Commentator
Dr. Jay Cullen, Lecturer in Banking and Finance Law and Assistant Director of the Sheffield Institute for Corporate and Commercial Law, The University of Sheffield
Leader of the assessment
Professor Trygve Bergsåker, Departement of Private Law
Supervisors
Professor Beate Sjåfjell, Department of Private Law
Co-supervisor Yuri Biondi, CNRS Paris
For outline and draft text, contact Linn Cecilie Anker-Sørensen.
Abstract
Did you know that fifty of the world’s hundred largest economies are represented by multinational enterprises, without their conduct being subject to an overarching regulatory framework?
By extension, did you know that corporate groups can choose to structure their business in ways that legislators have not anticipated?
One of the main reasons for this is our limited perception of what a corporate group can represent in terms of contractualization and securitization.
We are facing a legitimacy concern for corporate accountability, transparency and liability regimes, due to a limited regulatory framework for corporate groups.
There is for example reason to believe that illicit money that flows between de facto affiliated entities can be transferred by the use of (intra group) derivatives.
On an overarching level, the subject of this thesis is about achieving a better understand financial practices that diverge from the letter of the law. This will enable us to assess whether and how the current regulatory regime reflects these practices and thereby to mitigate the unlawful ones.
In the aftermath of the financial crisis in 2007-08 the EU legislator amended a large number of its security and company law regulations in an effort to ensure more financial transparency and accountability. One standard remedial measure to correct information asymmetry in the corporate sphere seems to be to add new topics to the existing reporting requirements. This approach raises several questions: Is the quest for more financial transparency achievable only through additional reporting obligations? Moreover, what about our ability to process the growing amount of information? Are we able to sort out the significant pieces of information from all of the rest, or will the principles of ‘bounded rationality’ lead to a false belief that we have achieved transparency and an overview of the ever-changing corporate landscape? Most important, however, is the issue which is often neglected in the debate over financial transparency, namely that if we want to address the negative consequences of corporate groups, e.g. capital flight, corruption, market abuse etc., we need to understand the underlying structure that enables the practices we are aiming to regulate. A better understanding of the underlying structural ties and interconnectedness may provide us with a more precise picture of how the infrastructure can be used for both effective trade and production, and also how the same structure can serve as a tailor-made architecture for illicit activities.
The thesis encompasses three overarching research questions:
- What is corporate control – understood as the key criterion for corporate group organization, transparency and accountability?
- In what ways do financial and corporate practices challenge the conventional concept of control?
- Do the amended relevant EU directives and regulations respond to these financial and corporate practices (decoupled corporate control)?
Cumulating the three questions above, I question the conventional concept of control. I want to find out whether different modes of control pass under the regulatory radar when corporate control is assessed. The importance of the questions is twofold: first, to improve our understanding of corporate group structuring, and second, the socio-economic perspective of regulatory effectiveness. Without bridging the dual aspects of the research questions in this thesis, we cannot fully understand if and whether regulatory effectiveness can be achieved if corporate control remains unidentified. If the answer to the first and second questions is affirmative, we are faced with a scope of ‘shadow business’ outside the sphere of current regulations.