EU Company Law Harmonization Between Convergence and Varieties of Capitalism

Abstract

This chapter sketches the history of EU Company Law, from its beginnings in the 1960s until today. Throughout all periods, EU company law harmonization was largely a top-down, technocratic project that was considered imperative to realize the common market. In other words, it was promoted mainly by the European Commission and experts advising it without any particular business or investment interest group pushing for harmonization. Scholars are divided about the success of the project, with opinions ranging from it being a great success story to the claim that EU company law harmonization is largely trivial. This chapter suggests that that the development of EU company law can be understood as reflecting two distinct periods of convergence in corporate law, even if that convergence has often been limited to specific issues and sometimes remained restricted to the formal level. Company law harmonization efforts mirror prevailing fashions about what is considered good corporate law. Each of these periods is roughly linked to the success of a particular model of capitalism that seemed to be on the ascendancy at the respective time. This first period was characterized by a dominance of the German model, and a vision of corporate law that one could characterize as belonging to a “coordinated” variety of capitalism, when shareholder value maximization was not yet the prime directive of corporate law. The second period began in the late 1990s and partly coincides with the “convergence in corporate governance” debate. Harmonization efforts focused on enabling choice for shareholders based on transparency and information. This period was dominated by liberal capitalism oriented toward shareholders and increasingly the stock markets. Germany’s position as the model jurisdiction was increasingly taken over by the UK. EU Company law harmonization has always been in the balance between top-down proposals coming from the center and national resistance. In the early period, when company law harmonization was influenced mainly by Continental models, the UK stepped on the brakes after joining the EEC in 1973 whereas since the 2000s Germany and other Continental jurisdictions have been the main source of resistance. Because of Member State options and the ability to avoid company rules, convergence has remained formal and superficial, but not entirely irrelevant.