TOWARDS A SUSTAINABLE EUROPEAN COMPANY LAW: A NORMATIVE ANALYSIS OF THE OBJECTIVES OF EU LAW WITH THE TAKEOVER DIRECTIVE AS A TEST CASE, Chapter 1, Kluwer Law International, 2009
17 Pages Posted: 10 Mar 2009 Last revised: 17 Jan 2011
Do companies have a role beyond the maximisation of profit for shareholders? May human and environmental interests be discussed in the realm of company law? Does company law have a role in furthering sustainable development?
The book 'Towards a Sustainable European Company Law. A Normative Analysis of the Objectives of EU Law, with the Takeover Directive as a Test Case' gives the controversial affirmative answer to all three questions, and goes to the very core of the ongoing debate on the function and future of European company law. This first chapter 'Companies, Society and the Environment' explains the background for and outlines the structure of the discussions in the book and indicates some of its conclusions.
The first half of the book contains a normative analysis of the objectives of EU company and securities law. The author begins by discussing fundamental issues in company law, concerning the involved values and affected interests. Thereafter, the legislative objectives of EU company and securities law are analysed, with the general objectives of EU law as the framework. The analysis of the objectives examines what the objectives are and should be, both from a traditional and in a wider perspective, thus highlighting questions that to a certain extent have tended to be ignored or overlooked. To show the significance of the conclusions from the analysis of the objectives in the first half of the book, and to find out to what extent the legal obligations are met in one area of Community law, the selected test case - the Takeover Directive - is analysed and evaluated in the second half of the book.
The analysis of the Takeover Directive demonstrates the problem with simple market thinking. The analysis highlights the fallacy of using the poorly substantiated theory of a 'market for corporate control' as a theoretical and ideological basis when enacting company law. It also shows that 'shareholder primacy', and requiring companies to take the related concept of 'shareholder value' as an operating guideline, is wrong. When shareholder value - even in the 'enlightened' version - is attempted used as the guideline for running companies, it dilutes responsibility for company actions (even though the opposite is the intention).
It also may, with its typical narrow, short-term focus, tend to work against the achievement of overarching societal goals. The book develops an alternative approach, based on the normative purpose of the company: the fulfillment of its function as an all-important component of our economies in such a way as to contribute to the ultimate goal of a good society.
Keywords: EU company and securities law, takeover bids, takeover directives, objectives of EU law, values, sustainable development, market for corporate control, law and economics, shareholder primacy, shareholder value
Suggested Citation: Suggested Citation
Sjåfjell, Beate, Companies, Society and the Environment. TOWARDS A SUSTAINABLE EUROPEAN COMPANY LAW: A NORMATIVE ANALYSIS OF THE OBJECTIVES OF EU LAW WITH THE TAKEOVER DIRECTIVE AS A TEST CASE, Chapter 1, Kluwer Law International, 2009; Nordic & European Company Law Working Paper No. 10-11. Available at SSRN: https://ssrn.com/abstract=1356542