Who Should Make Corporate Law? EC Legislation versus Regulatory Competition
University of Oxford - Faculty of Law; University of Oxford - Said Business School; European Corporate Governance Institute (ECGI)
ECGI - Law Working Paper No. 54/2005
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.
Number of Pages in PDF File: 58
Keywords: European Law, Company Law, regulatory competition, corporate insolvency, Centros, Inspire Art
JEL Classification: G34, H73, K22
Date posted: November 30, 2005