At the very beginning of CoCo issuance, all corporate consents will have to be granted. Without a doubt, it would be the management board’s role to point out the necessity of raising regulatory capital. The detailed course of action will vary depending on national laws on corporate governance. Generally, we may recognize three scenarios: (i) the management board may solely decide to launch the issue, (ii) the management board will have to gain the supervisory board’s approval, and (iii) the management board will have to gain shareholders’ approval, by means of a general meeting resolution. The first scenario is most likely to happen in case of UK/US companies, where management boards have a lot of discretion on conducting their companies’ business. In fact, these systems of corporate governance make no distinction between a management board and a supervisory board (two-tier board structure), incorporating a single (one-tier) board structure. In such a board, executive members are accountable for company management, while nonexecutive members are responsible for supervision (Mäntysaari, 2010). The second scenario is also very likely to happen in companies with a two-tier board structure, if the explicit consent of the supervisory board is required by provisions of national banking law or corporate law. In general, financial institutions in continental Europe will most probably have to gain shareholders’ approval.
KeywordsCorporate Governance Stock Exchange Supervisory Board Management Board Corporate Governance System
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