Routledge Handbook of Corporate Law

Roman Tomasic

• Publisher: Taylor & Francis
• Year: 2016
• eBook ISBN: 9781317662167
• Edition: 1
• Topic: Jura
• Subtopic: Unternehmensfinanzen

The Routledge Handbook of Corporate Law provides an accessible overview of current research in the field, from an international and comparative perspective.

In recent years there has been an explosion of corporate law research, as this area of law continues to develop rapidly throughout the world. Traditionally, Anglo–American corporate law theory has dominated debates and publications; however, this handbook readdresses the balance by exploring the treatment of corporate law in both Europe and Asia, as well developments in the US and UK. Bringing together a wide range of key thinkers in the field, this volume is divided into three main parts:

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• Thinking about corporate law

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• Corporate law principles and governance

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• Some cross-cultural comparisons

Providing up-to-date and authoritative articles covering all the key aspects of corporate law, this reference work is essential reading for advanced students, scholars and practitioners in the field.

Part I
Thinking about corporate law

1
The methods of comparative corporate law

Mathias M Siems

Introduction

In the 1990s, it was said that there was ‘very little systematic writing about the methods of comparative law’ (Merryman 1999: 3) and that the comparative methodology was ‘still at the experimental stage’ (Zweigert and Kötz 1998: 33). However, this has changed to a significant degree: recent years have seen the publication of a number of new books about the comparative method of law (Husa 2015; Siems 2014; Samuel 2014) with a common core of themes emerging that most of these books discuss.

Comparative corporate law has also seen a rise in popularity, here too, with many books published recently (Ventoruzzo and others 2015; Roth and Kindler 2014; Siems and Cabrelli 2013; Cahn and Donald 2010; Kraakman and others 2009; Andenas and Wooldridge 2009). This line of research has made important contributions to the, traditionally, rather parochial scholarship on corporate law. However, in the comparative corporate law literature there is often a lack of consideration given to the recent advances made in the general field of comparative law.

This chapter aims to fill this gap: it will outline a conceptual framework that shows how seven core themes of comparative law can be linked to research on comparative corporate law. Subsequently, it will explain these seven topics in more detail, also distinguishing between research approaches that have a legal focus and those that follow a more interdisciplinary perspective. The conclusion will then suggest that there is a need to overcome not only the disconnection between comparative and corporate law research but also between legal and interdisciplinary perspectives of comparative corporate law.

Conceptual linkages between comparative and corporate law

The central idea of having a field of research called ‘comparative law’ is that there are certain themes that can apply to the legal comparison with any area of law. However, this general approach does not deny that variations may be necessary according to the area of law in question, for instance, since some areas may invite a closer link to the social sciences (e.g. to economics for research on comparative competition law), whilst in other areas a closer link to the humanities may be appropriate (e.g. to cultural studies for research on comparative family law).

For comparative corporate law, Corcoron (1996: 57–58) suggests that there is a ‘corporate law advantage’ when using the comparative method because of the following two reasons:

The first is the historical relationships between the use of the corporate form by different legal systems. Corporations go all the way back to the Twelve Tables, the most ancient of Roman laws. Because of the strength of this historical relationship, comparative work in corporate law has a theoretical depth that does not exist in other areas of the law. The second advantage for the comparative corporate scholar is the modern relationship between corporate theory and economic theory. In the modem era corporations have provided the major vehicle for the development of capitalism and other commercial ventures. These two relationships together mean that in corporate law, the modem corporate entity has both a substantive and a structural relationship across legal systems.

This line of reasoning identifies two features of corporate law which enable comparability of legal systems, thus providing a common denominator (‘tertium comparationis’) in the terminology of comparative law (see Siems 2014: 26). However, it is the position taken in this chapter that there is more to be said about the relevance of themes of comparative law for research in comparative corporate law.

Table 1.1 summarises how comparative law can contribute to comparative corporate law. The seven categories capture the main themes of comparative law which may be applied to any area of law. In the subsequent columns these themes are then related to questions of comparative corporate law. Those will be explained in detail in the main part of this chapter. Examples will be used in order to illustrate the popularity of those approaches, their technical implementation, as well as forms of criticism.

To clarify, it seems worth noting that there may be blurred lines between the classification schemes of Table 1.1. It may often be the case that research will be concerned with more than one of the seven categories. Similarly, the divide between ‘legal focus’ and ‘interdisciplinary perspective’ has a grey area where doctrinal legal scholarship incorporates some socio-legal research into its work.

This chapter does not aim to rank the seven categories of comparative approaches to corporate law. The choice of the appropriate method cannot be assessed universally since it depends on the research topic and the countries in question, as well as the skills and the resources of the researcher (including forms of collaboration).However, it is also not suggested that ‘anything goes’; rather, the following will explain the benefits and limitations of each of the seven comparative categories as applied to corporate law.

The seven categories of a comparative approach to corporate law

(1) Rule-based comparison

In both academia and legal practice, a rule-based comparison of corporate law is often a natural starting point. For example, a scholar or practitioner from a civil-law jurisdiction may want to find out whether certain incorporation requirements from her country also apply elsewhere, say, the provision of minimum share capital or the notarial authorisation requirements. If the result is then that in other countries (e.g. in some common law countries) there are no such requirements, that would already be an interesting finding for such a study (Van Hulle and Gesell 2006; see also section (4) below).

Table 1.1 Overview of relationship between comparative and corporate law

Theme of comparative law	Typical question for comparative corporate law	Examples of research:
		with a legal focus	with an interdisciplinary perspective
(1) Rule-based comparison	Does paiticular domestic rule of corporate law also exist in other countries?	• description of differences in legal rules and principles	• coding of rules based on model of one country
		• search for universal rules in company law
(2) Functional comparison	How is particular corporate problem addressed in particular countries?	• themalically oriented country chapters	• principal-agent problems to identify similarities and differences
		• application of Common Core approach to company law	• coding of rules based on problem case
(3) Classifications of legal systems	How does corporate law differ at a wider level (e.g. globally)?	• classifications according to sources of law, board models, and shareholder/stakeholder interests	• ownership structure and insider/outsider models
			• broad models: e.g. Anglo–Saxon, continental and Asian; legal origins
(4) Comparative law in context	Why are insights o! differences and similarities in corporate law of more general interest?	• substitutes or complementarities of rules from different areas	• qualitative research on specific countries
		• role of lawyers, auditors, courts, supervisory authorities etc.	• quantitative research on incorporation costs, role of culture and ‘law and finance’
(5) Historical comparative perspective	How far does history explain similarities and differences in corporate law?	• differences in industrialisation and politics; path dependencies	• drives for convergence, including regulator competition
		• historical commonalities and recent convergence	• qualitative and quantitative challenges to causal effect of corporate law
(6) Transnational and comparative law	Is a countiy-level perspective of corporate law still accurate?	• beyond-state law in EU and US	• Doing Business Report’s index on investor protection and criticism
		• OECD Principles of Corporate Governance and how they work	• UN initiatives; discussion about role of limited liability in MNlis
(7) Applied comparative law	What are possible policy implications that can follow from comparing corporate laws?	• main beneficiaries of comparative corporate law	• corporate law and development; empirical research
		• types of reforms from small to large-scale	• non-economic considerations

A rule-based comparison can also be of a more conceptual nature. For instance, the discussion about the applicable rules of corporate law (i.e. the private international law of corporations) typically does not start with a question about the precise legal rules but with the divide between countries that follow the ‘incorporation theory’ or the ‘real seat theory’, namely whether a country determines the applicable law only based on the place of incorporation (the ‘statutory seat’) or whether it also considers the place of the headquarters (the ‘real seat’) (Gerner-Beuerle and Schuster 2014: 310–14).

Such a more conceptual rule-based comparison can also be revealing in order to identify similarities. For instance, a controversial article by Hansmann and Kraakman (2001) suggests that across jurisdictions all modern corporate laws share the following core characteristics: full legal personality, limited liability for owners and managers, shared ownership by investors of capital, delegated management under a board structure and transferable shares. Identifying similarities of rules and concepts across countries is also important for the question of whether transnational law-makers can develop a common position that is acceptable across legal systems, for example, as far as European harmonisation is concerned (Bachner 2009, justifying a doctrinal approach for comparative corporate law) or for global benchmarks such as the OECD Principles of Corporate Governance (discussed in section (6) below).

It may seem that research with an interdisciplinary perspective would not be interested in a rule-based comparison. However, La Porta and others (1998) – an article by a group of financial economists – includes such a comparison. La Porta and others use a quantitative methodology in order to examine the differences in shareholder and creditor protection in 49 countries and its impact on financial development. For example, for shareholder protection, they use an index on ‘anti-director rights’ that codes (with ‘1’ or ‘0’) the rules on ‘proxy by mail allowed’, ‘shares not blocked before the meeting’, ‘cumulative voting’, ‘oppressed minorities mechanism’, ‘share capital required to call an extraordinary shareholder meeting’ and ‘pre-emptive rights to new issues’.

Subsequent scholarship has identified problems with the coding of these variables (Spamann 2010), but in the present context the main problem to note is that the selection of these variables is not based on a comparative analysis of legal tools available in different legal traditions. Rather, La Porta and others usually follow the US model, thus, implicitly benchmarking how similar legal systems are to that of the US (and whether this makes a difference in terms of financial development; see also section (4) below). Such an approach is problematic because it disregards that shareholder protection – or ‘anti-director rights’ – may be based on other rules in other countries. Therefore, a functional comparison is often seen as preferable.

(2) Functional comparison

According to the traditional method of comparative law, the initial research question should not simply refer to the law of one legal system, but should be posed in functional terms (Zweigert and Kötz 1998: 38, 43). For example, following the approach of the Common Core project,¹ a comparatist may start with a hypothetical or real-life problem in order to examine how a problem would be solved in different legal systems. This has the advantage that preconceptions based upon the comparatist’s own legal tradition will not lead to a ‘false negative’, with their personal bias leading them to fail to consider functional equivalents in other jurisdictions.

In comparative corporate law, a functional approach is very popular. The books by Fleckner and Hopt (2013) and Puchniak and others (2012) have the term ‘functional’ in their titles. They both deal with questions of corporate governance and derivative actions in selected jurisdictions and present those in separate country chapters. Siems and Cabrelli’s (2013) Comparative Company Law: A Case-based Approach follows more closely the approach of the Common Core project. The main chapters of this book are based on 10 hypothetical cases, which are subsequently examined according to the laws of eight European countries, as well as the US and Japan. The project was coordinated by the two editors who appointed one or two country experts for each of the 10 jurisdictions. Each of the country experts (or the two experts from one country) also suggested one hypothetical case in order to achieve a good mix and balance of cases.

The concluding chapter of Siems and Cabrelli (2013), as well as the accompanying article by Cabrelli and Siems (2015), relate the results of the cases to differences and similarities in legal rules and sources of law. It is found that there is a strong correlation between the results of the cases (e.g. whether they favour directors or shareholders; shareholders or creditors; minority or majority shareholders) and the legal rules in question. By contrast, there is a weaker link between the relevant sources of law (case law, statute law, articles of association etc) and the results. In particular, it is not found that the case law of common law countries is a crucial determinant for higher levels of shareholder protection (a topic to be discussed further in the next section). Such a functional approach can therefore contribute to core themes of comparative corporate law.

A limitation of the approach taken in Siems and Cabrelli (2013) is that it mainly examines the legal solutions to the 10 cases. Such a ‘legal focus’ is in line with the books of the Common Core project. However, a functional comparative perspective by nature is not restricted to a legal approach; for example, it may be the case that the protection of shareholders provided by the law in some countries is provided by extra-legal factors in others. It is therefore no coincidence that interdisciplinary research has also used the functional approach.

One example for a functional and law-...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Notes on contributors
• Introduction: corporate law in transition
• PART I Thinking about corporate law
• PART II Corporate law principles and governance
• PART III Some cross-cultural comparisons
• Index