Klaus J. Hopt is former director at the Max Planck Institute for Comparative and International Private Law, Hamburg, Germany. This post is based on his recent paper.
The establishment and use of internal investigations, whistleblowing and external monitoring is a topic of current importance for scholarship, legislation and corporate practice. Internal investigations into (suspected) legal violations by companies, sometimes triggered by whistleblowing and, of late, sometimes tracked by external monitoring are components of corporate compliance. These three information and enforcement channels relate to the core area of corporate management and they are a task of the management and/or the board. The Board must investigate suspected legal violations in the company, but it has broad discretion as to the manner in which the specific violation of law should be addressed and as to the necessary scope of the inquiry. In practice, a typical sequence of a stages and steps has been established in practice for internal investigations: (1) Indication of an incident: plausibility assessment, preparation, possible ad hoc measures, investigation; (2) Legal assessment of the interim result based on the facts at hand, data analysis and interviews; (3) Result and reporting: measures, tracking, follow-up and identification of lessons learned. There is a broad and detailed body of comparative legal experiences from the USA, the United Kingdom, Switzerland and other European countries on internal investigations, whistleblowing and external monitoring. These experiences are reported in detail in the corresponding article in the European Company and Financial Law Review (ECFR) 2021, October issue.
