Corporate Directors:In Search of a European Normative Model for Legal Persons as Board Members

Juridical persons may be appointed as company directors in a number of European Member States, such as France, Belgium Spain or Italy, while this practice is forbidden in other jurisdictions (traditionally, Germany and, today, the United Kingdom). The lawfulness of the so-called «corporate directors» depends on a policy decision that legislators may make after balancing potential benefits and risks deriving from placing corporate bodies on the board. Corporate directors are not an essential tool for the European business environment, but are indeed a European corporate governance practice which does provide flexibility and operative advantages. This paper evaluates regulatory alternatives for both domestic legislation and prospective European instruments. It analyses how placing legal entities on a board may affect corporate governance and underlines their potential applications, namely, in groups of companies. It then examines two opposite policy approaches to corporate directors, an express prohibition and an explicit admission, as considered by certain Member States and article 47.1 of the Societas Europaea Regulation. We further explore the predominant model for the admission of corporate directors, which is based on three core elements: an enabling provision, the compulsory appointment of a permanent representative, and a joint liability rule.