Corporate Governance in a Fractured World

Welcome back!

In corporate governance, some assumptions have held firm for decades. Chief among them: that globalisation — of capital, regulation, and best practices — would continue to guide the evolution of corporate law. But the idea of convergence has been disrupted by recent geopolitical shifts. Governments are reasserting control over corporate structures and investments. Boards are now confronting risks that extend beyond financials — from trade restrictions to national security reviews of ownership and supply chains.

What does this new geopolitical reality mean for the future of corporate governance? How can directors and investors navigate a world that seems more fragmented and politicised than in years past? In this month’s issue, we turn to Prof. Mariana Pargendler to explore these questions.

The Rise of Nationalism

In our interview (see below), Prof. Pargendler reflects on nationalism in corporate law — not as an entirely new development, but as a recurring force with deep historical roots. From voting caps and codetermination to parent company liability rules designed to protect domestic interests, nationalist tools have long shaped legal frameworks.

What’s different now, she argues, is the visibility and directness of these measures. Economic nationalism — which under certain conditions may be justified — is now “overt.” Golden shares, investment restrictions, and state involvement in business are on the rise — particularly in sensitive sectors, such as energy, rare earths, microchips, pharmaceuticals, software and big data.

Role of the Board

Recent developments highlight how geopolitics is reshaping governance. The U.S. order for TikTok’s divestiture (with the relevant law recently upheld by the Supreme Court), the blocked Broadcom–Qualcomm deal, and tariff impacts on Tesla’s market strategy all reflect rising protectionism.

As a result, boards are adapting proactively. For instance, in Japan, some firms are establishing board-level oversight for geopolitical risk, as others may seek outside consultants, such as former diplomats or government officials, to advise on geopolitical matters. As Curtis Milhaupt describes, we are entering an age of “weaponised interdependence” — where supply chains, data access, and cross-border equity stakes can all become instruments of strategic leverage. In an era of geoeconomics, this is both a matter of competitive edge and survival.

The End of Convergence?

These trends challenge the idea that corporate governance systems are steadily converging. But as Prof. Pargendler notes, convergence may not be over — just changing shape. International standards, regulatory diffusion, and extraterritorial rules (such as the EU’s CSDDD) may still foster alignment. There is no single trajectory. Convergence and divergence are unfolding simultaneously, shaped by institutional choices, market forces, and political currents.

What does this mean for firms, boards and investors? There are no simple answers — but the ability to navigate between external systems of power may prove decisive for firms.

We hope you enjoy the interview with Prof. Pargendler and welcome your thoughts on these evolving dynamics.

Best,
~ Riccardo