Skip to main content
SpringerLink
Log in

Regulatory competition in European company law

  • Published:
European Journal of Law and Economics Aims and scope Submit manuscript

Abstract

States have customarily tended to compete with one another. Not always, however, is this tendency, or the underlying methods put to use, obvious. That states (provincial divisions in the US) were competing to attract incorporations by relaxing their regulatory standards, couldn’t be seriously observed and highlighted until mid-1970s. Today, a few would doubt the existence of regulatory competition in corporate law in the US. In this paper, the author examines the issue whether the EU is (likely to be) engaged in regulatory competition in the area of company law. Answering the question in affirmative, the author proceeds to examine the strength of the race to the bottom and the race to the top theories, as developed and argued in the US, for the European setting. Since the legal systems of Member States of the EU have certain very disparate “core values” along which those systems have historically developed, relaxation of standards in the EU would take place against different variables. Because of the multitude of variables, comparable variables are unlikely to yield comparable results; either of the race theories is unlikely to satisfactorily predict the regulatory behaviour of EU Member States. Instead, since “laxation” in respect of one variable would be met by “optimisation” in respect of the other, there is likely to be simultaneous races to the top and to the bottom among the EU Member States.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. This motivation is more apparent in the judicial systems of common law jurisdictions, where foreign judicial decisions are often quoted to persuade a court to respond to an issue in a manner it has been dealt with by courts abroad. The ostensible argument cited against adoption of the foreign solution is the need for “domestic adaptation.” This is however not always the real motivation, particularly in states with developed systems of laws, where the real motivation, as would be apparent from this paper, is regulatory competition. The motivation is also discernible in the area of legislations.

  2. See, Radaelli (2004), Murphy (2004), and, for the origin of this concept, Tiebout (1956).

  3. Infra II.C.

  4. Esty and Geradin (2001) (“Esty and Geradin, “Regulatory Co-opetition””).

  5. Id., p. 33.

  6. Id., p. 30.

  7. Id., p. 31.

  8. See, Radaelli, “Regulatory Puzzle”.

  9. See generally, Conrad (1973), Jennings (1976), Kaplan (1976), Schwartz (1976).

  10. The expression was first used by Judge Brandeis in Liggett v. Lee 288 U.S. 517, though the theory was most forcefully propounded by William Cary, Infra II.C.

  11. Infra, Part II.D.

  12. The difference in substantive regimes of different states makes the choice of the connecting factors important. See, Drury (1998) and R. v. Secretary of State ex parte Factortame [1991] 1 AC 603 (ECJ).

  13. See, Henriques v. Dutch West India Co. (1728) 92 E.R. 494, where this doctrine is believed to have originated. For an analysis of the American treatment, see, Rees and Kaufman (1958).

  14. The Queen v. H. M. Treasury and Commissioners of Inland Revenue, ex parte Daily Mail and General Trust plc [1998] ECR 5483, Para 19 (“Daily Mail”); reiterated in Überseering BV v. Nordic Construction Company Baumanagement GmbH [2002] ECR I-9919, Para 40 (“Uberseering”).

  15. Restatement (Second) of Conflict of Laws § 301 (1971); CTS Corporation v. Dynamics Corporation (1987) 481 U.S. 69. For an outdated view that being a creature of national law, a (foreign) company cannot be recognized outside such system, see, Bank of Augusta v. Earle (1839) P.S.C. 519.

  16. For an analysis of the problems created in the European context, infra Part III.D.2.

  17. See, for arguments in favour and against the desirability of this freedom of choice, Symposium (1989).

  18. A pseudo-company is one which is incorporated in a state but carries on its business and administration wholly outside its territorial limits. However, where the only connection with a state is the “naked fact of incorporation” and no more, the courts have taken a more pragmatic view and refused to apply the incorporation doctrine. See, for example, Mansfield Hardwood v. Johnson 268 F.2d. 317 in the United States. See also, Kaplan (1968), Latty (1955); Kozyris (1985). Though argued by some, when, to address the concerns of regulating a tramp corporation, the courts apply a “most-closely connected country” type test, it is doubtful whether it is actually and always a reference to the real seat doctrine (though in most cases, it would be).

  19. Drury, “Recognition of Foreign Corporations”, p. 194.

  20. See, Clark (1986), Romano (1987).

  21. Alva (1990).

  22. Cary (1974) (hereinafter “Cary, “Federalism””).

  23. Id., p. 669.

  24. For a historical account of the Delaware syndrome, see, Butler (1985) and Alva (1990).

  25. Cary, “Federalism”, p. 701.

  26. See generally, Latty (1965).

  27. As to the relationship between separation of ownership from control and profit of the enterprise, which Daniel Fischel understands to be the theoretical foundation for Cary’s “race to the bottom” conclusion, see, Berle and Means (1968) and, Posner (1977) generally.

  28. Cary, “Federalism”, p. 673.

  29. Id., p. 669 and p. 679.

  30. Cary gives a detailed account of several decisions from Delaware courts which clearly go to show that the Delaware judiciary has been instrumental in pursuing this state “public policy”: Id., pp. 670–686.

  31. See, Fischel (1982) (hereinafter “Fischel, “Race Revisited””).

  32. See, Cary, “Federalism”, p. 695.

  33. For a contrary view of the role of the Delaware courts, see, Arsht (1976). Similarly, Winter also believes that the Delaware courts have not been excessive, though admitting generally that “the case law interpreting [Delaware code is not] perfect.” He however hastens to caution as “unrealistic” any “expectations of unvarying correctness”, see, Winter (1977, p. 6). (hereinafter “Winter, “Corporation Theory””).

  34. Cary, “Federalism”, 672, citing the federal court decision in Mansfield Hardwood v. Johnson 268 F.2d. 317.

  35. Id., p. 673, citing Steinberg v. Adams 90 F.Supp. 604 and Cheff v. Mathes 41 Del. Ch. 494.

  36. Id., p. 675, citing American Hardware v. Savage Arms Corporation 37 Del. Ch. 59, Cary comments that “the Delaware courts are reluctant to assist any group seeking a takeover.” Id., p. 677.

  37. Id., p. 677, citing Federal United Corp. v. Havender 24 Del. Ch. 318 and Berrett v. Denver Tramway Corp. 53 F.Supp. 198.

  38. Id., p. 679, citing Hariton v. Arco Electronics Inc. 41 Del. Ch. 74.

  39. Id., p. 679, citing Sinclair Oil Corp. v. Levien 280 A.2d. 717 and Getty Oil v. Skelly Oil 267 A.2d. 883.

  40. Id., p. 683, citing Graham v. Allis-Chalmers Manufacturing 40 Del. Ch. 335.

  41. Id., p. 663.

  42. Id., 666 and 705.

  43. Liggett Co. v. Lee 288 U.S. 517, 558 (per Justice Brandeis).

  44. Radaelli, “Regulatory Puzzle”, p. 2.

  45. Cary, “Federalism”, p. 666.

  46. Id.,pp. 696–705.

  47. For a detailed discussion of the constitutional challenges posed by federalisation of corporate law in the US, see, Student Note (1972). See also, Nader et al. (1976) for a view endorsing the constitutional desirability of federal law on the basis of the “interstate” or “international” character of the underlying transactions.

  48. See, Cary, “Federalism”, p. 696.

  49. Id., p. 663.

  50. Id., pp. 700–705.

  51. See generally, for this suggestion, Nader et al. (1976).

  52. Cf., Klevorick (1997).

  53. Esty-Geradin, “Regulatory Co-Opetition”, p. 30.

  54. Besides “race to the bottom” also, federalism is justified for (a) the presence of interstate externalities and (b) public choice rationale. Those who oppose “across-the-board” federalisation however argue that federalisation does not constitute the complete elimination of race to the bottom tendencies since there may be other regulatory dimensions where states may compete. See, Revesz (2001) (hereinafter “Revesz, “Federalism””).

  55. For a good survey of the changed attitude and reaction of the Delaware courts to the criticism and “popular support”, see, Fischel, “Race Revisited”, pp. 923–941.

  56. See, for instance, the decision of the US Supreme Court in Sante Indus, Inc. v. Green 97 S. Ct. 1292, where the SC declined to set the fiduciary standards under the Securities Exchange Act, 1934 as the general corporate law standards.

  57. Fischel, “Race Revisited”, pp. 941–945.

  58. Winter, “Corporation Theory”, p. 256. See also, Easterbrook & Fischel (1984).

  59. See, Berle-Means, pp. 12–28.

  60. See, Fischel, “Race Revisited”, p. 917.

  61. Ibid., citing amongst others, Fama (1980).

  62. See, Id., p. 918.

  63. See generally, Easterbrook and Fischel (1981); Easterbrook and Fischel (1991).

  64. Winter, “Corporation Theory”, p. 253.

  65. See, Fischel, “Race Revisited”, p. 918.

  66. See, Fama, “Agency Problems” pp. 292–294.

  67. Winter (1977).

  68. For a detailed analysis of this argument, see, Manne (1965).

  69. Fischel, “Race Revisited”, p. 919.

  70. Dodd and Leftwich (1980).

  71. Fischel, “Race Revisited”, p. 920.

  72. For the meaning and concept of “competition in corporate charters”, see, Winter, “Corporation Theory”.

  73. See generally, Dodd and Leftwich, “Market for Corporate Charters”: arguing that there is a third increase in the returns subsequent to reincorporation in Delaware as compared to returns before. See also, Bebchuk et al. (2002).

  74. Fischel, “Race Revisited”, pp. 922–923. Some competitionists also argue that the federalists base their conclusions only on the benefits aspect and tend to conveniently ignore the impact of regulatory costs on shareholders. See generally, Winter, “Corporation Theory”, p. 258.

  75. See, Romano (2005).

  76. Darwin, The Origins of Species, Chapter IV (P.F. Collier & Son: New York, 1909–1914), available at http://www.bartleby.com/11/4001.html, last visited 05 August 2008.

  77. Klevorick (1997).

  78. Ibid.

  79. Bebchuk (1992) (hereinafter “Bebchuk, “Desirable Limits””).

  80. Id., p. 1440.

  81. See, Bebchuk (1989).

  82. Bebchuk, “Desirable Limits” pp. 1458–1470 and pp. 1483–1484.

  83. Id., p. 1485.

  84. Id., pp. 1493–1495.

  85. Id., p. 1485.

  86. Id., p. 1496. For a strong response to this view, highlighting the acute federal public choice problems, see Kostel (1993).

  87. Bebchuk, “Desirable Limits”, pp. 1499–1507.

  88. Roe (2005). (hereinafter “Roe, “Delaware’s Politics””).

  89. Id., p. 2493.

  90. Id., p. 2499.

  91. Id., pp. 2515–2522.

  92. Id., p. 2499.

  93. Ibid.

  94. See, Gibson (2001).

  95. See, Winter, “Corporation Theory”, p. 253 and pp. 259–260. For a contrary view, see, Carney (1980).

  96. The difference between “pecuniary” and “real ownership” interest is well exemplified in the manner in which the takeover regime is crafted in each of the US and the UK. The US permits whereas the UK prohibits employment of defence tactics by the management. See generally, Rosenzweig (2007).

  97. Sachdeva (2007).

  98. See, Article 2, Consolidated Version of the Treaty Establishing the European Community (hereinafter, “EC Treaty”).

  99. Article 3(1)(c), EC Treaty.

  100. See, Preamble, EC Treaty.

  101. Article 3(h), EC Treaty.

  102. Edwards (1999).

  103. See the combined effect of Articles 43 and 48, EC Treaty. As to the nature and effect of Article 43, see Reyners v. Belgium [1974] ECR 631; Sodemare v. Regione Lombardia [1997] I-3395; and Opinion of AG La Pergola in Centros v. Erhvervs-og Selskabsstyrelsen [1999] ECR I-1459 (“Centros”).

  104. Article 294, EC Treaty.

  105. See, Hansmann and Kraakmann (2004).

  106. Armour (2005) (hereinafter “Armour, “Who Should Make Corporate Law””).

  107. See, Villiers (1998).

  108. Schmitthoff (1973). See generally for a very strong view that “the Community cannot tolerate the establishment of a Delaware in its territory”, Ibid. For a lucid history of the EC company law, see, Edwards (1999). This early consensus for harmonisation grew at around the same time as the “race to the bottom” cry across the Atlantic: Deakin, “Regulatory Competition versus Harmonisation in European Company Law” in Esty and Damien (2001) (hereinafter “Deakin, “Competition versus Harmonisation””).

  109. See, Kolvenbach (1990).

  110. Grundmann (2007).

  111. Schmitthoff (1976).

  112. See, Enriques (2004) and Charny (1991) (hereinafter “Charny, American Perspective””): there is no reason to fear the Delaware syndrome in the EU. Cf., Edwards (1999) 3 arguing that divergences in the national company laws “may be expected to create a European ‘Delaware effect’”. See also, Armour, “Who Should Make Corporate Law” arguing a case for regulatory competition and against harmonisation in Europe.

  113. Article 44(2)(g), EC Treaty provides the legal basis for “making equivalent throughout the Community,” “by coordinating[,…] the safeguards … required by member states of companies or firms within the meaning of the second paragraph of Article 48.” The consequence of choosing an incorrect legal basis for legislation is the risk of its annulment by the ECJ.

  114. Article 44(1) read with Article 94, EC Treaty.

  115. Article 249(3), EC Treaty. The position of a maximum harmonisation directive is however slightly different.

  116. Edwards (1999).

  117. Id., pp. 10–11.

  118. See, Villiers (1998).

  119. Edwards (1999).

  120. For a vividly expressed account of development of EC company law, including the influence of the growth of the political agenda, Wouters (2000) and citations therein.

  121. Infra, III.D.1.1.

  122. Villiers (1998).

  123. Deakin, “Competition versus Harmonisation” pp. 194–195.

  124. All the company law systems in the EU form a spectrum, at the one end of which is the UK and the other, Germany. In a blatant language, therefore it is not incorrect to suggest that they are the only two real company law systems in Europe. Any harmonisation exercise is then only an attempt to reconcile the UK concepts with the German. Some of these contentious issues include employee involvement, minimum capital requirements, creditor protection, structure and constitution of the board, control structures, modes of corporate control and the conflict of laws rules for recognition of “foreign” companies. The categorisation of company law systems into “insider” and “outsider” systems quite adequately brings out these differences. See for this categorisation, Mayer (1997).

  125. Edwards (1999).

  126. Cf., Ebke (1988).

  127. Cheffins (1997).

  128. See generally, Kieninger (2004).

  129. Cf., Grundmann however considers that the constitutional framework in the EU is the same as in the US. The integration goal is the EU equivalent of the full faith and credit clause; and the subsidiarity principle, of the internal affairs doctrine: Grundmann (2001) (hereinafter “Grundmann, “Different Genius””).

  130. Charny, “American Perspective”, p. 428.

  131. Charny, “American Perspective”, p. 447.

  132. The proponents of regulatory competition in Europe primarily have been economists and the few legal scholars tend to take, contrary to the European legislator, a pragmatic line with respect to this concept: Grundmann, “Different Genius” p. 566.

  133. Kirchener (2004).

  134. Dammann (2004).

  135. See, Hertig and McCahery (2003) (hereinafter “Hertig-McCahery, “Regulatory Competition””).

  136. Some efforts have been made in the past to show that UK would be obviously the favoured jurisdiction. Armour, for instance, identifies absence of minimum capital requirements, flexible character of the UK company law, expert and business friendly judiciary, rich body of precedents and the consequent predictability, self-regulatory rules for listing and takeovers providing the advantages of continuous update and rulemaking by relevant business experts, presence of strong interest groups and lobbies. See, John Armour, “Who Should Make Corporate Law”.

  137. Article 5(2), EC Treaty.

  138. Article 5(3), EC Treaty.

  139. For the principle of subsidiarity, see generally, Bergh (1994), Bernard (1996), Ogus (1999).

  140. Revesz, “Federalism” 1, p. 19.

  141. Id., p. 20.

  142. Grundmann (2007).

  143. Deakin, “Competition versus Harmonisation”, p. 199.

  144. While there is a principle of supremacy of EC law and therefore a national rule can be set aside for inconsistency with EC secondary legislation also, since the appropriate measure in company law matters is a “directive”, unless the provision is unconditional and sufficiently precise, this situation is unlikely to arise. See generally, Alter (2001).

  145. Keck and Mithouard Cases (Case C-267/91 and C-268/91) [1993] ECR I-6097.

  146. ReweZentral AG v. Bundesmonoplverwaltung fur Brantweinn [1979] ECR 649, establishing inter alia the “mandatory requirements” doctrine.

  147. Deakin, “Competition versus Harmonisation” p. 198.

  148. Munari and Terrile (2001) (hereinafter “Munari, “Centros and Corporate Market””).

  149. Abundant material is available as comments on each of these decisions and the implications these decisions have for (a) the freedom of establishment; (b) the harmonisation programme and (c) the conflicts norms in Europe. See generally, Ebke (2000).

  150. Case C-167/01 Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art.

  151. C-438/05 International Transport Workers Union and Finnish Seamens’ Union v Viking Line ABP.

  152. See, for a very well considered and thoughtful comment on the effect of these three cases on freedom of establishment in EU, Hirt (2004).

  153. Reinhard Gebhard v Consiglio dell'Ordine degli Avvocati e Procuratori di Milano (Case C-55/94) [1995] ECR I-4165. The precise scope of the test is not clear but it seems that the standard required to make a case for an exception is actually higher than it appears to be from the express language.

  154. Stefan Grundmann (2007).

  155. Hertig-McCahery, “Regulatory Competition” p. 11.

  156. Spamann (2001).

  157. Stefan Grundmann (2007).

  158. Deakin, “Competition versus Harmonisation” pp. 198–199.

  159. Some attempts have however been made to show that the holdings do not relate to the real seat doctrine per se, but merely to some aspects and versions of it. See, for example, Halbhuber (2001).

  160. See generally, Grundmann (2007). Whilst this is so, Grundmann agrees that “for the most important rules in the phase of formation, those on protection of capital and namely minimum capital, the ECJ has decided that they are not justified by imperative requirements in the general interest.” (Emphasis supplied).

  161. For some alternative means to safeguard the “significant legitimate [national] interests”, see, Munari, “Centros and Corporate Market”, pp. 529–558.

  162. While the EC Regulation on the Statute for a European Company of 8 October 2001 (“the Statute”) does provide for a “real seat” arrangement, it may not be still correct to say that there is some Community instrument or solution governing the matter, since the Statute governs “specific[ally]” the matter with respect to SEs and not other companies. Secondly, the Statute merely requires the registered office and the head office to coincide. This in itself shows that the Statute was not intended to suggest a preference for either model and yet avoid the difficulties of the question of applicable law since, if the two coincide, by the application of either doctrine, the same result followed. Thirdly, Recital 27 further clarifies that “the ‘real seat’ arrangement is without prejudice …  and … pre-empt[ion to] any choices to be made”.

  163. See, Grundmann (2007).

  164. Armour, “Who Should Make Corporate Law?”, p. 5.

  165. Radwan (2006), distinguishing the Commission Communication, Modernising Company Law and Enhancing Corporate Governance in the European Union – A Plan to Move Forward, COM (2003) 284 final, (Brussels, 21.05.2003).

  166. Revesz, “Federalism”, p. 28.

  167. Hopt (2001).

  168. Armstrong and Bulmer (1998).

  169. See, Deakin, Id., pp. 209–217 for the idea of “reflexive harmonisation” as to the effect of substantive and procedural harmonisation.

  170. As a good illustration, one may refer to EC Regulation 44/2001 on Jurisdiction and Recognition of Judgements.

  171. That this harmonisation is in any event “only minimum harmonisation” and as such has the effect of promoting choice and therefore “functioning” competition. See, Grundmann, “Different Genius”, p. 572.

  172. Cf., Deakin, “Competition versus Harmonisation” 199: “The Court’s approach is ultimately founded on the logic of legal integration and not that of regulatory competition.”

  173. See, Romano (1993).

  174. This constitutes “regulatory meltdown”, see, Warren (1990) 16 Brooklyn Journal of International Law, p. 19.

  175. Ringe (1997) citing inter alia, F.C. Terhoeve v Inspecteur van de Belastingdienst Particulieren/Ondernemingen buitenland (Case C-18/95) [1999] ECR I-345 (“Terhoeve”).

  176. Hughes de Lastreyie du Saillant v. Ministere de l’Economie, des Finances et de l’Industrie [2004] 3 Common Market Law Review 39: imposition of “exit” taxes on natural persons held to contravene the freedom of movement of persons. While not necessarily a very persuasive precedent, the case law on freedom of movement of natural persons may be used to show the trend of the Court to such an issue.

  177. The ECJ does not seem to be drawing a distinction between the common law concepts of ratio decidendi and obiter dicta. In this sense, it is difficult to argue that the Court must restrict itself to the facts of the case and the precise question referred to it by a national court in its preliminary reference.

  178. Keber (2000).

  179. Article 44(2)(g), EC Treaty.

  180. Article 94, EC Treaty.

  181. Article 93, EC Treaty.

  182. See, Edwards (1999) and Ficker (1973).

  183. See, Grundmann, “Different Genius”, p. 569. The German version of the real seat doctrine affords an illustration of the former; and the Reservations under the WTO GATS Agreement by several states illustrate the latter.

  184. See, Omar (1999), Werlauff (1999).

  185. See for a powerful advancement of this view, Grundmann, European Company Law95-109 and Grundmann, “Different Genius” p. 561 onwards.

  186. Romano (1996) (hereinafter “Romano, “American Exceptionalism”) and Cheffins (1997).

  187. Deakin, “Competition versus Harmonisation”, p. 212.

  188. Grundmann, “Different Genius” pp. 570–571.

  189. See, Ebke (2005).

  190. Hertig-McCahery, “Regulatory Competition”, pp. 1–34.

  191. To develop a general theory of corporate regulatory competition is beyond the scope of this paper. It is however not claimed that this proposal cannot be true outside of Europe.

  192. Charny, “American Perspective”, p. 447.

  193. Hertig-McCahery, “Regulatory Competition”, p. 8.

  194. Grundmann very briefly and vividly brings out some of such “foundational” differences in German and UK company law systems: Grundmann (2007) and the literature cited therein.

  195. This process of advancing to the break-even point is distinguished by some legal scholars from the process of “copying practices in other jurisdiction to which a state is closely related by trade”, a process that they refer to as “co-evolution” rather than regulatory competition: Deakin, “Competition versus Harmonisation”, p. 210.

  196. I use the term “deterioration” to indicate a bottom race phenomenon and “innovation” or “optimal” for the top race phenomenon.

  197. See also, Grundmann, “Different Genius?” Grundmann infers greater choice from this variety. The opportunities of arbitrage would include for instance, cross-border mergers, cross-border takeovers, European Company, moving real seat, changing law even while maintaining the physical location.

  198. By “variable” is meant, each of the fronts capable of compromise, whether or not a state chooses to compromise on such front. Various choices are available to a state: Winter, “Corporation Theory”, pp. 259–260. I use the term “front” also in the same sense.

  199. Romano, “American Exceptionalism” pp. 138–146.

  200. The “reshuffling of goals” is however not destructive of the “core values” concept introduced at the beginning. That phenomena like reshuffling and reordering take place is supported by some of the widely (though not unanimously) accepted theories in jurisprudence see, for example, Kelsen’s grundnorm and Hart’s primary and secondary rules. See, Hart (1961) and Knight (1967).

References

EC legislations

  • Consolidated Version of the Treaty Establishing the European Community OJC 325/33 24.12.2002.

  • Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State.

  • Council Regulation EC 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgements in Civil and Commercial Matters OJ L12/1 16.1.2001.

  • Council Regulation 2001/2157/EC (“The European Company Statute”) of 8 October 2001 on the Statute for the European company (SE) (26.11.2001) OJ L294/1 10.11.2001.

  • Council Directive 2001/86/EC of 8 March 2001 supplementing the Statute for the European Company with regard to the involvement of employees OJ L294/22 10.11.2001.

  • Directive 2004/25/EC of 21.04.2004 on Takeover Bids (often known as the 13th Company Law Directive) OJ L142/12 30.4.2004.

  • Directive 2005/56/EC of 26.10.2005 on Cross-border Mergers of Limited Liability Companies (known as the 10th Company Law Directive) OJ L310/1, 25.11.2005.

List of cases cited

  • American Hardware v. Savage Arms Corporation 37 Del. Ch. 59.

  • Bank of Augusta v. Earle (1839) P.S.C. 519.

  • Berrett v. Denver Tramway Corp. 53 F. Supp. 198.

  • Centros v. Erhvervs-og Selskabsstyrelsen [1999] ECR I-1459.

  • Cheff v. Mathes 41 Del. Ch. 494.

  • CTS Corporation v. Dynamics Corporation 481 U.S. 69.

  • F.C. Terhoeve v Inspecteur van de Belastingdienst Particulieren/Ondernemingen buitenland (Case C-18/95) [1999] ECR I-345.

  • Federal United Corp. v. Havender 24 Del. Ch. 318.

  • Getty Oil v. Skelly Oil 267 A.2d. 883.

  • Graham v. Allis-Chalmers Manufacturing 40 Del. Ch. 335.

  • Hariton v. Arco Electronics Inc. 41 Del. Ch. 74.

  • Henriques v. Dutch West India Co (1728) 92 E.R. 494.

  • Hughes de Lastreyie du Saillant v. Ministere de l’Economie, des Finances et de l’Industrie [2004] 3 Common Market Law Review 39.

  • International Transport Workers Union and Finnish Seamens’ Union v Viking Line ABP C-438/05.

  • Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Case C-167/01.

  • Keck and Mithouard Cases (Case C-267/91 and C-268/91) [1993] ECR I-6097.

  • Liggett Co. v. Lee 288 U.S. 517.

  • Mansfield Hardwood v. Johnson 268 F.2d. 317.

  • R. v. Secretary of State ex parte Factortame [1991] 1 AC 603 (ECJ).

  • Reinhard Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano (Case C-55/94) [1995] ECR I-4165.

  • ReweZentral AG v. Bundesmonoplverwaltung fur Brantweinn [1979] ECR 649.

  • Reyners v. Belgium [1974] ECR 631.

  • Sante Indus, Inc. v. Green 97 S. Ct. 1292.

  • Sinclair Oil Corp. v. Levien 280 A.2d. 717.

  • Sodemare v. Regione Lombardia [1997] I-3395.

  • Steinberg v. Adams 90 F. Supp. 604.

  • The Queen v. H. M. Treasury and Commissioners of Inland Revenue, ex parte daily Mail and General Trust plc [1998] ECR 5483.

  • Überseering BV v. Nordic Construction Company Baumanagement GmbH [2002] ECR I-9919.

List of books and journals

  • Alter, K. (2001). Establishing the supremacy of European law: The making of an international rule of law in Europe. Oxford: Oxfor University Press.

    Google Scholar 

  • Alva, C. (1990). Delaware, the market for corporate charters: History and agency. Delaware Journal of Corporate Law, 15, 885.

    Google Scholar 

  • Armour, J. (2005). Who should make corporate law?: EC legislation versus regulatory competition. CBR WP307 1 available at www.cbr.cam.ac.uk/people/armour.htm, last visited on 4 January 2008.

  • Armstrong, K. A., & Bulmer, S. J. (1998). The governance of the European single market. Manchester: Manchester University Press.

    Google Scholar 

  • Arsht, S. (1976). Reply to Professor Cary. Business Lawyer, 31, 1113.

    Google Scholar 

  • Bebchuk, L. (1989). Limiting contractual freedom in corporate law: The desirable constraints on charter amendments. Harvard Law Review, 102, 1820.

    Article  Google Scholar 

  • Bebchuk, L. (1992). Federation and the corporation: The desirable limits of state competition in corporate law. European Law Review, 105(7), 1435.

    Google Scholar 

  • Bebchuk, L., Cohen, A., & Ferell, A. (2002). Does the evidence favour state competition in corporate law? California Law Review, 90(6), 1775.

    Article  Google Scholar 

  • Bergh, R. (1994). The subsidiarity principle in european economic law: Some insights from law and economics. Maastricht Journal of European and Comparative Law, 1, 337.

    Google Scholar 

  • Berle, A., & Means, G. (1968). The means corporation and private property. New York: Harcourt, Brace & World, Inc.

    Google Scholar 

  • Bernard, N. (1996). The future of European economic law in the light of the principle of subsidiarity. Common Market Law Review, 33, 633.

    Google Scholar 

  • Butler, H. (1985). Nineteenth century jurisdictional competition in the granting of corporate privileges. Journal of Legal Studies, 14, 129.

    Article  Google Scholar 

  • Carney, W. (1980). Fundamental corporate changes, minority shareholders, and business purposes. American Bar Foundation Research Journal, 5(1), 69.

    Google Scholar 

  • Cary, C. (1974). Federalism and corporate law: reflections upon Delaware. Yale Law Journal, 83(4), 663.

    Article  Google Scholar 

  • Charny, D. (1991). Competition among jurisdictions in formulating corporate law rules: An American perspective on the race to the bottom in the European communities. Harvard International Law Journal, 32, 423.

    Google Scholar 

  • Cheffins, B. (1997). Company law: Theory, structure and operation. Oxford: Oxford University Press.

    Google Scholar 

  • Clark, R. C. (1986). Corporate law. Boston: Little Brown.

    Google Scholar 

  • Conrad, A. (1973). An overview of the laws of corporations. Michigan Law Review, 71, 623.

    Google Scholar 

  • Dammann, J. (2004). Freedom of choice in European company law. Yale Journal of International Law, 29, 477.

    Google Scholar 

  • Deakin, S. (2001). Regulatory competition versus harmonisation in European company law. In D. C. Esty & D. Geradin (Eds.), Regulatory Competition and Economic Integration: Comparative Perspectives. Oxford: OUP.

  • Dodd, P., & Leftwich, R. (1980). The market for corporate charters: ‘Unhealthy competition’ versus federal regulation. Journal of Business, 53, 259.

    Article  Google Scholar 

  • Drury, R. (1998). The regulations and recognition of foreign corporations: Responses to the ‘Delaware syndrome’. Cambridge Law Journal, 57, 165.

    Article  Google Scholar 

  • Easterbrook, F., & Fischel, D. (1981). The proper role of a target management in responding to a tender offer. Harvard Law Review, 94, 1161.

    Article  Google Scholar 

  • Easterbrook & Fischel. (1984). Manager’s discretion and investors’ welfare: Theories and evidence. In 9 Delaware Journal of Corporate Law, 540.

  • Easterbrook, F. H., & Fischel, D. R. (1991). The economic structure of corporate law. MA: Harvard University Press.

    Google Scholar 

  • Ebke, W. (1988). The limited partnership and transnational combinations of business forms: ‘Delaware Syndrome’ versus European company law. In 22 International Lawyer, p. 191.

  • Ebke, W. (2000). Centros—some realities and some mysteries. American Journal of Comparative Law, 48, 623.

    Article  Google Scholar 

  • Ebke, W. (2005). The European conflict-of-corporate-laws revolution: Überseering, Inspire Art and beyond. European Business Law Review 9.

  • Edwards, V. (1999). EC company law. Oxford: Oxford University Press.

    Google Scholar 

  • Enriques, L. (2004). EU company law and the fears of a European Delaware. European Business Law Review 1259.

  • Esty, D. C., & Geradin, D. (Eds.). (2001). Regulatory competition and economic integration: Comparative perspectives. Oxford: Oxford University Press.

    Google Scholar 

  • Fama, E. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88, 288.

    Article  Google Scholar 

  • Ficker, H. C. (1973). The EEC directives on company law harmonisation. In S. C. Schmitthoff (Ed.), The harmonisation of European company law. London: NCCL.

    Google Scholar 

  • Fischel, D. (1982). The ‘race to the bottom’ revisited: Reflections on recent developments in Delaware’s corporation law. Northwestern University Law Review, 76, 913.

    Google Scholar 

  • Gibson, R. (2001). Globalising corporate governance: Convergence of form or function. American Journal of Comparative Law, 49, 329.

    Article  Google Scholar 

  • Grundmann, S. (2001). Regulatory competition in European company law: some different genius? In G. Ferrarini, et al. (Eds.), Capital markets in the age of the Euro (p. 575). The Hague: Kluwer Law.

  • Grundmann, S. (2007). European company law: Organisation, finance and capital markets. Antwerp: Intersentia.

    Google Scholar 

  • Halbhuber, H. (2001). National doctrinal structures and European company law. Common Market Law Review, 38, 1385.

    Article  Google Scholar 

  • Hansmann, H., & Kraakmann, R. (2004). What is corporate law? In R. Kraakmann, et al. (Eds.), The anatomy of corporate law. Oxford: OUP.

    Google Scholar 

  • Hart, H. L. A. (1961). The concept of law. Oxford: Clarendon.

    Google Scholar 

  • Hertig, G. & McCahery, J. (2003). Company and takeover law reforms in europe: misguided harmonisation efforts or regulatory competition? ECGI working paper no. 12/2003, available at http://ssrn.com/abstract-438421, last visited on 19 November 2007.

  • Hirt, H. (2004). Freedom of establishment, international company law and the comparison of European company law systems after the ECJ’s decision. In Inspire Art Ltd, European Business Law Review 1189.

  • Hopt, K. (2001). Common principles of corporate governance in Europe? In J. A. McCahery, P. Moerland, T. Raaijmakers, & L. Renneboog (Eds.), Convergence and diversity in corporate governance regimes and capital markets (pp. 170–179). Oxford: Oxford University Press.

    Google Scholar 

  • Jennings, R. (1976). Federalization of corporation law: Part way or all the way. Business Lawyer, 31, 991.

    Google Scholar 

  • Kaplan, S. (1968). Foreign corporations and local corporate policy. Vanderbilt Law Review, 21, 433.

    Google Scholar 

  • Kaplan, S. (1976). Fiduciary responsibility in the management of the corporation. Business Lawyer, 31, 883.

    Google Scholar 

  • Keber, W. (2000). Interjurisdictional competition within the European Union. Fordham Journal of International Law, 23, S217–S218.

    Google Scholar 

  • Kieninger, E.-M. (2004). The legal framework of regulatory competition based on company mobility: EU and US compared. German Law Journal, 6, 741.

    Google Scholar 

  • Kirchener, C. (2004). Regulatory competition in EU corporate law after Inspire Art: Unbundling Delaware’s product for Europe. Working Paper, Humboldt University and University of Illinois, pp. 23–35.

  • Klevorick, A. (1997). Reflections on the race to the bottom. In J. N. Bhagwati & R. E. Hudec (Eds.), Fair trade and harmonization: Prerequisites for free trade? (I) Economic analysis (pp. 459–460). Massachusetts: MIT Press.

    Google Scholar 

  • Knight, M. (Trans.) (1967). Hans Kelsen’s pure theory of law. Berkeley: University of California Press.

  • Kolvenbach, W. (1990). EC company law harmonisation and worker participation. University of Pennsylvania Journal of International Business Law, 11, 709.

    Google Scholar 

  • Kostel, M. (1993). A public choice perspective on the debate over federal versus state corporate law. Virginia Law Review, 79, 2129.

    Article  Google Scholar 

  • Kozyris, P. J. (1985). Corporate Wars and Choice of Law. Duke Law Journal 1.

  • Kraakmann, R. et al. (Eds.) (2004). The anatomy of corporate law. OUP: Oxford.

  • Latty, E. (1955). Pseudo-foreign corporations. Yale Law Journal, 65, 137.

    Article  Google Scholar 

  • Latty, E. (1965). Why are business corporation laws largely ‘enabling’? Cornell Law Quarterly, 50, 599.

    Google Scholar 

  • Manne, H. (1965). Mergers and the market for corporate control. Journal of Political Economy, 73, 110.

    Article  Google Scholar 

  • Mayer, C. (1997). Corporate governance, competition and performance. Journal of Law and Society 152.

  • McCahery J., et al. (Eds.) (2001). Convergence and diversity in corporate governance regimes and capital markets. OUP: Oxford.

  • Munari, F., & Terrile, P. (2001). The Centros case and the rise of an EC market for corporate law. In G. Ferrarini, et al. (Eds.), Capital markets in the age of the Euro (p. 531). The Hague: Kluwer Law.

  • Murphy, D. D. (2004). The structure of regulatory competition. Oxford: Oxford University Press.

    Google Scholar 

  • Nader, R., Green, M., & Seligman, J. (1976). Constitutionalizing the corporation: The Case for the federal chartering of giant corporations. Washington, D.C: Corporate Accountability Research Group.

    Google Scholar 

  • Ogus, A. (1999). Competition between national legal systems: A contribution of economic analysis to comparative law. International and Comparative Law Quarterly, 48(2), 405.

    Article  Google Scholar 

  • Omar, P. J. (1999). Freedom of establishment and the avoidance of regulation. International Commercial and Company Law Review 286.

  • Posner, R. A. (1977). Economic analysis of law. Boston: Little Brown.

    Google Scholar 

  • Radaelli, C. (2004). The puzzle of regulatory competition. Journal of Public Policy, 24(1), 1.

    Article  Google Scholar 

  • Radwan, A. (2006). 25 Thoughts on European Company Law in the EU of 25. European Business Law Review 1169.

  • Rees, W., & Kaufman, E. (1958). The law governing corporate affairs: Choice of law and full faith and credit. Columbia Law Review, 58, 1118.

    Article  Google Scholar 

  • Revesz, R. (2001). Federalism and regulation: some generalizations. In D. C. Esty & D. Geradin (Eds.), Regulatory competition and economic integration: comparative perspectives (pp. 1–9). Oxford: OUP.

  • Ringe, W.-G. (1997). No freedom of emigration for companies? Available at Google Scholar-Books, last visited on 14 August 2008.

  • Roe, M. (2005). Delaware’s politics. Harvard Law Review, 118, 2491.

    Google Scholar 

  • Romano, R. (1987). The state competition debate in corporate law. Cardozo Law Review, 8, 709.

    Google Scholar 

  • Romano, R. (1993). The genius of American corporate law. Washington, DC: AEI.

    Google Scholar 

  • Romano, R. (1996). Explaining the American exceptionalism in corporate law. In W. Bratton, et al. (Eds.), International regulatory competition and coordination: perspectives on economic regulation in Europe and the United States (pp. 127, 138–146). Oxford: OUP.

  • Romano, R. (2005). The states as laboratory: legal innovation and state competition for state charters. ECGI Law Working Paper No. 34/2005.

  • Rosenzweig, B. (2007). Private versus public regulation: A comparative analysis of British and American takeover controls. Duke Journal of Comparative & International Law, 18, 213.

    Google Scholar 

  • Sachdeva, A. (2007). International investment: A developing country perspective. Journal of World Investment and Trade, 8, 533.

    Google Scholar 

  • Schmitthoff, C. (Ed.). (1973). The harmonisation of European company law. London: NCCL.

    Google Scholar 

  • Schmitthoff, C. (1976). The success of the harmonisation of European company law. European Law Review, 1, 100.

    Google Scholar 

  • Schwartz, D. (1976). A case for federal chartering of corporations. Business Lawyer, 31, 1125.

    Google Scholar 

  • Spamann, H. (2001). Choice of law in a federal system and an internal market. Available at http://www.jeanmonnetprogram.org/papers/01/012601-01.html, last visited on 05 August 2008.

  • Student Note. (1972). Federal chartering of corporations: Constitutional challenges. Georgetown Law Journal, 61, 123.

    Google Scholar 

  • Symposium. (1989). Contractual freedom in corporate law. Columbia Law Review, 89, 1395.

  • Tiebout, C. (1956). A pure theory of local expenditures. Journal of Political Economy, 64(5), 416.

    Article  Google Scholar 

  • Villiers, C. (1998). European company law: Towards democracy? Aldershot: Dartmouth.

    Google Scholar 

  • Warren, M. (1990). Regulatory harmony in the EC: The common market prospectus. Brooklyn Journal of International Law, 16, 19.

    Google Scholar 

  • Werlauff, E. (1999). Using a foreign company for domestic purposes. European Business Law Review 306.

  • Winter, R. (1977). State Law, shareholder protection, and the theory of the corporation. Journal of Legal Studies, 6, 251.

    Article  Google Scholar 

  • Wouters, J. (2000). European company law: Quo Vadis? Common Market Law Review, 37, 257.

    Article  Google Scholar 

Download references

Acknowledgments

The author wishes to extend his heartfelt thanks to Prof. Jonathan Rickford and Dr. David Kershaw (both, London School of Economics) from whose teachings in class and discussions, the author had substantial to draw. The author also wishes to thank Sachin Sachdeva and Yamini Mahajan for their fruitful discussions and thoughtful remarks. Usual disclaimer applies.

Author information

Authors and Affiliations

  1. Vaish Associates Advocates, New Delhi, India

    Amit M. Sachdeva

  2. G/59-60, State Bank Colony, Neelam Bata Road, NIT, Faridabad, Hayrana, 121001, India

    Amit M. Sachdeva

Authors
  1. Amit M. Sachdeva
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Amit M. Sachdeva.

Additional information

Amit M. Sachdeva, Associate, Vaish Associates Advocates, New Delhi; LLM, London School of Economics; Diploma, The Hague Academy of International Law; LL.B. (Hons.) (Gold Medalist), GGSIP University; PGD Securities and Banking Laws (Gold Medalist), Indian Law Institute.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Sachdeva, A.M. Regulatory competition in European company law. Eur J Law Econ 30, 137–170 (2010). https://doi.org/10.1007/s10657-009-9129-3

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10657-009-9129-3

Keywords

JEL Classification

Search

Navigation