What Is Dead May Never Die: The UK's Influence on EU Company Law

Abstract

In this symposium article, we attempt to trace the UK’s influence on EC/EU company law harmonization by focusing on a few key areas. Since the establishment of the European Economic Community in the 1960s, company law harmonization has possibly been the area of private law most affected by the EEC/EC/EU. The success of the harmonization program is, however, controversial. Arguably, the frequent antagonism between the UK and its Continental European partners has often been the reason why certain ambitious projects were ultimately not pursued or watered down by compromise. We propose a bifurcated thesis in which we distinguish between company law issues related to capital markets and others. Areas not directly related to capital markets that were the subject of the first wave of company law harmonization attempts include board structure and legal capital. Here, the United Kingdom had a considerable impact, as it was typically on the brakes when Continental Europeans were poised to enact top-down regulation along the lines of German or other Continental European models. The United Kingdom tended to favor freedom of choice in company law, and thus ended up as the primary “user” of the freedom of establishment for companies, which led to the fulfillment of the noble dream of this particular Freedom in spite of Continental objections and fears of a race to the bottom. By contrast, in areas related to capital markets, from the 1990s onwards, the UK became the model jurisdiction on which European harmonization projects were increasingly based. In areas such as takeover law and financial reporting, EU law generally adopted a UK perspective emphasizing transparency and shareholder choice, either as mandatory law, or as a strongly encouraged model for the Member States. Arguably, as a leading capital market the United Kingdom might have had the same impact without even being an EU member. Counterintuitively, depending on the specific area of harmonization, the fact that the United Kingdom was an EU member can thus either be described as important or irrelevant.