1 Reference in this chapter to ‘banks’ is a reference to ‘credit institution’ within the meaning of Article 4(1)(1) of CRR, that is, an undertaking the business of which is to take deposits or other repayable funds from the public and to grant credits for its own account.
2 Reference is made to the country-by-country overview of the European Banking Federation showing great variety in legal form and size of banks within the European banking sector; Facts and Figures 2017, available at https://www.ebf.eu, accessed 8 October 2018.
3 As listed in Annex I to Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to certain aspects of company law,  OJ L169/46.
4 Under Dutch law, this is arranged through a transparency requirement in respect of the management report, based on Article 2:391(5) of the Dutch Civil Code (DCC).
5 The most extensive (and important) directive is the Codification Directive, see Directive (EU) 2017/1132 of the European Parliament and the Council of 14 June 2017 related to certain aspects of company law,  OJ L169/46. This Directive contains rules on, among other things, (cross-border) mergers, demergers (division), and capital issues, but very few on corporate governance. The Shareholders Directive (Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of certain rights of shareholders in listed companies ( OJ L184/17), as amended by Directive 2017/828 of the European Parliament and of the Council of 17 May 2017 ( OJ L132/1) is one of the rare examples of European harmonization of a typically corporate governance issue: the encouragement of shareholder engagement.
6 This is in fact not a limitation of this study, as the Single Rulebook that constitutes the focal point of banking supervision is European in origin. Nevertheless, to the extent allowed by the provisions of the Single Rulebook (i.e. to the extent not prohibited by the prescribed level of harmonization), there could be additional national financial regulation for banks, such as the Dutch bonus cap rule of 20 per cent as set out in Article 1:121 of the Dutch Act on financial supervision, (Wet op het financieel toezicht).
7 Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC,  OJ L176/338.
8 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012,  OJ l176/1,  OJ L321/6 (corrigendum).
9 Council Regulation (EU) No 1024/2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions,  OJ L287/63.
10 Consisting of: (i) Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms and the rules on Deposit Guarantee Schemes as set out in Directive 2009/14/EU amending Directive 94/19/EC on Deposit Guarantee Schemes as regards the coverage level and the pay-out delay,  OJ L173/190 and (ii) Regulation (EU) 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010,  OJ L225/1.
11 See Bart Bierens, Chapter 4, this volume, Section VIII.
12 G20/OECD, ‘Principles of Corporate Governance’, 2015, 9.
13 Within the scope set forth in Article 4 of Council Regulation (EU) 1042/2013 and with the prescribed cooperation of national supervisory authorities as set forth in Article 6 thereof.
14 Parts of this study are based on and a further elaboration of a previous study of the impact of financial regulatory laws on Dutch company law by Kitty Lieverse: (i) ‘Doorwerking van het financieel toezicht recht in het vennootschapsrecht’, inaugural lecture of 24 November 2016, Radboud Repository, (http://hdl.handle.net/2066/167585), and (ii) ‘Doorwerking van het financieel toezicht recht in het vennootschapsrecht’, Ondernemingsrecht, 2017/145.
15 As is also set out in Recital 56 of CRD IV.
16 Article 91(2) of CRD IV.
17 Article 91(3) of CRD IV.
18 For comprehensive studies on corporate governance of banks, see Peter O Mülbert, ‘Corporate Governance on Banks’, European Business Organization Law Review (2009), 10, 411–36 and the Basel Committee on Banking Supervision (BCBS), ‘Guidelines Corporate governance principles for banks’, 2015.
19 For the last two decades, an exception has been made in the various corporate governance codes. They often consist of principles, followed by long lists of best practices. Therefore the framework of corporate governance is nowadays rather extensive in comparison with ‘pre-code times’.
20 Reference is, for example, made to the EBA ‘Guidelines on Internal Governance, EBA/GL/2017/11, 21 March 2018, Ch 4, para 17 et seq.
22 Article 2:129a of DCC.
23 P Davies, ‘Corporate Boards in the United Kingdom’, in P Davies et al (eds), Corporate Boards in Law and Practice, Oxford University Press, 2013, 716–17 and 723.
24 The UK Corporate Governance Code mentions ‘the board’, ‘directors’, ‘executive directors’, and ‘non-executive directors’.
25 German Stock Corporation Act (AktG), Paragraph 84.
26 See M Roth, ‘Employee Participation, Corporate Governance and the Firm: A Transatlantic view focused on Occupational Pensions and Co-determination’, European Business Organization Law Review (2010), 11, 51, para 5. To avoid the mandatory employee representation in a supervisory board, a German company can decide to change into a (German) SE. The co-determination within an SE is subject to (compulsory) negotiations between the management and the employees (represented by a special negotiating body).
27 This nomination and proposal is not easy to depart from; see Article 2:158 of DCC. The articles of association may provide alternative provisions, see Article 2:158(12) of DCC.
28 As a condition for the licence, see Article 13(1) of CRD IV.
29 As set out in Recital 55 and Article 3(1)(7) of CRD IV, either as part of the single board, or by means of a separate board of supervisory directors.
30 Article 91(1) of CRD IV, as further detailed in subsections (2)–(10).
31 Reference is made to the ECB ‘Guide to Fit and Proper Assessments’, May 2017 (Updated in May 2018), para 2.2. and also the ESMA/EBA ‘Guidelines on the assessment of suitability’, para 49.
32 See extensively on this topic: Iris Palm-Steyerberg and Danny Busch, Chapter 8, this volume.
34 Article 2:391(7) of DCC.
35 One-Third Participation Act, Paragraph 4(4) (DrittelbeteiligingsGesetz, DrittelbG). This is similar in practice for (large) companies who fall under the Co-Determination Act (MitbestG), according to M Roth, ‘Corporate Boards in Germany’, in Davies et al (eds), n 23, 293 (fn 333).
36 See UK Corporate Governance Code Provision B.2.4.
37 In Article 91(10) of CRD IV, as clarified in Recital 60.
38 This topic is also covered by the joint ESMA and EBA ‘Guidelines on the assessment of suitability’; ‘Final report on guidelines on the assessment of the suitability of members of the management body and key function holders’, EBA/GL/2017/12, 26 September 2017.
39 ESMA/EBA, ‘Guidelines on the assessment of suitability’, paras 43, 44, and 115.
40 Article 435(c)(2) of CRR.
41 This refers to banks which are significant in terms of their size, internal organization and the nature, scope, and complexity of their activities, as specified in Article 6 of SSM Regulation.
42 Article 88(2) of CRD IV, in conjunction with Article 435(c)(2) of CRR.
43 ESMA/EBA, ‘Guidelines on the assessment of suitability’, para 108.
44 Section 174(1) of the Companies Act 2006: ‘A director of a company must exercise reasonable care, skill and diligence’.
45 Dutch Supreme Court (HR), 10 January 1997, NJ 1997/360, annotated by Maeijer (Staleman v Van de Ven).
46 German Stock Corporation Act (AktG), Paragraph 100.
47 Hopt/Roth, Grosskommentar Aktiengezetz, Section 100, no 20.
48 Article 88(1)(a) of CRD IV.
49 EBA, ‘Guidelines on internal governance’, EBA/GL/2017/11, 21 March 2018, effective as of 30 June 2018, reference is made to Title II, para 20 et seq.
50 ibid, para 23(j) and Section 9.
51 ibid, para 23(k) and Section 10.
52 ibid, Sections 2 and 3.
53 Article 2:135 of DCC. There is an (extensive) Chapter 3 on remuneration in the Dutch Corporate Governance Code.
54 German Stock Corporation Act (AktG), Paragraphs 87 and 120 (4).
55 Directive (EU) 2017/828 of the European Parliament and the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement,  OJ L132/1.
57 Article 92(2)(c) of CRD IV.
58 Subject to the option for Member States to introduce a lower threshold; Article 94(1)(g)(i) and (ii) of CRD IV.
59 Crédit Agricole v ECB ECLI:EU:T:2018:219, 24 April 2018, EU General Court.
60 In France, CRD IV is implemented in the Code monétaire et financier français (French monetary and financial code) (the CMF). The CMF is not considered in this chapter.
61 Crédit Agricole v ECB, n 59, para 77.
62 See extensively, Bulten and De Jong, ‘Vital companies in safe hands’, Series VHI No 142 (2017), Ch 7 (English summary).
63 In Dutch company law there are, for example, protective measures facilitated by the certification of shares via a foundation or the grant by the company of an option to an independent foundation that may call for the issuance of preference shares to enable such foundation to exercise a considerable package of voting rights.
64 For the full definition, reference is made to ‘qualifying holding’ as defined in point (36) of Article 4(1) of CRR.
65 Article 14 et seq of CRD IV.
66 Article 23(1) of CRD IV.
67 Or if the information provided by the proposed acquirer is incomplete, Article 23(2) of CRD IV.
68 C-18/14 CO Sociedad de Gestión y Participación SA v De Nederlandsche Bank NV ECLI:EU:C:2015:419, 25 June 2015, ECJ.
69 Which in fact concerns the insurance industry where a similar pre-approval requirement for shareholders who wish to acquire a qualifying holding applies.
70 Reference is made to the definition in Article 128(6) of CRD IV.
71 Article 102 of CRD IV.
72 Article 104 of CRD IV.
73 See, e.g, P Davies et al, ‘Boards in Law and Practice’, in Davies et al (eds), n 23, 8 with further references.
74 See P Davies, ‘Corporate Boards in the United Kingdom’, in Davies et al (eds), n 23, 753 with further references.
75 See Article 2:129(5) of DCC for management directors, and Article 2:140(2) of DCC for supervisory directors.
76 R Nowak, ‘Corporate Boards in the Netherlands’, in Davies et al (eds), n 23, 435–6.
77 Cancun ECLI:NL:HR:2014:797, NJ 2014/286, 4 April 2014, para 4.3, Dutch Supreme Court (HR).
78 Fugro v Boskalis ECLI:NL:HR:2018:652, JOR 2018/142, 20 April 2018, Dutch Supreme Court (HR).
80 For a discussion on the interpretation of this part of Article 88(1) of CRD IV, see Kleis Broekhuizen, Klantbelang, belangenconflict en zorgplicht, 2016, Ch 6.
81 VEB v Fortis NV ECLI:NL:GHAMS:2012:BW0991, JOR 2013/41, 5 April 2012, Court of Appeals Amsterdam, Enterprise Court (Ondernemingskamer), annotated by Bulten.
82 VEB v Fortis NV ECLI:NL:HR:2013:1586, JOR 2014/65, 6 December 2013, Dutch Supreme Court (HR), annotated by Holtzer.
83 In respect of systemically important banks: Steven L Schwarcz, ‘Too Big to Fool: Moral Hazard, Bailouts, and Corporate Responsibility’, Minnesota Law Review (2017–18) 761–801; Steven L Schwarcz, ‘Misalignment: Corporate Risk-Taking and Public Duty’, Notre Dame Law Review (2016), 1–50.
84 Klaus J Hopt, ‘Better Governance of Financial Institutions’, Law ECGI Law Working Paper No 207/2013, II.2.