Who Should Make Corporate Law? EC Legislation Versus Regulatory Competition

58 Pages Posted: 30 Nov 2005

See all articles by John Armour

John Armour

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

Multiple version iconThere are 2 versions of this paper

Date Written: June 2005

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 (June 2005). ECGI - Law Working Paper No. 54/2005. Available at SSRN: https://ssrn.com/abstract=860444 or http://dx.doi.org/10.2139/ssrn.860444

John Armour (Contact Author)

University of Oxford - Faculty of Law ( email )

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University of Oxford - Said Business School ( email )

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European Corporate Governance Institute (ECGI) ( email )

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