A Macro-Level Investigation of Transatlantic Controlling Shareholder’s Fiduciary Duty

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.