Among the jurisdictions that responded, Colombia and China appear to be the least restrictive when it comes to breaking the corporate veil as a resort to the inappropriate actions of a subsidiary. Colombian law empowers the corporate supervisory authority (in addition to the courts) to ignore the limited liability of a parent company (as a shareholder of its subsidiary) for fraudulent acts that cause harm to third parties. China`s response to the questionnaire states: „Hare holders must not harm the interests of the corporation by abusing the rights of shareholders or the interests of the company`s creditors by abusing the independent legal status or limited responsibilities of shareholders. If a shareholder has caused losses to a corporation, the corporation or other shareholders through abuse of shareholder rights, he or she is liable for damages. Among the respondents, Latvia, Portugal and Slovenia (Austria being mainly case law) have adopted much of the German model in their national company law regulations. Others, including Brazil, Poland and the Czech Republic, have adopted some elements of the treaty group concept. Question 9: Does the legal/regulatory framework or case law provide exceptions to a director`s fiduciary duty of loyalty and due diligence to the corporation on whose board he or she sits if the corporation is controlled by another corporation? [Note: Examples may include provisions that allow parent/holding companies to require directors of subsidiaries to act in accordance with instructions or to circumvent the ordinary authority of the subsidiary`s board of directors.] Please select all elements of the framework that contain or refer to such provisions. Question 2: The legal/regulatory framework in general (i.e. for all listed companies, not just those belonging to groups of companies), mandatory and/or voluntary disclosure requirements regarding: Virtually all statutory/regulatory arrangements effectively prohibit circular shareholdings (where a subsidiary is the ultimate owner of its parent company`s shares), at least in listed companies. Cross-ownership, where companies hold significant stakes in each other without moving to the level of the parent/subsidiary, is still common in some markets and is subject to increasing scrutiny. As described in the Korean case study, policymakers in this jurisdiction have waged a long battle against circular ownership and cross-ownership, drastically reducing the once ubiquitous practice. However, Colombia`s largest economic group, Grupo Empresarial Antioqueño (GEA), remains linked to numerous listed subsidiaries through the mutual participation of three listed holding companies. Several responding jurisdictions highlighted the need for consolidated financial statements as an important driver of implied liability of parent supervisory boards for the adequacy of the Group-wide audit and control environment. However, expectations regarding the level of coordination and oversight required by the parent board and management appear to differ.

Colombia`s National Corporate Governance Code appears to go the furthest by explicitly assigning responsibility for the Group`s control architecture and risk management approach to the parent company`s board of directors and responsibility for group-wide risk management to the parent company`s CRO. The challenge in dealing with the duties of directors in corporate groups, particularly those where the traditional approach to fiduciary duty is considered a „black letter law”, is to reconcile with the legitimate objectives for which corporate groups exist and the actual conduct of directors and governing bodies. Group companies behave significantly differently from their independent counterparts, which strongly implies that their boards of directors function differently in significant ways. The challenge for boards and policymakers is to overcome, identify and measure practical difficulties, both informative and analytical, how the interests of the Group and its members overlap and diverge, and to promote equitable and cost-effective outcomes. Major sources of federal regulation include the Securities Act of 1933 (the „Securities Act”) and the Securities Exchange Act of 1934 (the „Exchange Act”), as well as regulations issued by the SEC under that Act and others. The Securities Act regulates the offering and sale of securities, primarily through a disclosure-based approach that addresses certain governance issues. The Exchange Act requires certain annual, quarterly and interim reports on financial and other material matters, as well as the disclosure of proxies and other requirements relating to votes and shareholder meetings. Other relevant federal regulations that impose disclosure and compliance requirements include the Sarbanes Oxley Act of 2002 („SOX”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 („Dodd-Frank”). SOX imposed a number of essential requirements to improve the integrity of financial statements and reports. The Dodd-Frank Act requires additional disclosure in proxy circulars, non-binding shareholder votes on matters related to executive compensation, and facilitates greater access to the Company`s proxy for directors proposed by shareholders.

The SEC`s expected rules are expected to address environmental, social, and governance („ESG”) issues, human capital management, cybersecurity governance, board diversity, and other issues. 1.2 What are the main legislative, regulatory and other sources of regulation of corporate governance practices? General meetings are held in accordance with the articles of association of the company, including who chairs the meeting.