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Reflexive Governance and European Company Law


Simon Deakin


University of Cambridge - Centre for Business Research (CBR); European Corporate Governance Institute (ECGI); University of Cambridge - Faculty of Law

July 24, 2007

CLPE Research Paper No. 20/2007

Abstract:     
The use of reflexive forms of regulation is growing within the EU, in particular as the open method of coordination ("OMC") is applied to a growing number of contexts including employment policy, social inclusion, enterprise promotion, environmental protection, energy policy, and fundamental human rights. Company law, however, seems to be an exception to this: recent activity has taken the form of "hard law" harmonization through directives, coupled with the stimulation of regulatory competition through judgments of the European Court of Justice in relation to freedom movement, stemming from the Centros case. There is a very limited "company law OMC" in the form of the deliberations of the European Corporate Governance Forum, but there is little evidence here of what proponents of the OMC call "learning from diversity"; instead, the Forum appears to envisage the elimination of country-specific practices which it refers to as "distortions of competition". This paper argues that the lack of a meaningful company law OMC is likely to prove a more serious long-term obstacle to capital market integration than the persistence of inter-country variations in corporate governance practices. The example of labour law shows how functional convergence and a coordinated raising of standards can be achieved by the dovetailing of the OMC with social policy directives. By contrast, the recent failure of the Takeover Directive to impose a uniform model of takeover regulation indicates the limits of top-down modes of harmonization. At the same time, the case of labour law highlights the importance of placing the OMC within a wider framework of legal support for fundamental rights, of the kind which is capable of providing a countervailing force against court-led deregulation.

Number of Pages in PDF File: 36

Keywords: corporate governance, open method of coordination, European company law

JEL Classification: G34, K22, K33

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Date posted: July 26, 2007 ; Last revised: November 17, 2010

Suggested Citation

Deakin, Simon, Reflexive Governance and European Company Law (July 24, 2007). CLPE Research Paper No. 20/2007. Available at SSRN: http://ssrn.com/abstract=1002678 or http://dx.doi.org/10.2139/ssrn.1002678

Contact Information

Simon F. Deakin (Contact Author)
University of Cambridge - Centre for Business Research (CBR) ( email )
Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+ 44 1223 335243 (Phone)
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
University of Cambridge - Faculty of Law ( email )
10 West Road
Cambridge, CB3 9DZ
United Kingdom

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