There has been much talk about regulatory reform around the world in the wake of the financial crisis but relatively little action. As a major international financial centre, the UK is very much at the heart of the debate and has a particular interest in the ultimate outcome. The financial crisis has exposed the weaknesses of ‘light touch’ regulation and ‘principles-based’ regulation, which characterised the UK system in the pre-crisis phase. Changes to the institutional structure of regulation recently announced by the new coalition government, combined with changes to regulatory style, are likely to have far-reaching consequences for the practice and intensity of regulation in the UK. This article reviews and assesses recent and proposed regulatory changes and considers the relationship between corporate governance and regulation. It evaluates the impact on the UK system of initiatives undertaken at international and EC levels as well as various interests and incentives within the UK that are likely to be influential in shaping the regulatory regime in years to come.

Following recent developments in some European jurisdictions, the Committee of European Securities Regulators (CESR) proposed, on 9 February 2010, ‘to extend major shareholding notifications to instruments of similar economic effect to holding shares and entitlements to acquire shares’. This initiative pushes for mandatory Economic-only Disclosure of Major Shareholdings in Europe (EOD). By providing twenty arguments against the CESR proposal, this paper seeks to spur a lively discussion as to whether mandatory EOD is desirable. It puts forward that European institutions are well advised to refrain from implementing the CESR proposal in its current form. If at all, implementing a requirement to report to regulators (Economic- only Reporting – EOR) and limiting EOD to very large positions serves social welfare better than EOD and avoids major differences between European securities law and US securities regulation.

The financial crisis has severely hit the Austrian banks and the financial market as a whole. Austrian banks sold ‘Lehman-products’ to a disproportionate extent, banks invested far too high amounts in Iceland, and finally and most importantly, Austrian banks did and are doing their main business in CEE countries, which have been heavily affected by the crisis.

The Austrian government and parliament have reacted by taking different measures to support the near-collapsing banks. Apart from granting guarantees and promoting interbank business through different measures, the main instrument has been to improve the capital ratio by issuing so-called participation capital subscribed for by the government. Although generally the holders of participation capital do not have membership rights, the state is entitled to exercise control rights via a special company.

The most important lesson to be learnt from the financial crisis perhaps is that nation states cannot deal with the challenges of global financial markets on their own. As markets become more and more connected, sovereignty becomes increasingly fictitious. Although there seems to be little dispute about this, the implications for legal scholarship are far from clear. How can legal scholars contribute to solving the issues of global financial markets? Do we need a shift of paradigm in how to think about securities regulation? Which theoretical backgrounds should we rely on?

An answer to these questions might be found in the growing body of literature on transnational law. Transnational law defines a fourth category of law beyond the triad of national, international and supranational law which evolves beyond the nation state due to private ordering, social convenience and non-legal convention. Transnational law scholarship embraces the idea that nation states are in decline and that, as a result, legal scholars should turn their attention to such phenomena as soft law and indirect regulation, private ordering and self-regulation, regulatory competition, legal convergence and legal transplants. All of these phenomena can be seen as consequences of the globalisation of markets and as signs of the decline of the nation state. Although they are part of virtually any advanced securities regulation worldwide, they seem to be little explored from a legal perspective.

From 3 to 5 March 2010, the German Association for Law and Society and the University of Bremen hosted a conference on transnationalism in law, state and society. Part of this conference was a panel on transnational financial markets regulation. The aim of this panel was to ask some renowned experts on national, European and international securities regulation to analyse their fields of research from the perspective of transnational law.

This paper serves as an introduction to the topic and to the presentations given at the conference. It seeks to define the term ‘transnational financial markets regulation’ and to show why the study of transnational financial markets law promises to be rewarding. It concludes with a short summary of the presentations given at the conference.

Recent events and trends have led to an increased awareness of the importance of Islamic law and a more widespread interest in the subject. However, many areas remain relatively inaccessible, including the law of business associations. The aim of this and a subsequent article is to alleviate this situation somewhat by providing a general introduction to Islamic perspectives on this area.

This article provides an overview of the classical sharia, looking at three Sunni schools by way of example, plus a brief comparison with Western-style law. The second article will consider the replacement of the sharia regimes in the Middle East and the interaction of the sharia with Western-style law in Muslim-majority jurisdictions and elsewhere.

The question of how to optimise corporate governance with regard to the structure of remuneration systems and, particularly, executive compensation is presently more hotly debated than ever. Since flawed executive pay structures are considered to have contributed to the financial crisis by encouraging short-term risk-taking at the expense of long-term security, remuneration systems are re-evaluated at national, European and international level. The analysis of current regulatory and legislative reform initiatives of selected countries in Europe (United Kingdom, Switzerland and Germany) and the United States shows the fundamental common objective to sustain market confidence and promote financial stability by removing incentives for inappropriate risk-taking by firms. The internationally emerging remuneration model strives to ensure, to the widest extent possible, congruency between incentives and risks. The need for firms to concentrate on long-term rather than short-term performance is a recurring theme of the reform movement. However, a closer look at the different national regulatory and legislative initiatives reveals that the structural approaches to how to design a well-balanced remuneration system vary significantly as to the scope of application and the intensity and detail of the new regulation and legislation.

When Council Regulation (EC) No 2157/2001 on the Statute for a European Company (Societas Europaea – SE) became effective on 8 October 2004, it offered existing publicly traded companies, for the first time, a choice between competing company laws, namely the national law of the company's home state and the law of the supranational SE. Using an event study methodology, we analyse a unique dataset of publicly traded firms that have announced to re-incorporate under the SE Regulation.

After the global financial crisis, systemic risk regulation has taken centre stage. Many consider hedge funds a potential threat to financial stability. Regulating hedge funds, however, is necessarily a transnational challenge because no national government alone can effectively control the systemic risks affecting its economy. This article takes the example of hedge funds for a case study of emerging transnational regulation. After an introduction to hedge funds and the reasons for regulating them, it considers the possible elements of a transnational regulatory regime for hedge funds: transnational industry self-regulation, including such induced by the government, regulatory competition between government regulators, and harmonisation of government regulation. The main conclusions are: self-regulation cannot substitute fully for government regulation in controlling systemic risks caused by hedge funds. Equally, regulatory competition tends to undercut systemic risk regulation. Effective transnational regulation can only be accomplished through harmonisation of government regulation. Such harmonisation is likely to arise if regulation is needed to control systemic risk in global financial markets.

The Union legislator and the ECJ are trying to prevent forum shopping in cross-border insolvency cases through recourse to the following legal instruments: (1) guiding the process of interpreting the notion of COMI and determining that COMI in practice so as to avoid forum shopping; (2) determining the moment relevant for establishing the debtor's COMI, which should be relatively early; (3) introducing the perpetuatio fori principle that can frustrate debtors' attempts to transfer their COMI to another Member State; and (4) making it impossible to change international jurisdiction in cross-border insolvency matters after insolvency proceedings have been opened. However, there is no need to exclude the possibility of a transfer of the debtor's COMI that leads to the effective change of international jurisdiction before the request for the opening of insolvency proceedings is lodged, as it would be contrary to the freedom of establishment. It is thus submitted that in order to facilitate the exercise of fundamental freedoms, international jurisdiction in cross-border insolvency cases should be (de lege ferenda) determined not so much by the COMI as by the location of the registered office (statutory seat) of the debtor.

As most states, France has been affected by the global financial crisis and has quickly taken appropriate steps to tackle its worst effects. Thus, France immediately took measures to respond to the liquidity crisis and recapitalised the most important banks in order for them to continue to finance the ‘real economy’. Some measures have been aimed directly at the ‘real economy’, such as the creation of a mediator for the distribution of credit and the establishment of a French sovereign wealth fund aimed at investing in strategic companies facing difficulties and in medium-sized companies. After the first wave of the crisis, France took a preventive measure concerning the remuneration of traders and a punitive measure by creating an exceptional taxation of traders' remuneration. But the crisis has also provoked a long-term reform of the French supervisory landscape, merging the supervisory authorities of the banking and the insurance landscape into a single body, the Authority for Prudential Control (Autorité de Contrôle Prudentiel).

The four Framework Directives of the Lamfalussy Process constituted a further step towards guaranteeing an efficient and dynamic functioning of the EU's securities market. Since then, a number of implementing directives and regulations have been passed and further changes have already been suggested.

Regarding the existing system from a German point of view, this article focuses on the role of the Committee of European Securities Regulators (CESR) and the legal nature of its guidelines and recommendations. It establishes the claim that the CESR's statements have a binding effect despite their character set out in the Framework Directives and argues that the traditional dichotomy of legal sources needs to be substituted by a trichotomy of hard law, soft law and a third kind of secondary law. This so-called third kind of secondary law has three consequences: first of all, it needs to be recognised; secondly, it needs to be complied with; and thirdly, in case of non-compliance, extensive reasons must be given. This puts the third kind of secondary law in a position similar to that of persuasive authorities. Regulation (EC) No. 1060/2009, which was adopted following the financial crisis, confirms this notion by requiring that the national financial supervisors consider the CESR's advice but that they can deviate if they give full reasons for their decision.

Lastly, the creation of a European Securities and Markets Authority (ESMA), which has already been proposed, is discussed and compared with the existing system. The ESMA's expanded supervisory powers over national authorities are a step in the right direction. It remains to be seen, however, whether the Proposal for a Regulation creating the ESMA will achieve the goal of establishing a common supervisory culture for European financial markets.

Recent events and trends have led to an increased awareness of the importance of Islamic law and a more widespread interest in the subject. However, many areas remain inaccessible and have received relatively little scholarly attention. One such is the law of business associations. The aim of this and a previous article (‘the first article’) is to alleviate this situation somewhat, providing a critical overview and facilitating further research.

The first article contained an overview of the classical sharia, looking at three Sunni schools by way of example, plus a comparison with Western concepts. This article considers the replacement of the sharia regimes by Western-style law and the interaction of the sharia with Western-style law.

Corporate governance and the theory of the firm are discussed primarily from the shareholders' perspective. This point of view neglects the tremendous effects of private pensions and of co-determination as well as interdependencies between codetermination, pensions and corporate governance. Since in the private pension world the firm serves as an investment tool, the focus should be shifted from short-term interests to concepts maximising long-term shareholder value. In this context, also moderate forms of co-determination might serve as a tool for long-term oriented corporate governance. Given the rise of the European Company, co-determination is likely to spread in Europe. Both, private pension-based corporate governance systems and stakeholder-oriented corporate governance systems should be re-examined in the light of the financial and economic crisis and due to the rise of behavioural law and economics.

Financial markets have increasingly grown cross-border, this having important implications for the design and conduct of prudential regulation and the provision of safety nets, such as deposit insurance or crisis management structures (lender of last resort operations).

The financial crisis has evidenced a number of weaknesses specific to cross-border banking. The study of regulation on the basis of recent cases of banking failure during the crisis allows developing conclusions about the evolution of cross-border banking and the challenges present in the current EU regulatory and supervisory framework. In particular, attention is paid to the impact that legal structures used in cross-border banking may have on financial stability.

This paper analyses the way in which cross-border banking has evolved during the last years, focusing on the legal structures and their impact on competition and financial stability. Thought is given to the specific changes in regulation and supervision that may lead to sustainable cross-border banking within the EU. Finally, the current EU regulatory proposals as well as the changes in the EU supervisory architecture are critically analysed, and final conclusions are drawn on the way forward.

Over-the-counter (OTC) derivatives have emerged as a global behemoth – the ‘800 pound gorilla’ of modern financial markets. In the wake of both their precipitous growth and prominence in the thick of the current global financial crisis, financial market regulators have found themselves under pressure to enhance their regulation of OTC derivatives markets. This paper explores both the private and social costs and benefits of OTC derivatives and the respective strengths and weaknesses of public and private systems of ordering in pursuit of the optimal mode of regulating OTC derivatives markets. On the basis of this exploration, this paper advocates employing modes of regulation which abandon the largely artificial distinction between public and private ordering, align the incentives of public and private actors and facilitate the long-term transfer of information and expertise between these actors in order to generate more nuanced and responsive regulation and thereby enhance social welfare.

Dutch company law is undergoing tumultuous times. Much is changing in the legislation, for example, a major revision of private limited company law is imminent. The courts are constantly presented with an increasing number of difficult issues. It is precisely in such times that there is a need for guiding ideas, and I went searching for them. In this paper, I have relied on the American theory of pragmatism to help find a method to trace principles of law (section 1). I present nine principles of Dutch company law (section 2) and finally enlist the aid of these principles to solve a problem of present Dutch company law (section 3). Based on these principles, I take a fresh look at Dutch company law. In my search, I came to the conclusion that, as a result of the increasing importance of ‘duties of care’, it is becoming less important who does and who does not belong to the company. To ensure that courts review the actions of corporate executives with restraint, I consider it important to make a distinction between standards of conduct and standards of liability.

In EBOR 10(1) (2009, pp. 73–95), the Green Paper on a new Danish Companies Act was described in some detail. The Act has now been passed mostly as proposed in the Green Paper, except for some issues in respect of capital maintenance and the transfer of the registered seat of a company. Against this background, the main features of the new Act are explored and the minor differences from the original proposal are explained. It is concluded that although the new Act is now at the forefront of European company law and is especially well-suited to the needs of foreign enterprises and investors, reform is still necessary on a European level.

The European capital markets law imposes no precise requirements as to its enforcement. The four Framework Directives only state that Member States are to ensure that appropriate sanctions are imposed. This article analyses the different approaches to supervision of stock markets in Europe and the enforcement through private law.