EU Company Law Harmonization Between Convergence and Varieties of Capitalism

Research Handbook on the History of Corporation and Company Law by Harwell Wells, ed., Forthcoming

Fordham Law Legal Studies Research Paper No. 2977500

European Corporate Governance Institute (ECGI) - Law Working Paper No. 355/2017

48 Pages Posted: 1 Jun 2017 Last revised: 16 Jun 2017

See all articles by Martin Gelter

Martin Gelter

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Date Written: May 30, 2017

Abstract

This chapter sketches the history of EU Company Law, from its beginnings in the 1960s until today. Throughout all periods, EU company law harmonization was largely a top-down, technocratic project that was considered imperative to realize the common market. In other words, it was promoted mainly by the European Commission and experts advising it without any particular business or investment interest group pushing for harmonization. Scholars are divided about the success of the project, with opinions ranging from it being a great success story to the claim that EU company law harmonization is largely trivial.

This chapter suggests that that the development of EU company law can be understood as reflecting two distinct periods of convergence in corporate law, even if that convergence has often been limited to specific issues and sometimes remained restricted to the formal level. Company law harmonization efforts mirror prevailing fashions about what is considered good corporate law. Each of these periods is roughly linked to the success of a particular model of capitalism that seemed to be on the ascendancy at the respective time. This first period was characterized by a dominance of the German model, and a vision of corporate law that one could characterize as belonging to a “coordinated” variety of capitalism, when shareholder value maximization was not yet the prime directive of corporate law. The second period began in the late 1990s and partly coincides with the “convergence in corporate governance” debate. Harmonization efforts focused on enabling choice for shareholders based on transparency and information. This period was dominated by liberal capitalism oriented toward shareholders and increasingly the stock markets. Germany’s position as the model jurisdiction was increasingly taken over by the UK.

EU Company law harmonization has always been in the balance between top-down proposals coming from the center and national resistance. In the early period, when company law harmonization was influenced mainly by Continental models, the UK stepped on the brakes after joining the EEC in 1973 whereas since the 2000s Germany and other Continental jurisdictions have been the main source of resistance. Because of Member State options and the ability to avoid company rules, convergence has remained formal and superficial, but not entirely irrelevant.

Keywords: Freedom of Establishment, European Company Law, Harmonization, European Court of Justice, Company Law Directives, History of Corporate Law, Varieties of Capitalism, Convergence, Corporate Governance

JEL Classification: K22

Suggested Citation

Gelter, Martin, EU Company Law Harmonization Between Convergence and Varieties of Capitalism (May 30, 2017). Research Handbook on the History of Corporation and Company Law by Harwell Wells, ed., Forthcoming; Fordham Law Legal Studies Research Paper No. 2977500; European Corporate Governance Institute (ECGI) - Law Working Paper No. 355/2017. Available at SSRN: https://ssrn.com/abstract=2977500

Martin Gelter (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States
646-312-8752 (Phone)

HOME PAGE: http://www.fordham.edu/info/23135/martin_gelter

European Corporate Governance Institute (ECGI)

HOME PAGE: http://ecgi.global/users/martin-gelter

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