24.2 Part I — Disclosure requirements in company law and securities law: backgrounds and developments

The disclosure requirements for listed companies in European law were initially strongly influenced by the Fourth and Seventh Company Law Directives created in 1978 and 1983. Since 2005, the presentation roles for consolidated financial statements of European listed companies are more uniform due to the IAS regulation. The European disclosure requirements onder securities law were harmonized further at the end of the nineties of the last century due to the Prospectus Directive, Market Abuse Directive and Transparency Directive ensuing from the FSAP. Although the disclosure requirements for listed companies have been harmonized to a significant degree through these two paths, a European attempt at creating a supervision and enforcing system of the disclosure requirements is lacking.

In American legislation, the disclosure requirements for listed companies can be found in the federal securities legislation. The essence can be found in or is based on the Securities Act 1933 and the Securities Exchange Act 1934. The European and American disclosure requirements more specifically relating to the presentation mies for the consolidated financial statements of listed companies consisting of the IFRS and US GAAP, converged from the beginning of this century. This convergence process seems to have slowed down since the financial crisis of 2008.

The first disclosure requirement imposed on listed companies in Dutch law is the obligation adopted in the Commercial Code (Wetboek van Koophandel) in 1928 to file a copy of the annual accounts and explanatory notes with the office of the Commercial Register. Dutch securities legislation has increased substantially in scope since the eighties of the last century and has become an independent legal area. The supervision by the Netherlands Authority for the Financial Markets, AFM, has also increased considerably in the last few years.

The policy document on `modemization of business law' of 2004 is one of the few parliamentary documents in which some of the aims of Dutch company law are explicitly stated. I maintain that the main aim of company law should be to stimulate and facilitate commercial activities, with a view to maximizing social wealth. Specific attention was, however, given to the aims of securities law in the legislative history of Dutch securities legislation. I infer from this that the aim of Dutch securities law is to promote an efficient allocation of means with a view to facilitating economie growth.

A shift of the aim of company law to stimulating and facilitating commercial activities should, in my opinion, mean that fewer mandatory provisions are imposed in company law. The inclusion of mandatory provisions in company law is not an aim in itself but is a means for achieving social wealth. When this applies, is a question which must — to a certain extent in any case — be answered based on a law and economics analysis.

Five aims and functions of the disclosure requirements for listed companies can be derived from the legislative history of the disclosure requirements and from the doctrine. The first function concerns the reporting rendering of account by a listed company's management. The second function of the disclosure requirements is to contribute to the accuracy — or efficiency — of pricing on the securities markets. The third function of the disclosure requirements concerns the protection of investors, shareholders and, in particular in the European Union, creditors of the listed company. The fourth function consists of restoring the investors' confidence in the operation of the securities market and its actors. The fifth function of the disclosure requirements that can be distinguished is `corporate governance' — the system enabling investors, on the basis of the published information, to make or be able to make better use of the rights to which they are entitled.

Two main aims are distinguished in this study from a functional perspective the perspective which abstracts from the aims and functions stated in the legislative history of laws and regulations and is based on the economic reason for existence of the disclosure requirements. The first main aim is to counter the `agency problems' — the conflict of interests between the management and the shareholders — within listed companies. The second main aim of the disclosure requirements is to improve the proper operation of the securities market. The other puts of this study build on this distinction.