Introduction

Supranational co-ordination of the non-legal aspects of the Member States' systems of corporate governance is, appropriately enough, increasingly achieved by means of ‘soft law’, such as recommendations and exchanges of best practice. At national level, shareholder value finds its clearest and most unequivocal support in the form of corporate governance codes. Although, the Commission currently has no intention of promulgating a supranational corporate governance code, it has issued a number of recommendations which echo the provisions of national codes, and its European Corporate Governance Forum aims to assist Member States to reform their systems. Both these interventions may drive convergence of national ‘soft law’ regimes around what is considered ‘best practice’ from the perspective of shareholder value corporate governance. National ‘soft law’ will also gain greater normative effect through a combination of the Commission urging Member States to require companies to ‘comply or explain’ deviations from national ‘soft law’ and the recent introduction of mandatory disclosure of corporate governance arrangements (see chapter 8 above), which together will enable the market to incorporate deviations from good practice into the current share price. All that is required to complete this picture of shareholder value supranational ‘soft law’ are measures encouraging institutional investors to play a more active role in the companies in which they invest. There are signs that specific regulation may not be required, with Anglo-Saxon institutional investors and, increasingly, private equity and hedge funds taking a more activist stance than in the past.