The Law on Company Directors' Self-Dealing: A Comparative Analysis

Posted: 31 May 2001

See all articles by Luca Enriques

Luca Enriques

University of Oxford Faculty of Law; European Corporate Governance Institute (ECGI)

Abstract

The paper focuses on a specific kind of potentially asset-diverting behavior on the part of company directors, self-dealing transactions, providing a comparative analysis of the legal tools employed in the United States, the United Kingdom, Italy, France, and Germany in order to regulate them. The paper first describes the trade-off that any legal system faces in regulating self-dealing (deterrence versus the risk of overkill). It provides then a description of the individual legal tools adopted to regulate self-dealing transactions (i.e., prohibition, disclosure, approval or ratification by the board, approval or ratification by shareholders), accounting for the differing degree to which the legal systems in the sample rely on each.

The analysis shows that the regulation of self-dealing is more sophisticated and has more bite where equity markets have a longer traditions and dispersed ownership is more common, i.e., in Britain and the United States. As a conclusion, the paper provides some possible explanations for the minor significance of self-dealing regulations in continental Europe, and advocates a reform of the Italian law on self-dealing.

Note: This is a revised version of "The Law on Corporate Directors' Self-Dealing: A Comparative Analysis"

Suggested Citation

Enriques, Luca, The Law on Company Directors' Self-Dealing: A Comparative Analysis. International & Comparative Corporate Law Journal, Vol. 2, p. 297, 2000. Available at SSRN: https://ssrn.com/abstract=271591

Luca Enriques (Contact Author)

University of Oxford Faculty of Law ( email )

St Cross Building
St Cross Road
Oxford, OX1 3UL
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http:/www.ecgi.org

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