A Macro-Level Investigation of Transatlantic Controlling Shareholder’s Fiduciary Duty
Legal Studies (Cambridge University Press)
40 Pages Posted: 8 Jul 2021
Date Written: June 27, 2021
Abstract
Legal systems around the world apply various strategies to mitigating agency costs between controlling and minority shareholders. A systematic review of the transnational law on controlling shareholder's loyalty and care obligations reveals variant doctrinal choices. This study aims to uncover the evolution of these choices by employing a law-in-context methodology. Accordingly, it seeks to explain the differences in governance selections by exploring the cultural, historical, and socio-economic backgrounds of a particular legal system in which organizations and decisions are embodied. I conduct a macro-level inquiry that focuses on the cultural environment and business history development to understand the different doctrinal designs. In particular, I argue that those dissimilarities result from unique cultural-non-formal norms of corporate governance regarding the protection afforded to shareholders' interests, and they correspond to the historical development of the law of corporate groups across nations. As the macro-level investigation indicates, any initiative to globally converge corporate law and governance should be carried out with caution because it may distort the delicate normative equilibrium represented in a given jurisdiction.
Keywords: global convergence of corporate governance and norms, law of business groups, cultural-non-formal norms of corporate governance, controlling shareholder's loyalty and care obligations
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