Introduction

In only a limited number of small companies is it possible for all the members to participate in management. This task has to be delegated to directors and managers, who have the power of taking binding decisions on behalf of the company. The national laws of the EU Member States under consideration provide for suitable management bodies for their companies. They also provide for controlling mechanisms which endeavour to ensure that the directors and managers do not make improper use of their extensive powers. Thus, rights may be vested in such bodies as the general meeting, the supervisory board or the works council to require information, be consulted about certain matters, and to give their consent to certain important proposals, for example the alteration of the company articles (statute), its merger with another company, or its conversion into a company of a different type.

In all the Member States under consideration, there are significant legal controls on the activities of the directors and managers, which are intended to ensure that such officers act within their powers, and conduct their business efficiently. Such controls vary in their detail and in the sanctions provided for in case of their breach. Furthermore, in all the relevant states, requirements exist as to financial disclosure, and the accounts of most companies have to be audited by a qualified auditor who has to report on them. The latter requirements should, but do not inevitably, succeed in guarding against financial irregularities.