Who Should Make Corporate Law? EC Legislation versus Regulatory Competition

Current Legal Problems, Vol. 48, 2005

53 Pages Posted: 20 Jul 2005  

John Armour

University of Oxford - Faculty of Law; University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)

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Abstract

This paper makes a case for the future development of European corporate law through regulatory competition rather than EC legislation. It is for the first time becoming legally possible for firms within the EU to select the national company law that they wish to govern their activities. A significant number of firms can be expected to exercise this freedom, and national legislatures can be expected to respond by seeking to make their company laws more attractive to firms. Whilst the UK is likely to be the single most successful jurisdiction in attracting firms, the presence of different models of corporate governance within Europe make it quite possible that competition will result in specialisation rather than convergence, and that no Member State will come to dominate as Delaware has done in the US. Procedural safeguards in the legal framework will direct the selection of laws which increase social welfare, as opposed simply to the welfare of those making the choice. Given that European legislators cannot be sure of the 'optimal' model for company law, the future of European company law-making would better be left with Member States than take the form of harmonized legislation.

Keywords: European law, company law, regulatory competition, corporate insolvency, Centros, Inspire Art.

JEL Classification: G34, H73, K22

Suggested Citation

Armour, John, Who Should Make Corporate Law? EC Legislation versus Regulatory Competition. Current Legal Problems, Vol. 48, 2005. Available at SSRN: https://ssrn.com/abstract=757205

John Armour (Contact Author)

University of Oxford - Faculty of Law ( email )

Oriel College
Oxford, OX1 4EW
United Kingdom
+44 1865 286544 (Phone)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

European Corporate Governance Institute (ECGI) ( email )

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

HOME PAGE: http://www.ecgi.org

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