Company Law and Corporate Governance

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"The knock on effect of Enron on European Initiatives in the area of Corporate Governance has been immeasurable and promises to revitalise the whole of the company law harmonisation agenda"

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Background and Introduction

"Company Law and Corporate Governance are right at the heart of the political agenda, on both sides of the Atlantic"1.

The extent of Enron's ruin was enormous, being the largest American company ever to file for bankruptcy2. Justifiably the tragedy sparked an enormous United States Senate Investigation and it was shown that directors of Enron intentionally ignored high risk accounting procedures that led to the energy company's collapse3. After the Enron misfortune, few people doubted the need to re-examine corporate governance globally.

Corporate Governance is a contentious issue for lawyers, accountants, politicians and businesses alike4 and in the last decade corporate governance has been a priority on the agenda of several governments and has been firmly under the spotlight. Corporate scandals such as Enron have exposed companies' susceptibility to mismanagement, conflicts of interest and corruption5. As a result, corporate governance has moved up from being a mere exercise to becoming a considerable concern for companies.

Corporate Governance is an incredibly