Multinational enterprises, corporate groups and supply chains in a globalised world:
Regulatory challenges and approaches, and the future role of company law and corporate governance
Significance of the Forum Theme
Over the last decades, multinational enterprises have grown in significance. These companies are usually based on a sophisticated corporate group structure with subsidiary companies, both in the home state of the parent company and abroad. In the era of globalisation those companies increasingly also rely on complex supply chains which often span over different countries and continents. Those developments pose significant challenges for traditional concepts of company law and corporate governance, for example the concept and exact meaning of the company as a separate legal entity and what is meant by the fact that directors must act “in the best interests of the company”: what different interests are represented in “the company”? What does this mean in the context of groups of companies? There is much discussion about a so-called regulatory gap in supply chains which allows multinational enterprises to outsource not only the production, but also legal liability to suppliers. The hitherto dominating soft law approach to addressing the issues posed by such business structures has been much criticised, but is there an alternative to it? In recent years, particularly following the UN Guiding Principles on Business and Human Rights, much emphasis has been placed on corporate disclosure, but there are questions and some doubts about its impact.
This Forum will critically review the impact that these business developments have for company law and corporate governance and related legal areas such as public law and private law, in areas like corporate law, tort law and tax law. The Forum will discuss to what extent existing legal concepts are still ‘fit for purpose’ or if they need adjustment and refinement, for example, the contested debate about group liability. The Forum will also look at recent developments in the home states of multinational enterprises which are intended to overcome the ‘regulatory gap’ such as transparency laws or duties to conduct due diligence.
Areas that will be covered include:
- Group liability;
- Corporate transparency / non-financial information disclosure (EU Directive, UK Modern Slavery Act transparency in supply chains etc.);
- The French supply chain legislation from 2017 which imposes a duty to conduct due diligence on parent companies;
- Corporate structures and tax law;
- Soft law and its limits (Corporate Governance Code and self-imposed codes of conduct);
- An international approach? What can EU law do, including discussions at UN level about a treaty on companies;
- The national implementation of the UN Guiding Principles;
- The influence of corporate theory (e.g. shareholder primacy theory versus stakeholder theory);
- “The purpose of the corporation” in an international and globalised context – “profit maximisation for shareholders” or “long-term sustainable growth of corporations, achieved by acting responsibly and being good ‘corporate citizens’”;
- Transnational tort litigation? The German KIK case which as an ongoing lawsuit based on tort against the German textile discounter KIK at the Landgericht Dortmund for a factory fire at a supplier in Pakistan and comparable international examples like the BP Deep Horizon Environmental disaster.