The “comply or explain” principle and the ”soft law”

Ana Sílvia Falcão Mestre Efigénia

Keywords

Soft law; comply or explain; corporate governance; shareholders; disclosure; effectiveness

Abstract

Soft lawis a legal instrument that provides flexibility to whom makes use of it, but the absence of sanction raises an enormous discussion around the legal safety it provides.   In this sense, the comply or explainprinciple, in the context of marketable securities societies permitted to negotiate in a regulated Market, provides the flexibility of the soft law, in the extent that every society adopts the corporate management system it considers most adequate to its needs but, in order to increase transparency on this matter, obliges it to disclosure the management system and the reasons for non-compliance to it.

It appears that there is control over the mandatory disclosure of the statement. However, to improve the preventive judicial protection of the principle is necessary to better control the level of the contents. Accordingly, it is important to protect the principle comply or explain ex ante but also ex post in order to increase its effectiveness.