A Rule-based Comparison and Analysis of Ten Case Studies

Abstract

Drawing on data derived from ten hypothetical case studies, we adopt a rule-based comparative evaluation of the company laws of twelve different jurisdictions. The ten case studies examine topics relating to directors’ duties and liabilities generally and in the context of takeovers, the protection of creditors, including the relationship between creditors and a company, and the law governing shares, shareholders’ rights and protection and the flexibility of company law. Each of the corporate law issues raised by the ten case studies are addressed by national reporters appointed in respect of the US (Delaware), UK, Germany, France, the Netherlands, Italy, Spain, Poland, Finland, Latvia, South Africa and Japan. This paper compares and contrasts the formal company law rules recognised by each of these twelve countries as applicable in respect of the ten case studies, as well as the effects and consequences of the application of those rules. The value in the comparative assessment of the form and function of the relevant company law rules in each of the twelve jurisdictions under review lies in the additional light they can cast on four of the most enduring debates in comparative company law. These concern the propositions that: (i) the pressures exerted by the increased pace of globalisation, international competition, interest groups, and imitation will inevitably lead to the convergence of company law rules (in terms of form or function) across all jurisdictions in the world, and in particular, assimilation to the US model of corporate law and governance (“the convergence proposition”); (ii) the patterns and structures of shareholder ownership (dispersed/outsider v concentrated/insider) of public joint stock companies in a country's main stock exchange will influence the nature and strength of the shareholder protection rules applicable in that country (“the patterns of share ownership proposition”); (iii) countries have a preference for a shareholder primacy model of corporate governance over that of a stakeholder or director primacy framework (“shareholder primacy proposition”); and (iv) the civilian legal origin of a country will influence its company law rules to such an extent that it will be inferior to a country that has its origins in the common law with regard to the level of (a) investor protection, (b) financial development, (c) access to finance, (d) government ownership and regulation, (e) security of property rights and (f) contract enforcement (“the legal origins proposition”). The authors seek to demonstrate what a careful analysis of the form and function of each of the legal rules operative in the twelve jurisdictions can reveal about the strength of each of these propositions. The conclusions are drawn that there is a lack of evidence for the legal origins, patterns of share ownership, and convergence propositions, but some available for the shareholder primacy one. The broader economic and legal policy implications of these findings are subsequently examined and conclusions drawn.