Cambridge law professor John Armour has posed to SSRN a new paper making the case for the EC to rely on compeititve federalism in developing its corporate law rather than regulatory harmonization. As long-time readers know, this squares rather nicely with my preferences with respect to US law, but I suspect the article will be of interest even to those without such predispositions.
Here's the abstract:
This paper makes a case for the future development of European corporate law through regulatory competition rather than EC legislation. It is for the first time becoming legally possible for firms within the EU to select the national company law that they wish to govern their activities. A significant number of firms can be expected to exercise this freedom, and national legislatures can be expected to respond by seeking to make their company laws more attractive to firms. Whilst the UK is likely to be the single most successful jurisdiction in attracting firms, the presence of different models of corporate governance within Europe make it quite possible that competition will result in specialisation rather than convergence, and that no Member State will come to dominate as Delaware has done in the US. Procedural safeguards in the legal framework will direct the selection of laws which increase social welfare, as opposed simply to the welfare of those making the choice. Given that European legislators cannot be sure of the 'optimal' model for company law, the future of European company law-making would better be left with Member States than take the form of harmonized legislation.
You can download a short essay of mine defending competitive federalism in US corporation law here.
