A U.S. View of the European Model Company Act

Abstract

This paper is a brief contribution to a symposium on the European Model Company Act (“EMCA”). In it, I point out the extent to which the EMCA employs broad standards, as opposed to specific rules, and the extent to which it allows companies to customize their own governance arrangements. This approach to the EMCA is inevitable in light of the EMCA’s ambition to serve as a model for any EU country. I raise the question, however, whether courts across the EU could effectively interpret and apply the EMCA’s standards and the customized arrangements that companies would adopt under the EMCA. I suggest that, in countries for which a model act would be most attractive, courts would find it difficult to apply the law. As a complement to the EMCA, I therefore suggest that a standing committee be established to write ongoing commentary designed to facilitate the effective implementation of the EMCA’s terms. Such a committee has precedent in the US in the Model Business Corporation Act and the American Law Institute’s Principles of Corporate Governance.

Keywords: Company law, corporate law, Comparative