Related party transactions (RPTs) are one of the primary ways for corporate insiders to expropriate company value at the expense of (minority) shareholders and creditors, and thus attract close regulatory/investor attention around the world. Conventional wisdom in corporate law theory holds however that RPTs entered into by directors/managers (rather than controlling shareholders) in controlled and dispersedly-owned companies are of lesser concern. In controlled companies, such transactions would be effectively monitored by controlling shareholders whereas, in dispersedly-owned companies, executive compensation arrangements would be preferable to RPTs to divert company value for directors/managers. This article challenges this conventional wisdom and puts forward various other theories under which RPTs entered by directors/managers remain a significant concern in terms of value-diversion in both controlled and dispersedly-owned companies.The article then presents hand-collected data of RPTs entered into by directors/managers who are not significant/controlling shareholders and/or by their related entities in companies listed on the prime standard of the German stock exchange for the years of 2018 and 2019. This dataset and its evaluation provide preliminary indications and exploratory evidence regarding the threat posed by RPTs entered into by abovementioned persons. In addition, up-to-date share-ownership data of those companies and several findings regarding disclosure practices are provided. The article closes with proposing a few regulatory improvements and implications.

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This study tracks the legislative process of the Shareholders’ Rights Directive II as regards the regulation of related party transactions (RPT) and identifies important factors that have led to the current regime of RPT regulation in the EU. While the European Commission’s Proposal subjected material RPTs to approval by the majority of (minority) shareholders (MOM approval) and a number of other requirements, the requirements have been greatly watered down in the legislative process. The analysis suggests that the ambition of the European policy makers to strengthen European capital markets and attract/facilitate more foreign/cross-border investment led the European Commission to propose MOM approval for RPTs based on the feedback/demand from the institutional investors. This proposal, however, faced a backlash from the business community and some Member States. Relatedly, as a result of the pressure of the interest groups that represent the European companies and some reluctant Member States, during the legislative process, numerous compromises have been made, giving wide discretion to Member States in devising a regime of RPT regulation and effectively spelling the death of the European Commission’s ambitions. The study then concludes by connecting this process to accounts of how corporate law develops in the literature.

Global consensus is growing on the contribution that corporations and finance must make towards the net-zero transition in line with the Paris Agreement goals. However, most efforts in legislative instruments as well as shareholder or stakeholder initiatives have ultimately focused on public companies: for example, most disclosure obligations result from the given company's status of being listed on a stock exchange. This article argues that such a focus falls short of providing a comprehensive approach to the problem of climate change. In doing so, it examines the contribution of private companies to climate change, the relevance of climate risks for them, as well as the phenomenon of brown-spinning. We show that one cannot afford to ignore private companies in the net-zero transition and climate change adaptation. Yet, private companies lack several disciplining mechanisms available to public companies such as institutional investor engagement, certain corporate governance arrangements, and transparency through regular disclosure obligations. At this stage, only some generic regulatory instruments such as carbon pricing and environmental regulation apply to them. The article closes with a discussion of the main policy implications. Primarily, we propose extending sustainability disclosure requirements to private companies. Sustainability disclosures aim at promoting a transition to a greener economy, rather than (only) protecting investors by addressing information asymmetry. Therefore, these disclosures should encompass private companies that are of relevance for the net-zero transition. Such disclosures can be a powerful tool in shedding light on the polluting private companies that have so far been in the dark as well as serving as a disciplining mechanism.

Climate change is one of the highest-ranking issues on the political and social agenda. Vulnerabilities of the world ecosystem laid bare by the COVID-19 pandemic and the potential damage for the human and business life made the need for urgent action clear once again. Corporations are one of the main actors that will play a major role in the decarbonisation of the economy. They need to put forward a net zero strategy and targets, transitioning to net-zero by 2050. Yet, an important but rather overlooked stakeholder group in the sustainability debates can pose a significant stumbling block in this transition: employees. Although climate action has huge benefits by ameliorating adverse environmental events and is expected to have overall positive impact on employment, net zero transition in companies, especially in certain sectors and regions, will cause substantial adverse employment effects for the workforce. This has the potential to slow down or even derail the necessary climate action in companies. In this regard, just transition is a promising concept, which calls for a swift and decisive climate action in corporations while taking account of and mitigating adverse effects for their workforce. If well implemented, it can accelerate net zero transition in companies. This potential clash of environmental (E) and social (S) aspects of ESG agenda, materialised in the companies' net zero transition, and its potential remedy, just transition, have important implications for corporate governance and finance, especially for directors' duties & executive remuneration, sustainability disclosures, institutional investors' engagement and green finance.