system of Monitoring of practices and behaviours of lobbyists and of
high civil servants … And sanctions .
….Meaning we go back aigain to a need of transparency &
Then to keep a good governance the question is how to
Promote Ethical and responsible lobbying ?
Corporate Governance : how to better involved stakeholders ? Role of CSR
Ho to promote a less short term approach of business?
“In the current economic situation, we need more than ever to ensure that
companies are well governed and consequently reliable and sustainable. Too much
short term thinking has had disastrous consequences.
New legal tools could be implemented to promote the long term viability and
continuity of the enterprise: long term shareholders preferential treatment,
promotion of a sound dialogue with them to encourage them to be more active
on corporate governance issues.
In the field of corporate social responsibility, the Commission has recently called
for non‐financial disclosure by companies.
European Union : how to better involved citizen ? Role of European citizenship
In the same way, the promotion of a European democracy meaning the creation of a
European citizenship is required to limit the gap between the European Union and its
citizens (pedagogy, communication, …) 11
Comparison shows CG and PG have the same perspective
How to promote better democraty ?
A very huge and complex question
Differences between public and private governance fields.
Different primary goals: for a company the main goal is
profitability, for a State or the EU the main goal is bringing
Priorities Arbitrations have not the same roots: Social interest
of the company / General interest of a State
But the comparison shows …Difference of