This document compares corporate governance and public governance at the European level. It discusses how both fields aim to restore trust and enable participation through transparency, checks on decision-making, and stakeholder input. However, corporate governance focuses on profitability while public governance aims for cohesion. Still, modern democracy and companies both require representation of economic and social interests. The document also notes calls for corporate governance to address short-termism and how public governance could improve European citizenship and responsible lobbying.

1. Corporate governance and
public governance - A Short
Comparison at the
European level
Viviane de Beaufort
Doctorate in European Community Law, University of Paris I - La Sorbonne , Master's Degree,
European Community Law, University of Paris I - La Sorbonne. Master's Degree in Political
Science, University of Paris X. Center for European Economics Studies degree, La Sorbonne.
Full Professor in European law with a “Jean Monnet chair” delivered by the European
Commission. Director of the “law curriculum” and co-director of the European Center Law and
Economics at ESSEC (ECLE).
Funder and Director of “Women programmes ESSEC” supported by the Women’s Forum and
several women networks.
Author of several books, chapters of books and articles on Corporate Governance and on
European public affairs. Involved in several think-tanks.
beaufort@essec.fr @vdbeaufort

2. Corporate governance and public
governance raised quite similar
questions
 How to restore trust between CITIZEN and
STATE / SHAREHOLDER & COMPANY?
 How to create sound conditions for
participation in a MODERN DEMOCRACY -in a
MODERN COMPANY?
 How a DEMOCRACY listens to civil society
and takes into account its opinions / A
COMPANY listens to shareholders and takes
into account its interests
Corporate governance and public governance - A Short
Comparison at the European level

3. Same questions to take into account:
 QUALITY of managers / of politicians
 TRANSPARENCY of decision-making process inside the company
inside the State
 STAKEHOLDER’S ABILITY to INTERVENE in the company /
CITIZEN’S and CIVIL SOCIETY’S ABILITY to take part in
regulation of the State (European Union)
This type of governance aims to achieve a clear objective: obtaining
« the best » decision.
That is, a decision acceptable to everyone, including different views
and interests.
At the end of the process of consultation, the ultimate choice must
serve the “social interest” of the company / the “public interest”
of the nation or the community of States (for EU).
Corporate governance and public governance - A Short
Comparison at the European level

4. Public and private Governance in both
cases , deep cultural roots
 The manner in which the corporate governance of
Company X is organized reflects cultural attitudes of
Country Y: the role and accountability of companies vis-à-vis
stakeholders but also depends on the company’s
specific capital structure.
 In the same way, the manner in which the public
governance is organized will depend on the type of political
regime (parliamentary or presidential)…and also on the
systems’ maturity regarding the participation of the civil
society in the country. Modern representative democracy
gives a role to lobbying in a way that classic direct
democracy does not.
In either case, there should be a coherent system of
principles and mechanisms regulating relations with the
actors.

5. REFERENCES on European PUBLIC
GOVERNANCE
Main 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
(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 with the principle of
precedence over national law, and the
direct and binding effect of the “acquis
communautaire”.
REFERENCES on European CORPORATE
GOVERNANCE
A strong and sophisticated body of company law rules
and corporate governance principles at the European
scale…
– Directive 2006/46/EC of 14 June 2006 on the annual accounts 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 insurance undertakings (OJ L 224, 16.8.2006, p. 1–7).
– 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 (OJ L 390, 31.12.2004, p. 38–57).
– Directive 2007/36/EC of 11 July 2007 on the exercise of certain rights of
shareholders in listed companies (OJ L 184, 14.7.2007, p.17–24).
– Directive 2004/25/EC of 21 April 2004 on takeover bids (OJ L 142,
30.4.2004, p. 12–23).
– Commission Recommendation 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 (OJ L 52, 25.2.2005, p. 51–63).
– Commission Recommendation 2004/913/EC of 14 December 2004 fostering
an appropriate regime for the remuneration of directors of listed
companies (OJ L 385, 29.12.2004, p. 55–59).
– Commission Recommendation 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 (OJ L 120,
15.5.2009, p. 28–31).
ETC…
A large part of rules and CG principles remain at a
national level with national rules or codes.
In both cases, strong legal sources and links
with sources and regulation

6. Very near Contents
Main issues at a company level – 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
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.
- Non executive Administrators
-Specific protections for certain stakeholders, for example, shareholder
salaries
3/ Accountability provisions
Collective accountability management, auditors.
New reporting on CSR and diversity

7. In the same way, European public governance incorporate checks and balances:
The Codecision procedure between the European Commission, the European
Parliament and the European Council, the separation of powers, and
cooperation controls at different levels are all supposed to ensure checks and
balance
Moreover, before and during the process transparency provisions require:
- Official consultations of the European Economic and Social Committee and the Committee of the
Regions;
- A sound and regular dialogue with European Labor Unions and consumer Representatives.
- Open public consultations each time the European Commission is about to intervene.
Consultations are launched to identify possible positions and opinions from the civil society.
People, citizen, economic actors, NGOs are able to access to information (open data policies long in
place), high public servants are accessible. The civil society is deeply involved in the process with
Green Books on particular topics, questions, meetings, public hearing. Lobbying at Brussels (EU) is
both legal and encouraged.
The European Union has become the focal point for lobbyists, who are becoming increasingly
influential.
These interest and pressure groups represent national or international economic, social and cultural
stakeholders from the public or private sector. They play a great part in the decision-making process.

8. Economic and
Social
Committee
European
Commission
PROPOSALS
DECISIONS
European
Parliament
OPINIONS
CODECISION
Committe of
Regions
Council of
Ministers
DECISIONS
Court of
Auditors
FINANCIAL
European Council CONTROL
GUIDELINES
OPINION
DECISION
INITIATIVE
CONTROL

9. EU public governance and
corporate governance may (must)
both change perspective

10. The European Commission asked several questions about the limits of the
system, and seems ready to modify rules of CG to avoid the short term
perspective of CG due to :
“the role of institutional investors, pressure of markets and investors and
the rise of shareholder activism by hedge funds and private equity, in
combination with the vast liquidity that was available in the market”.
*Report on the Future of EU Company Law April 2011
*CG’s Green Paper June, 2011.
*In the field of Corporate Social Responsibility : non-financial disclosure by
companies directive of 2014
Michel Barnier said: “In the current economic situation, we need more than
ever to ensure that companies are well governed and consequently
reliable and sustainable. …we need company boards to be more effective
and shareholders to fully assume their responsibilities.”
“How to create a sound CG and avoid short-termism” is
the new question of the European Commission in CG
field

11. Management and members of boards are expected to explain better risk
management functions, risk management policies, structures and
procedures. The board should take responsibility for the company’s ‘risk
appetite’.
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.
* shareholders exercise of voting rights simplified with a voting platform
system, allowing shareholders to vote electronically;
* system of identification of shareholders so as to better communicate with
them
* employees’ interest in the long-term sustainability of their company
The European Commission continue to work on possible proposals to put
forward a new framework initiative to tackle issues related to CG
,company regulation and the societal challenges that enterprises are
facing.
OECD, Corporate Governance and the Financial Crisis - Conclusions and emerging good practices to enhance implementation of the Principles, February 2010.
http://ec.europa.eu/internal_market/consultations/2010/non-financial_reporting_en.htm.
“How to create a sound CG and avoid short-termism”
is the new question of the European
Commission in CG field (2)

12. In the same way, there is a need to create a good European public governance with a real
European citizenship
The gap between the European Union and its citizens must be a question duly addressed. People
learn about politics and political issues largely through their national education systems and via
their national, regional and local media.
- Better educate citizens at school so that they understand the 1957 project of peace and cooperation,
of openness for all Europeans, of overcoming national religious, socio-political and nationalistic
conflicts;
- Better train managers in executive education so that they understand real issues of the Internal
Market;
-Promote tangible symbols of the European construct: our European passports, the Euros in our
pockets, the designations of European origin for our local products, the soon-to-be European
driver's license,the European standards developed at the ESC, the Erasmus exchange program for
our students;
- Communicate better. Citizens feel far removed from the European Union, a complex and poorly
understood system. The media are partly responsible for this state of affairs: they do not discuss
Europe to any significant extent. They do not enable citizens to grasp the "European thing." Why is
Europe not mentioned in the 8 o'clock news? Why not a regular program on what is happening in
Brussels? Why did the national press take so long to write articles on Europe regularly?
Moreover, European political parties should be more responsible vis a vis European project and what
they say. The Euro skeptic opinion is for a large part due to their behavior. The debate never took
place. For citizens of all countries, the "social pact" of Europe must be promoted.
How to create a sound European citizenship is also “The” political
question for the future of Europe

13. A part of the question is also about to promote
Ethical and responsible lobbying
Lobbying could be defined as “a process comprised of
communications activities aiming to actively influence and secure
policy and legislative outcomes to the benefit of an identifiable
interest or cause”.
Ever greater numbers of Brussels & Member States actors in line
with expansive EU agenda
Politics of EU policy-making based on compromise and consensus
dossier by dossier – alliances are increasingly key
Two-way transparency (openness of policy-making + participation
vs. transparency + accountability)
Highly developed media environment, increasing public scrutiny
and pressure on actors
There should be an “Ethically responsible lobbying” which serves
the public debate with a clear identification of all of the interests
being represented in the registration system.
Incentives to register would include automatic alerts of
consultations on issues of known interest to the stakeholders.
A common code of conduct for all lobbyists
A system of monitoring, and sanctions to be applied in the event
of incorrect registration and/or breach of the code of conduct.

14. As a Conclusion: sound
links and few differences
Of course, there are differences between public and private governance
fields.
*First, public and private governance have different primary goals: for a
company the main goal is profitability, for the EU the main goal is
bringing cohesion.
*Second, democratic principles, notably equality, are not fully applicable
to a company. By example: the “ one share –one vote principle” , which
is a sound principle of democracy in a State needs nuances in corporate
statutes.
In the corporate setting, several countries authorize double voting rights
or decoupling ownership and voting rights (Survey WP CERESSEC, V.de
Beaufort, 2006 - Ferarrini « OS– OV: A EUROPEAN RULE? Law WP N°.
58/2006, January 2006, Yi Zhang , Khachaturyan,
But, in any modern democracy, a place must be given to a direct
expression of private economic and social interests and in any modern
company, a place must be given to stakeholders interests. There are the
links.
Personal involvement and personal ethic of political people, managers
and CEO makes ALL the difference