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Approaching Comparative Company Law

01 Jan 2008-Fordham Journal of Corporate & Financial Law (Cambridge University Press)-Vol. 14, Iss: 1, pp 83
TL;DR: In this article, the authors identify some common errors that occur in comparative law, offer some guidelines to help avoid such errors, and provide a framework for entering into studies of the company laws of three major jurisdictions.
Abstract: This paper identifies some common errors that occur in comparative law, offers some guidelines to help avoid such errors, and provides a framework for entering into studies of the company laws of three major jurisdictions. The first section illustrates why a conscious approach to comparative company law is useful. Part I discusses some of the problems that can arise in comparative law and offers a few points of caution that can be useful for practical, theoretical and legislative comparative law. Part II discusses some relatively famous examples of comparative analysis gone astray in order to demonstrate the utility of heeding the outlined points of caution. The second section offers a framework for approaching comparative company law. Part III provides an example of using functional definition to demarcate the topic "company law", offering an "effects" test to determine whether a given provision of law should be considered as functionally part of the rules that govern the core characteristics of companies. It does this by presenting the relevant company law statutes and related topical laws of Germany, the United Kingdom and the United States, using Delaware as a proxy for the 50 states. On the basis of this definition, Part IV analyzes the system of legal functions that comprises "company law" in the United States and the European Union. It selects as the predominant factor for consideration the jurisdictions, sub-jurisdictions and rule-making entities that have legislative or rule-making competence in the relevant territorial unit, analyzes the extent of their power, presents the type of law (rules) they enact (issue), and discusses the concrete manner in which the laws and rules of the jurisdictions and sub-jurisdictions can legally interact. Part V looks at the way these jurisdictions do interact on the temporal axis of history, that is, their actual influence on each other, which in the relevant jurisdictions currently takes the form of regulatory competition and legislative harmonization. The method of the approach outlined in this paper borrows much from system theory. The analysis attempts to be detailed without losing track of the overall jurisdictional framework in the countries studied.

Summary (9 min read)

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  • Vol. XIV FINANCIAL LAW about the laws of the separate jurisdictions.
  • Take, for example, one of today's most influential schools of comparative company law, led by finance theorists Professors Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny (hereinafter the "Origin Theorists").
  • They also believe that, on the contrary, legal systems originating from the civil law do not offer such benefits.
  • 36 The Origin Theorists summarize one of their key findings as follows: "Common law countries have the strongest protection of outside investors -both shareholders and creditors -whereas French civil law countries have the weakest protection.
  • 37 This conclusion is based on a list created by the Origin Theorists, wherein each country listed was assigned a governance index score based on the existence of certain predetermined shareholder rights.

APPROACHING COMPARATIVE COMPANY LAW 93

  • Rights on the books can in fact be effectively exercised in the jurisdictions the Origin Theorists favor, 40 and, most importantly (3) fails to use accurate information on the nature of the law in the jurisdictions it discusses.
  • The Origin Theorists view civil law countries as "interventionist" and "bureaucratic," 41 while they understand common law countries to use flexible standards like "fiduciary duty" and "fairness" to protect private property.
  • 42 But as Professor Mark Roe has rightly pointed out: State presence in common law systems today exceeds its historical presence in civil law nations.
  • The United States began moving away from judge-made law, and even away from legislatively made but judicially enforced law, well over a century ago when Congress set up the Interstate Commerce Commission and chose to have regulators, not judges, make law.

Id.

  • The Origin Theorists also depend on the rather aged argument that judges in civil law jurisdictions, rather than adjusting law by analogy to the case at hand, mechanically compare facts to rigid rules: 58 The "functional" method used in comparative law, like the functional analysis in sociology, 59 and the "structural" method employed in 55.
  • [T]he derivative suit had been recognized by the Supreme Court as a legal mechanism to protect minority shareholders, and the law of fiduciary duties generally required any corporate official who engaged in a self-dealing transaction with his firm to prove its "intrinsic fairness.".
  • Those background political conditions were not market-friendly.
  • Such orders explain why listing rules serve a harmonizing function that is not found in state company law with the exception, perhaps, of the Model Business Corporation Act (the "Model Act").

Id. (author's translation).

  • The Disney proceedings began in 1996 with the shareholders filing a complaint directly with the court rather than requesting that the directors pursue the action.
  • In the first round of action, the Disney directors sought dismissal of the case, which the Court of Chancery initially held in favor of the defendants.
  • As a sampling of the ten decisions in this long procedural history, see adequacy of executive compensation.
  • One could argue that this attitude is not readily apparent when comparing the two court decisions.
  • The comparison of "incomparables" to draw systematic conclusions, therefore, has the potential to divert attention from comparative work that focuses on the actual causes of the diverging treatment of compensation.

B. Recognize Functions and Relationships within Systems

  • Concededly, it is the rare case that seeks to compare two elements of a legal system that are both formally and functionally different.
  • But it is quite common to find that the comparatist does not cast her analytical net wide enough, and thus fails to appreciate all the functional elements that interact with a law or right in a foreign legal system.
  • This is one problem that has plagued development law and has led to the rejection by developing countries of incompatible "transplants" from foreign legal systems.
  • As Professors Daniel Berkowitz, Katharina Pistor and Jean-Francois Richard explain: "Extensive comparative research prior to the adoption of a foreign legal system is indicative for an informed choice.".
  • The overall compensation of a managing director must be "in an appropriate relationship to the duties of the director and the state of the company.".

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  • Such extensive comparative research would reveal "a system of functional constellations; its concepts [would] denote the tasks that a given life situation assigns law -indeed, assigns all laws resting on the same social and economic conditions.".
  • The relationship between the problems posed by similar underlying conditions -as well as the solutions devised to address them -is central to the analysis.
  • 95 Such comparative research, however, should include not only the legal provisions themselves, but also the means of enforcing them.
  • ZWEIGERT & KÖTZ, supra note 10, at 46 (defining the method of comparative law).

2008 APPROACHING COMPARATIVE COMPANY LAW 105

  • Context of the legal system and broader societal framework as solutions to problems that may arise in other jurisdictions.
  • Therefore, although the functional approach of comparative law is not without its dangers, 97 it is generally accepted.
  • In their explanation of how law development projects on the whole have had little success since the 19 th century, Berkowitz, Pistor and Richard attribute the trend to a failure to perform extensive comparative research on the constellation of values and functions within the recipient society before transplanting a foreign legal tool.
  • Using the term "demand" as shorthand for the desire of a recipient society to actually enforce a transplanted rule, they explain: [C]ountries that receive their formal legal order from another country have to come to grips with what was often a substantial mismatch between the preexisting and the imported legal order.
  • They may be unfamiliar with dispute settlement through adversarial litigation rather than mediation and negotiation, or with the rigidity of legal rights independent of kinship relations or norms of social obligations.

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  • Vol. XIV FINANCIAL LAW caveats), the authors argue that common law stands for the strategy of social control that seeks to support private market outcomes, whereas civil law seeks to replace such outcomes with state-desired allocations.
  • In words of one legal scholar, civil law is "policy implementing", while common law is "dispute resolving".
  • These broad ideas and strategies were incorporated into specific legal rules, but also into the organization of the legal system, as well as the human capital and beliefs of its participants.
  • When common and civil law were transplanted into much of the world through conquest and colonization, the rules, but also human capital and legal ideologies, were transplanted as well.
  • Along these lines, the difference between, say, the rationalism of René Descartes and the empiricism of Thomas Hobbes would have been the result of their respective legal systems, 125 or at least would have been transmitted to French and British colonies only through the transplant of such legal systems.

D. Be Aware of and Counter Prejudicial Perspectives

  • Zweigert & Kötz argue that the negative side of the functional method is flawed because it requires that the comparitist radically free herself from her own legal and doctrinal prejudices 127 -a task that perhaps one can never completely achieve, as writings evidencing harsh judgements on foreign law are not hard to find in comparative law literature.
  • One of America's classic texts on comparative law by Professors John Henry Merryman and Rogelio Pérez-Perdomo sneers so obviously at the "civil law tradition" that it can make even the U.S. reader uncomfortable.
  • Consider the following passage analyzing the work of legal scholars in civil law countries:.
  • The assumption of legal science that it scientifically derives concepts and classes from the study of natural legal data on the one hand, and the generally authoritarian and uncritical nature of the process of legal education on the other, tends to produce the attitude that definitions of concepts and classes express scientific truth.
  • Locking in a selected set of assumptions and values and locking out all others.

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  • Vol. XIV FINANCIAL LAW introduction of a current elementary textbook in Civil Law.
  • In contrast, English judges served at the pleasure of the crown, although the power to remove was seldom used.".

III. COMPARE ONLY COMPARABLES: WHAT IS "COMPANY LAW"?

  • A. Defining Company Law Functionally "Company law" or "corporate law" 149 is generally understood as a 146.
  • This Article uses the terms "company" law and "corporate" law indistinguishably.

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  • XIV FINANCIAL LAW distributed among various topical laws in each country, knowledge of the applicable topical laws, including their nature and the range of their application, is critical.
  • Such an "effects" test is essentially a functionality test seen from a practical rather than a theoretical vantage point.
  • Therefore, slightly reformulating Hansmann's and Kraakman's criterion, all rules, laws and organizational forms that have the function of regulating the corporation, its activities, and the rights of persons vis-à-vis the corporation with a close relation to the core characteristics of the corporate form, would be potential candidates for inclusion in a company law analysis.

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  • Vol. XIV FINANCIAL LAW regulations for corporations.
  • Act to place labor representatives on the supervisory board; 171 specifies the rights, duties and required financial statements of companies operating in corporate groups; 172 and requires listed companies to adopt a governance code on a "comply or explain" basis.
  • Under the AktG, a corporation has a two-tier board.
  • Regardless of its jurisdictional origin, however, the resulting law is broad, comprehensive and mandatory.

C. The United States

  • In the United States, a company and its "internal affairs" 187 are governed by the laws of the state in which the company is incorporated.
  • It provides for the creation of an entity with legal personality, 190 limited liability, 191 management by a centralized board 192 and transferable shares 193 .
  • Beyond these securities laws and the extensive body of rules that the SEC has issued under the authority they delegate, a listed company would also have to comply with the rules of the relevant exchange, which can be quite extensive.

D. The United Kingdom

  • The latter serve to supplement very permissive capital maintenance r tes.
  • Once the company is large enough to trigger application of the securities laws, however, such laws become more restrictive, regulating annual meetings and accounting practices, among other things.
  • As a jurisdiction with a common law system that has significantly influenced U.S. law, and as a member state of the European Union that, like Germany, must implement EU directives and obey EU regulations and ECJ decisions, the company law of the United Kingdom takes a middle position between Delaware and Germany.
  • Act removed a number of rules, such as those regarding the mandatory disclosure of significant shareholdings 218 and share dealings by directors 219 from the Companies Act, and placed them in newly issued rules of the UK Financial Services Authority (FSA).

2008 APPROACHING COMPARATIVE COMPANY LAW 129

  • Reform (previously the Department of T DGCL and allows such matters as the method of appointing directors 223 and the operation of the board 224 to be freely structured in the company's articles.
  • The fact that rules on company insolvency, directors' dealings, and shareholder disclosures were originally located in the Companies.
  • Act argues for including such laws and rules under the rubric of "company law".
  • The FSA's Disclosure and Transparency Rules thus constitute a central element of UK company law.

A. The Whole and Its Parts

  • Functions are by nature relational, and a correct understanding of legal functions thus requires that the entire system of relationships from which their relational value derives be taken into account.
  • Part V will build on this analysis by examining how the systemic unity of these jurisdictions acts as an environment of causal interaction to shape law's development over time.
  • Germany and the United Kingdom belong to the European Union; Delaware belongs to the United States.
  • The rule-giving bodies 240 affecting the governance of public companies in each of their jurisdictions are found at the primary, nation or state level (i.e., Germany or Delaware), at an upper, supranational or national level (i.e., the European Union or the United 240.
  • The agreement between an issuer and the securities exchange on which its shares are listed is a contract, and the exchange has "regulatory" power only over a very narrow group of persons, particularly its members and participants and its listed companies.

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  • Vol. XIV FINANCIAL LAW , such as on the reco and legal literature of the effects of an economy having corporate ownership rights dispersed among many small shareholders or concentrated in the hands of blockholders, 244 this States), and at the level of a private or quasi-public organization (e.g., the New York Stock Exchange or the UK Takeover Panel).
  • As discussed in Part II, socio-political and cultural factors are also important elements of the functional system comprising German, UK and U.S. company law.
  • Given the ample discussion in the economic Germany was a founding member of the European Economic Community (ECC) in 1957, 245 and the United Kingdom joined the EEC in 1973.
  • This latter relationship varies depending on the area being discussed.

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  • Vol. XIV FINANCIAL LAW companies . . . with a view to making such safeguards equivalent is not concurrent, the ECJ has interpreted the EC Treaty 251 to mean that EU law is supreme over that of the member states.
  • Once a directive has been adopted, however, it works to pre-empt conflicting national legislation.
  • The ECJ made this point clear in Inspire Art 260 , holding that the Eleventh Company Law Directive's list of required and optional disclosures for branches established in other member states is "exhaustive," and that any disclosure requirements imposed by a member state (in that case, The Netherlands) are pre-empted.
  • ECJ Justice Timmerman observed that the harmonization program conducted on the basis of Article 44 was thus seen as "an entrance.

2. The Company Law Directives

  • Ghts of shareholders with respect to changes in the com fee Member States accepted to pay for market integration.".
  • They provide rules that govern the creation and actual representation of the corporation as a legal person, the capital maintenance requirements (which are by many considered a quid pro quo for its limited liability), the nature of certain rights attaching to its shares, and the ri pany capital.

3. EU Implementing Regulations

  • Act defines the required minimum content of a prospectus under German law with a brief reference to the EU Prospectus Regulation.
  • The FSA's disclosure and transparency rules referred to in the previous section are, to a great extent, taken without change from this EU legislation.
  • As discussed in Part V, the Transparency Directive includes provisions on applicable law that r to regulate the disclosure requirements ember state.

4. The Europeanization of National Law

  • The growth of EU activity in the area of securities regulation is passing much of the legislative volume of rules in this area from the member states to the supranational entity.
  • The hierarchical relationship between the European Union and its member states, as well as the density of the EU measures in the areas of company law and capital markets, also mean that member state law has been shaped by EU law to a very significant extent.
  • For a U.S. observer, the "marbling" of national law with supranational elements will appear quite different than the twotiered state/federal structure that prevails in the United States.
  • The respective bodies of company law have both been "Europeanized" and exist alongside a large body of EU securities law.
  • Although EU law has not yet focused on private limited companies -and thus ECJ decisions have addressed conflicts in 289.

C. Within Germany and the United Kingdom

  • In public companies, the appointment of directors and their management of the company in areas other than those regulated by directives have been left to national law.
  • Thus in this important area of the law divergences do exist and continue to arise despite pressure by institutional investors for international b state (Land) of Hesse, where the city of Frankfurt am Main is located.

1. Germany

  • Each of these countries contains sub-jurisdictions and regulatory bodies to which power must be delegated or with which jurisdiction must be shared.
  • The Frankfurt rules go to disclosures and accounting, with standards for certain exchange segments being somewhat stricter than required by law.

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  • XIV FINANCIAL LAW ctice ailed EU legislation, however, the national substance of the BaFin regulations has become less signific very little jurisdictional interaction within Germ regulate the composition of the company's board or its actions.
  • Rather, the latter topics are addressed by the Corporate Governance Code referred to above, and compliance with the Governance Code must be declared (or non-compliance disclosed and explained) in the notes of a listed company's financial statements.
  • As CESR has increasingly issued more det ant.
  • As a result, there is any, especially given that the Frankfurt listing rules are comparatively light and the Kodex largely repeats the requirements of the Aktiengesetz.

2. The United Kingdom

  • Wales, Scotland and Northern Ireland -each having a certain degree of autonomy and slight differences in laws that affect companies -there is no regulatory competition between its component states.
  • The FSMA both created the FSA and delegated power to it, including the power to grant authorization to pursue a regulated financial activity.
  • Unlike the United States, however, it would be next to impossible for another UK exchange to compete for listing applicants by offering less regulation because the bulk of the listing rules come from the FSA rather than the exchangealthough a "race-to-the-top" strategy based on stricter standards should be possible.

2. Federal Laws

  • Federal laws, and the extensive body of rules issued pursuant to them, mostly require registration of companies, disclosure of financial and other information about the company and management, and make only minimal incursions into the internal affairs of the companies regulated.
  • When a shareholder raised a federal challenge against a "short-form" merger that under Delaware law did not require shareholder approval, the Supreme Court rejected the claim because the matter was "internal" and did not exhibit the relations inter se of the corporation, its shareholders, directors, officers or agents.
  • Matters which may also affect the interests of the corporation's creditors include the issuance of bonds, the declaration and payment of dividends, loans by the corporation to directors, officers and shareholders, and the purchase and redemption by the corporation of outstanding shares of its own stock.

3. Exchange Rules

  • The initial and continued listing requirements of national securities exchanges are merely contractual in nature, 363 1998).
  • The development of the system as a whole depends on the forces exercised on ea legal nature of the jurisdictions and their sub-units as described in Part IV demarcates the legally permissible boundaries for this interaction (e.g., the U.S. federal government will never command a state to implement a federal directive).
  • The historical dimension of legal development can be more fully understood by evaluating a well-researched assessment of relevant historical events in the context of legally permissible jurisdictional actions and reactions.

2. A Systemic Balance of State and Federal Law

  • Regardless of which direction regulatory competition leads, it is a fact of system dynamics that the more corporate law an authority with jurisdiction over the entire territory enacts (in the U.S., the federal government), the territorial sub-units (in the U.S., the states) will have fewer matters in which they can distinguish themselves and compete.
  • An increase in the amount of corporate law found at the federal level national population that state law had failed to prev discussed above, the federal government has largely avoided regulating corporate "internal affairs.".
  • Disclosures were improved by imposing internal checks on the creation of disclosure documents (i.e., accounts), as well as on the individuals who were responsible for their preparation.
  • The initial and continued listing requirements of U.S. securities exchanges are indeed quite extensive and, before the 1930's, they attempted to serve the investor protection function later performed by board 405 and transactions that must be put to the shar 399.

4. A Foreseeable Future of Stable Development

  • In the United States, the comparatist can look back on a 200-year history of company law that has not been significantly interrupted by war or tumultuous ideological turnarounds.
  • The long-term trend has been for authority to gradually pass from the states to the federal government.
  • The courts of California, on the other hand, have approved imposing their cumulative voting provisions on pseudo-foreign corporations.

Be

  • Y the interest by the general shareholders.
  • Professors William W. Bratton and Joseph A. McCahery rightly see "no political incentives that might encourage federal micromanagement of the charter market.".
  • Innovation enhances revenues from charter fees and the local corporate bar's income from servicing local clients.
  • Th view from Europe, however, is relatively clear: the way U.S. states and the federal government have approached div mpany law and the need to develop uniform rules has been -and will continue to be -markedly different from the process in Europe.

C. Company Law in Europe: Integration by Chance and by Choice 1. Historical Influences Preceding EU Market Integration

  • In 1811, as New York was adopting the first U.S. corporate law statute, the Duke of Wellington was in Portugal fighting armies allied with Napoleon Bonaparte, who controlled most of Continental Europe.
  • As would be the case for many wars to come, the financing for the military campaigns waged from Brittany to Moscow was arranged in London; it was at this time that the Rothschild brothers began their banking career by channeling currency to the Duke of Wellington and transferring subsidy payments from London to Britain's various European allies.
  • Part II presented some relatively famous, concrete examples of comparative analysis gone astray, and the debate they generated, in order to demonstrate the utility of heeding the approach coordinates.
  • Part IV analyzed the field of functions that comprises "company law" in the United States and the European Union.
  • An understanding of the type of historical development a particular jurisdiction has experienced and is currently exhibiting clarifies not only possible causal connections between legislative changes and changes in legal systems, but gives a better insight into how the respective countries and jurisdictions can be usefully compared.

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Fordham Journal of Corporate & Financial Law Fordham Journal of Corporate & Financial Law
Volume 14 Issue 1 Article 3
2008
Approaching Comparative Company Law Approaching Comparative Company Law
David C. Donald
Follow this and additional works at: https://ir.lawnet.fordham.edu/jc7
Part of the Banking and Finance Law Commons, and the Business Organizations Law Commons
Recommended Citation Recommended Citation
David C. Donald,
Approaching Comparative Company Law
, 14 Fordham J. Corp. & Fin. L. 83 (2008).
Available at: https://ir.lawnet.fordham.edu/jc7/vol14/iss1/3
This Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and
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83
APPROACHING COMPARATIVE COMPANY LAW
David C. Donald
ABSTRACT
This Article identifies several common errors that occur in
comparative law analyses, offers guidelines to help avoid such errors,
and provides a framework for studying the company laws of three major
jurisdictions. Part I discusses some of the problems that can arise in
comparative law and offers a few points of caution that can be useful for
practical, theoretical and legislative comparative law. Part II examines
well-known examples of comparative analysis gone astray in order to
demonstrate the utility of heeding the outlined points of caution. Part III
provides an example of using functional definitions to demarcate the
topic “company law,” offering an “effects” test to determine whether a
given provision of law should be considered as functionally part of the
rules that govern the core characteristics of companies. The relevant
company law statutes and related topical laws of Germany, the United
Kingdom and the United States are at the center of this analysis. On the
basis of this definition, Part IV analyzes the system of legal functions
that comprise “company law” in the United States and the European
Union. Part IV selects as the predominant factor for consideration the
jurisdictions, sub-jurisdictions and rule-making entities that have legis-
lative or rule-making competence in the relevant territorial unit, analyzes
the extent of their power, presents the type of law (rules) they enact
(issue) and discusses the concrete manner in which the laws and rules of
the jurisdictions and sub-jurisdictions can legally interact. Part V
examines the way in which these jurisdictions interact on the temporal
axis of history and assesses their actual influence on each other which,
in the relevant jurisdictions, currently takes the form of regulatory com-
petition and legislative harmonization. The approach outlined in this
Article borrows much from system theory and the analysis is detailed
without losing track of the overall jurisdictional framework in the
countries studied.
Professor, Chinese University of Hong Kong faculty of law. I would like to thank
Theodor Baums and Andreas Cahn for their comments on an earlier draft of this Article.

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I.
INTRODUCTION
The disciplines of “comparative law” in general and “comparative
company law” in particular are natural companions to the globalization
of social, political and economic activity. The course of economic and
political developments in recent decades has thus increased the amount
of comparative law taking place at every level, whether it be that of fact-
oriented practitioners, result-seeking legislators and development agen-
cies, or theory-focused academics. Each of these factions has its own
interests, priorities and goals. Nevertheless, there are certain approach
coordinates that mark the path for all their comparative studies. This
Article outlines these approach coordinates for the comparison of the
laws that govern public companies in the United States, the United
Kingdom and Germany.
Just as the merchants who engaged in the earliest forms of
international trade developed a commercial law that was trans-
jurisdictional,
1
today’s merchants and their counsel are often at the
forefront of comparative legal activity. When a transaction spans inter-
national borders, the persons responsible for structuring it must, by
necessity, become comparatists. As Professor Klaus J. Hopt has ob-
served, lawyers and legal counsel “are the real experts in both conflict of
company laws and of foreign company laws. . . . Working out the best
company and tax law structures for international mergers, and forming
and doing legal work for groups and tax haven operations, is a high,
creative art.”
2
Legal counsel’s consistent choice of a particular structure
or law can gradually crystallize into a “best practice” which, indepen-
dently or under the auspices of professional associations
3
, can lead to
many jurisdictions adopting that practice and converging toward a
1. See JOHN HENRY MERRYMAN & ROGELIO PÉREZ-PERDOMO, THE CIVIL LAW 13
(3d
ed. 2007).
2. Klaus J. Hopt, Comparative Company Law, in THE OXFORD HANDBOOK OF
COMPARATIVE LAW 1161, 1169 (Mathias Reimann & Reinhard Zimmermann eds.,
2006) [hereinafter H
ANDBOOK].
3. Such “associations” can range from the International Chamber of Commerce
and its international commercial terms for international sales transactions, to the
International Bar Association and its numerous practice guides, to the voluntarily
adopted master framework agreements created by organizations like the International
Swaps and Derivatives Association, Inc. See International Chamber of Commerce
Homepage, http://www.iccwbo.org (last visited Sept. 19, 2008); International Bar
Association Homepage, http://www.ibanet.org (last visited Sept. 19, 2008).

2008 APPROACHING COMPARATIVE COMPANY LAW 85
perceived optimal rule. In this way, the practical choices of lawyers
eventually become recognized legal norms. Comparative scholars like
Professor Philip R. Wood, whose numerous books focus on the practical
details of the financial laws and instruments in many countries,
4
give
internationally active lawyers the information they need to approach
transnational problems. Professor Wood specifically focuses on
providing detailed and accurate information about disparate legal sys-
tems, rather than reflecting on the policy goals of legislation or seeking
an overall coherence of a given system’s solution to a specific problem.
5
Comparative activity with great practical impact also occurs in
venues quite removed from commercial transactions. The unpreceden-
ted level of international cooperation transpiring on the regulatory side
of globalization creates systematic comparative studies that have drama-
tically accelerated legal understanding and convergence. Any project to
harmonize national laws or to draft a convention to govern an area of
law among nations will likely compare laws to find the best (or at least
the most mutually acceptable) solution. Institutions such as the
European Union,
6
the United Nations,
7
the International Institute for the
4. See, e.g., PHILIP R. WOOD, COMPARATIVE FINANCIAL LAW (1995) [hereinafter
W
OOD, FINANCIAL LAW]; PHILIP R. WOOD, COMPARATIVE LAW OF SECURITY INTERESTS
AND TITLE FINANCE (2d ed. 2007) [hereinafter WOOD, COMPARATIVE SECURITY
INTERESTS].
5. The method used, as is appropriate for the goal of the comparative study,
centers around the practitioner’s desire to use the law: “[t]here are three broad steps in
this type of measurement: (1) the legal rules; (2) the weighting of the importance of the
legal rules in practice; and (3) actual implementation or compliance by the jurisdiction
concerned.” W
OOD, COMPARATIVE SECURITY INTERESTS, supra note 4, at 16.
6. See PAUL CRAIG & GRÁINNE DE BÚRCA, EU LAW: TEXT, CASES, AND
MATERIALS 1189-95 (3d ed. 2008). As it developed from an initial six to its current 27
member states over a 50 year period, the European Economic Community (then
European Union) harmonized a core of minimum standards in many areas, followed this
up with mutual recognition of member state law while restricting harmonization to
health and safety, and introduced a parallel movement of European standardization.
This combination of legislative strategies allowed mandatory harmonization to pave an
initial uniformity, making home rule and voluntary convergence acceptable, which in
turn led to unproblematic harmonization so that the laws of the separate member states,
particularly the late entries, which became ever more tightly matched to each other.
This was particularly relevant for late entries, who were forced to adopt packages of
introductory laws. See id.
7. In particular, the Commission on International Trade Law (UNICTRAL) and
the Office of Legal Affairs, Codification Division’s Codification of International Law.
See generally United Nations International Law, http://www.un.org/law (last visited

86 FORDHAM JOURNAL OF CORPORATE & Vol. XIV
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Unification of Private Law (UNIDROIT)
8
and the Hague Conference on
Private International Law
9
engage in comparative law on a grand scale
in order to produce their directives, regulations and conventions. This
activity falls under the rubric of “legislative comparative law” in the
descriptive schema offered by Professor Konrad Zweigert and Professor
Hein Kötz, and has historically been one of comparative law’s most
solid domains.
10
If legislative efforts seek to achieve a specific result –
such as economic prosperity, stable government or investor protection
11
– then a second level problem arises: the legislator must correctly
ascertain a causal connection between the chosen law or legal system on
the one hand, and the desired social or economic effect on the other.
The latter, second-level type of project falls squarely within the mission
of institutions such as the World Bank, which seeks to “help developing
countries and their people . . . [by] building the climate for investment,
jobs and sustainable growth . . . .”
12
In addition to the studies prepared
by their experts, much of the academic comparative law produced in
universities also supports the activities of legislators and development
agencies.
The increasingly high stakes of correctly understanding foreign law
– both for the success of commercial transactions and for the comparing,
choosing and implementing of laws carried out by international
organizations – have naturally drawn an increasing amount of academic
Sept. 19, 2008).
8. UNIDROIT “is an independent intergovernmental Organisation . . . [whose]
purpose is to study needs and methods for modernising, harmonising and co-ordinating
private and in particular commercial law as between States and groups of States.”
UNIDROIT: An Overview, http://www.unidroit.org/dynasite.cfm?dsmid=84219 (last
visited Sept. 19, 2008).
9. “Since 1893, the Hague Conference on Private International Law, a melting pot
of different legal traditions, develops and services Conventions which respond to global
needs . . . .” HCCH Homepage, http://www.hcch.net/index_en.php (last visited Sept. 19,
2008).
10. See KONRAD ZWEIGERT & HEIN KOTZ, INTRODUCTION TO COMPARATIVE LAW
51 (Tony Weir trans., Oxford Univ. Press 3d rev. ed. 1998) (1977). See also Charles
Donahue, Comparative Law Before the Code Napoléon, in H
ANDBOOK, supra note 2, at
3 (“Modern comparative lawyers . . . tend to date the foundation of their discipline to
the nineteenth century and to the promulgation of the great European codes.”).
11. See ZWEIGERT & KÖTZ, supra note 10, at 11 (explaining how “applied”
comparative law can be used to solve specific legal policy problems).
12. The World Bank: About Us, http://go.worldbank.org/DM4A38OWJ0 (last
visited Sept. 19, 2008).

Citations
More filters
Book
29 Jul 2010
TL;DR: In this article, the essential properties of a corporation are discussed, including the following: 1. Approaching comparative company law 2. The partnership as a form of business organization 3. Corporations in a global market: the law applicable to corporations 4. Incorporating the company's share capital 5. Increasing the stock's capital 6. Distribution of dividends and maintenance of share capital 7. Repurchases of shares 8.
Abstract: Part I. The Essential Qualities of the Corporation: 1. Approaching comparative company law 2. The partnership as a form of business organization 3. Corporations in a global market: the law applicable to corporations Part II. The Corporation and its Capital: 4. Incorporating the company 5. Constituting the company's share capital 6. Increasing the company's capital 7. Distribution of dividends and maintenance of share capital 8. Repurchases of shares 9. The nature of shares and classes of shares Part III. Governing the Corporation: Subpart A. The Management: 10. An introduction to the Board and its governance 11. Directors' power to represent company 12. Directors' duties of loyalty, good faith and care 13. Judicial review of management decisions (The Business Judgment Rule) 14. Executive compensation 15. Directors' duties in listed companies Subpart B. The Members: 16. Shareholder voting rights 17. Shareholder information rights 18. Shareholder meetings 19. Shareholder duties 20. Judicial enforcement of shareholder rights Part IV. Corporate Combinations, Groups, and Takeovers: Subpart A. Mergers and Acquisitions: 21. Techniques for business combinations 22. Governance rules for business combinations Subpart B. Companies in Groups: 23. Corporate groups Subpart C. The Market for Corporate Control: 24. The regulation of takeover bids and prices 25. Management interference with takeover bids 26. Special problems of leveraged buyouts.

38 citations

Journal ArticleDOI
Peer Zumbansen1
01 Mar 2012
TL;DR: In the context of comparative constitutional law as discussed by the authors, the distinction between liberal and socialist constitutional orders that characterized early monographical treatments of the subjects has since given way to a very incoherent landscape of varieties of constitutionalism, with enormous consequences for the task of comparative legal analysis.
Abstract: Comparative lawyers have for more than a century sought to increase the understanding of ‘foreign’ legal orders and regulatory systems. Despite some never fully resolved methodological questions, great advances have been made in the comparative study of different regulatory areas both in ‘private’ (contract, tort, corporate, labour) and ‘public’ law (administrative law, environmental law). Comparative constitutional law [CCL] has emerged as a field with particular significance. Born in the context of a politically extremely divided world after the Second World War, CCL has undergone tremendous change in an economically fast-integrating world since the late 1980s. The distinction between ‘liberal’ and ‘socialist’ constitutional orders that characterized early monographical treatments of the subjects has since given way to a very incoherent landscape of varieties of constitutionalism, with enormous consequences for the task of comparative constitutional law. Rather than being able to set side-by-side distinct doctrinal instruments or legal principles that can be associated with a particular constitutional system, the emerging transnational legal-pluralist order demands a methodologically radically opened and methodologically interdisciplinary approach to capture the dynamics of constitutionalization, which characterize today’s processes of public-private norm creation and diffusion.

30 citations

Dissertation
01 Jan 2012
TL;DR: In this article, the authors consider whether the existing Thai legal framework provides adequate protection for minority shareholders, whether the transplanting of legal frameworks from other jurisdictions into Thai law is feasible, and what the obstacles to legal reforms are.
Abstract: Since the Asian currency crisis the legal framework for protecting minority shareholders in Thai listed companies has been strengthened. International and Western legal principles have been adopted to improve its efficiency and effectiveness. the main purpose has been to grow investment. The research questions whether the adopted legal principles are appropriate in the Thai context. It considers (i) whether the existing Thai legal framework provides adequate protection for minority shareholders; (ii) whether the transplanting of legal frameworks from other jurisdictions into Thai law is feasible; and (iii) what the obstacles to legal reforms are.

21 citations

Book ChapterDOI
TL;DR: In this paper, comparative legal studies in the context of transnational legal pluralism as a methodological approach to the study of intersecting normative and institutional orders are discussed. And the authors suggest that there is a great promise for comparative legal study in the domain of global governance, and draw out the context in which debates about comparative and transnational law are unfolding.
Abstract: A project seeking to assert and contrast the ‘practice’ of comparative law in distinction from the well-known and longstanding theoretical critique of the field is itself in need to define the meaning of practice. The following chapter, written for a volume edited by Jacco Bomhoff and Maurice Adams, takes up this challenge in two steps. In a first one, it revisits comparative law’s seemingly eternal self-doubt regarding its target of inquiry and its method. I will suggest that there is a great promise for comparative legal studies in the context of transnational legal pluralism as a methodological approach to the study of intersecting normative and institutional orders. In a second step, I would like to draw out the context in which current debates about comparative and transnational law are unfolding. This context- ‘global governance’- poses significant challenges for the role of law in what has fast become a multi-disciplinary inquiry regarding the contours and foundations of a continuously evolving global regulatory landscape. A reflection on the regulatory aims of comparative law as transnational law, which I have been pursuing together with Russell Miller in ‘Comparative Law as Transnational Law: A Decade of the German Law Journal’ (Oxford University Press, 2012), can serve as a powerful critique of global governance.

12 citations

Frequently Asked Questions (12)
Q1. What contributions have the authors mentioned in the paper "Approaching comparative company law" ?

This Article identifies several common errors that occur in comparative law analyses, offers guidelines to help avoid such errors, and provides a framework for studying the company laws of three major jurisdictions. The approach outlined in this Article borrows much from system theory and the analysis is detailed without losing track of the overall jurisdictional framework in the countries studied. I would like to thank Theodor Baums and Andreas Cahn for their comments on an earlier draft of this Article. 

None of these possibilities should be excluded by xamining company law in the European Union. 487 Given the currently foreseeable range of technical possibilities in company law, the pressure of internationally active investors to seek ever-increasing uniformity in securities regulation, the possible introduction of an EPC, and the creation of a European Model Company The possibility of flagged securities competing on a single exchange – thus replicating the w the comparatist e Moving away from harmonized regulation, Professor Theodor Baums484 has observed that the proposed creation of a European Private Company “ could well take the form of a regulation so as to create a true organizational form that can be used in all member state [ s ]. 

Matters which may also affect the interests of the corporation’s creditors include the issuance of bonds, the declaration and payment of dividends, loans by the corporation to directors, officers and shareholders, and the purchase and redemption by the corporation of outstanding shares of its own stock. 

A memorable functional analysis in anthropology is Claude Levi-Strauss’ comparison of mythical thought, characterized as “bricolage”, to scientific thought. 

Perhaps the most immediate danger faced by comparative lawyers is the risk of basing an analysis on incomplete or incorrect information about the legal systems being studied,34 especially since reliable information may be far away and written in a foreign language. 

The use of function instead of name or essence, however, dislodges the object of comparison from its linguistic or conceptual moorings and introduces the risk that the comparatist will abuse the elasticity of the “function” concept. 

The gradual change in outlook towards business and corporations was accompanied by positive attitudes towards securities dealing, which gradually overcame the view that speculation in securities was an unproductive activity that enabled deceit and should therefore be restricted. 

Because the SEC operates under power delegated to it through the Exchange Act, it may not instruct a securities exchange to adopt a rule in an area not covered by such delegated power. 

”254 In Articles 43 through 48 of the EC Treaty, the Community is given the express duty to guarantee the freedom of a citizen or company from one member state to establish him, her, or itself in any other member state, but the promulgation of company law beyond a certain level of safeguarding harmonization is not an express Community function. 

The initial and continued listing requirements of U.S. securities exchanges are indeed quite extensive and, before the 1930’s, they attempted to serve the investor protection function later performed byboard405 and transactions that must be put to the shar399. 

the institutions that control theft in its myriad forms, especially self-dealing by managers and controlling shareholders, are an essential fertilizer. 

The peculiarity of reversing the causal relationship in such manner is displayed in the solid method of the eminent intellectual historian, Professor Peter Gay, who analyzes the legal writings of Montesquieu for the tension between influences from the philosophical positions of rationalism and empiricism rather than taking the reverse path proposed by the Origin Theorists.