Convergence in Shareholder Law (International Corporate Law and Financial Market Regulation)

On the one hand, it can be argued that the increasing economic and political interdependence of countries has led to the convergence of national legal systems. On the other hand, advocates of the counterhypothesis maintain that this development is both unrealistic and unnecessary. Mathias Siems examines the company law of the UK, the USA, Germany, France, Japan and China to see how this issue affects shareholder law. The author subsequently analyses economic and political factors which may or may not lead to convergence, and assesses the extent of this development. Convergence of Shareholder Law, which was originally published in 2007, not only provides a thorough comparative legal analysis but also shows how company law interconnects with political forces and economic development and helps in evaluating whether harmonisation and shareholder protection should be enhanced. Cover 1 Half-title 3 Series-title 4 Title 5 Copyright 6 Contents 7 Preface and acknowledgments 11 Abbreviations 12 Table of cases 21 European Union 21 United Kingdom 21 United States 22 Germany 23 Other countries 24 Table of legislation 25 OECD 25 European Union 25 United Kingdom 30 Germany 37 France 42 Japan 46 China 49 Introduction 53 Part I The object and course of the investigation 57 1 Dimensions of convergence in shareholder law 59 I. The spatial dimension: the legal systems covered 59 II. The objective dimension: the shareholder of a joint stock company 62 1. Demarcation from shareholders in ‘small companies’ 62 2. Demarcation from other participants in the firm 67 III. The temporal dimension 69 1. ‘The End of History for Corporate Law’? 69 2. Historical interconnectedness in Europe 70 3. Receptions in the US, Japan and China 71 a) USA 72 b) Japan 72 c) China 74 4. Conclusion 75 IV. The methodological dimension 75 1. Variants of convergence 75 2. The division into ‘diagnosis’, ‘prognosis’ and ‘therapy’ 77 3. Shareholder law as the core of the study 77 V. Summary 78 Part II The status quo of convergence 81 2 legal bases 83 I. International and regional law 83 1. International law 83 2. Regional law 84 II. Statute law and case law 86 III. Company and securities law 89 1. Comparative overview 90 2. Conclusions 95 IV. Self-regulation and state regulation 97 1. Articles of association 97 2. Shareholder agreements 106 3. Corporate governance codes 108 V. Conclusion 111 3 Bases for a shareholder typology 112 I. The shareholder in the theoretical debate 112 1. The shareholder as ‘owner’ or ‘quasi-partner’ 112 2. The shareholder as ‘member of an association’ or ‘parliamentarian’ 114 3. The shareholder as ‘investor’ or ‘bystander’ 115 II. Real types of shareholder 116 III. Conclusions 118 4 The ‘shareholder as such’ 120 I. The profit-oriented shareholder 120 1. Limited liability 121 2. Profit realization while remaining in the company 123 a) Legal bases for profit distribution 123 b) Provisions on the amount of dividend 124 c) Dividend practice 127 d) Conclusion 129 3. Profit realization by selling shares 129 a) Permissibility of trading in shares 129 b) The influence of statutory provisions 130 c) Agreed selling restrictions 132 d) Practical difficulties 134 e) Conclusion 136 4. Share buybacks 136 5. Conclusions 138 II. The active shareholder 139 1. The purpose of shareholder participation 139 a) The different types of shareholder 139 b) The ‘rational apathy’ of shareholders 141 2. Modes of shareholder voting 143 3. Shareholder involvement prior to the general meeting 144 a) Shareholder influence on convocation and agenda 144 b) Timely information on the general meeting 148 c) Voting in advance 153 d) Conclusion 159 4. Participation in the general meeting 161 a) The right to attend and to speak 161 b) The voting right 165 c) Participation of institutional investors 170 5. Conclusion 172 III. The informed shareholder 173 1. Individual information rights 174 a) The right to demand information 174 b) Rights of inspection 177 c) Conclusion 178 2. Securities law 179 a) Convergence in law 179 b) Reservations 181 c) Conclusion 182 3. Financial reporting 183 a) Regulatory philosophies 183 b) Convergence 184 c) Prospects 186 4. Conclusion 188 IV. The anonymous shareholder 189 1. Anonymity of the registered shareholder 190 a) Reasons for the success of the registered share 190 b) Anonymity vis-`a-vis fellow shareholders 192 2. Anonymity of the bearer shareholder 194 3. Anonymity of the ‘spurious’ shareholder 195 4. Anonymity of the influential shareholder 198 5. Conclusions 199 V. Conclusions to this chapter 200 5 The shareholder in the power structure of the company 202 I. The deciding shareholder 203 1. The powers of the general meeting 203 a) Legal bases 203 b) Decisions on conduct of business 205 c) Regular decisions 208 d) Fundamental changes 213 e) Special situations 220 f) Conclusions 220 2. The necessary majority of shareholders 222 a) Relative, absolute and qualified majorities 222 b) Cumulative voting rights 225 c) Conclusion 226 3. Conclusion 226 II. The protected shareholder 227 1. Protection against management 227 a) The ranking of shareholder interests 228 b) Oversight of management 244 c) Conclusions 252 2. Protection against the shareholder majority 252 a) Voting in case of special interests 253 b) Substantive control of decisions 255 c) Leaving the company 259 d) Conclusion 263 3. Conclusions 264 III. The litigating shareholder 264 1. Actions against management conduct 266 2. Actions against resolutions of the general meeting 272 3. Conclusions 275 IV. Conclusions to this chapter 276 6 Conclusions to Part II 278 I. Divergence and convergence 278 II. Globalization and Americanization 280 III. Convergence and artificial convergence 282 Part III Developmental trends and patterns 283 7 Bases 285 I. The dependency of shareholder law 285 1. The causality problem 285 2. The public choice theory 288 a) Voters, parties and politicians 288 b) Problems of application 289 3. The influence of interest groups 290 4. Conclusion 292 II. Regulatory levels of shareholder law 293 1. Multinational firms and national law 293 2. Internationalization 294 3. Regionalization 296 4. Conclusion 298 III. Regulatory forms at the national level 298 1. Statute and case law 298 2. Company and securities law 299 3. Corporate governance codes 301 4. Conclusion 302 IV. Conclusions to this chapter 302 8 Convergence through congruence 304 I. General cultural and economic-policy approximation 304 1. ‘Clash’ or ‘convergence’ of cultures 304 2. ‘TINA’ or ‘THEMBA’ 307 II. The convergence of legal cultures 309 1. The importance of legal culture 309 2. Changes in legal cultures 310 a) Civil and common law 310 b) Western and Asian law 312 c) Conclusion 316 III. Internationalization of the economy 317 1. International economic law 317 2. Internationalization through ‘new media’ 320 3. The internationalization of private institutions 321 4. The internationalization of undertakings 322 a) International mergers 322 b) Foreign investors 324 c) Exchange listings abroad 325 d) Enterprise culture 330 IV. Approximation of shareholder structures 331 1. Explanatory models 331 a) The role of law and politics 331 b) The role of private law-making and individualism 334 c) Conclusion 335 2. The decline in concentrated shareholder structures 335 a) Features to date 336 b) Current developments 339 3. The influence of institutional investors 342 4. Conclusion 344 V. Legislative responses 344 1. Reform and reception 344 2. Path dependencies 347 a) Weak path dependencies 348 b) Strong path dependencies 348 3. Conclusion 350 9 Convergence through pressure 351 I. Pressure from company founders 351 1. Regulatory competition 351 a) Supply 352 b) Demand 357 c) Conclusion 360 2. Other forms of pressure 361 II. Pressure from management 361 III. Pressure from shareholders 364 1. Regulatory competition 364 a) Supply 364 b) Demand 365 c) Conclusion 367 2. Other forms of pressure 367 IV. Pressure from other interest groups 368 V. Pressure from international organizations and foreign states 370 VI. Legislative responses 371 1. Competition for the seat of companies 372 a) The position in the US 373 b) The position in the European Union 375 c) Divergence and convergence 376 2. The effect of lobbying 377 a) International lobbying 377 b) National lobbying 378 c) Conclusion 381 3. Competition for shareholders 381 a) The evolutionary position 381 b) Limits to convergence 383 c) Conclusion 388 4. Conclusions 389 10 Future convergences in shareholder law 390 I. The ‘shareholder as such’ 390 1. The profit-oriented shareholder 391 2. The modern shareholder 392 a) The international shareholder 393 b) The delegating shareholder 397 c) The information-seeking shareholder 400 d) The postmodern shareholder 402 e) Conclusions 406 3. Conclusions 407 II. The shareholder in the power structure of the company 407 1. The deciding shareholder 408 2. The protected shareholder 410 a) Protection against management 410 b) Protection against the shareholder majority 414 c) Conclusion 416 3. The litigating shareholder 416 4. Conclusions 418 11 Conclusions to Part III 420 I. Re-regulation 420 II. Convergence forces 421 III. Changes in future law 422 Part IV Conclusion 425 12 Convergence as a model for the future 427 I. Convergence ‘from above’ 427 1. Reasons for unification of law 427 2. Problems and implications 429 a) Uniform law 429 b) Means towards convergence ‘from above’ 431 3. Interim finding 434 II. Convergence ‘from below’ 435 1. National legislators 435 a) Regulatory competition 436 b) Convergence through lobbying 438 c) Convergence through congruence 440 2. Case law 440 3. Self-regulation 441 4. Conclusion 445 III. The object of convergence in shareholder law 445 1. The powerless shareholder? 445 2. The disempowered shareholder? 447 3. The empowered shareholder 447 IV. Conclusion 449 13 Summary of principal findings 450 References 455 Index 505 Cover......Page 1 Half-title......Page 3 Series-title......Page 4 Title......Page 5 Copyright......Page 6 Contents......Page 7 Preface and acknowledgments......Page 11 Abbreviations......Page 12 United Kingdom......Page 21 United States......Page 22 Germany......Page 23 Other countries......Page 24 European Union......Page 25 United Kingdom......Page 30 Germany......Page 37 France......Page 42 Japan......Page 46 China......Page 49 Introduction......Page 53 Part I The object and course of the investigation......Page 57 I. The spatial dimension: the legal systems covered......Page 59 1. Demarcation from shareholders in ‘small companies’......Page 62 2. Demarcation from other participants in the firm......Page 67 1. ‘The End of History for Corporate Law’?......Page 69 2. Historical interconnectedness in Europe......Page 70 3. Receptions in the US, Japan and China......Page 71 b) Japan......Page 72 c) China......Page 74 1. Variants of convergence......Page 75 3. Shareholder law as the core of the study......Page 77 V. Summary......Page 78 Part II The status quo of convergence......Page 81 1. International law......Page 83 2. Regional law......Page 84 II. Statute law and case law......Page 86 III. Company and securities law......Page 89 1. Comparative overview......Page 90 2. Conclusions......Page 95 1. Articles of association......Page 97 2. Shareholder agreements......Page 106 3. Corporate governance codes......Page 108 V. Conclusion......Page 111 1. The shareholder as ‘owner’ or ‘quasi-partner’......Page 112 2. The shareholder as ‘member of an association’ or ‘parliamentarian’......Page 114 3. The shareholder as ‘investor’ or ‘bystander’......Page 115 II. Real types of shareholder......Page 116 III. Conclusions......Page 118 I. The profit-oriented shareholder......Page 120 1. Limited liability......Page 121 a) Legal bases for profit distribution......Page 123 b) Provisions on the amount of dividend......Page 124 c) Dividend practice......Page 127 a) Permissibility of trading in shares......Page 129 b) The influence of statutory provisions......Page 130 c) Agreed selling restrictions......Page 132 d) Practical difficulties......Page 134 4. Share buybacks......Page 136 5. Conclusions......Page 138 a) The different types of shareholder......Page 139 b) The ‘rational apathy’ of shareholders......Page 141 2. Modes of shareholder voting......Page 143 a) Shareholder influence on convocation and agenda......Page 144 b) Timely information on the general meeting......Page 148 c) Voting in advance......Page 153 d) Conclusion......Page 159 a) The right to attend and to speak......Page 161 b) The voting right......Page 165 c) Participation of institutional investors......Page 170 5. Conclusion......Page 172 III. The informed shareholder......Page 173 a) The right to demand information......Page 174 b) Rights of inspection......Page 177 c) Conclusion......Page 178 a) Convergence in law......Page 179 b) Reservations......Page 181 c) Conclusion......Page 182 a) Regulatory philosophies......Page 183 b) Convergence......Page 184 c) Prospects......Page 186 4. Conclusion......Page 188 IV. The anonymous shareholder......Page 189 a) Reasons for the success of the registered share......Page 190 b) Anonymity vis-`a-vis fellow shareholders......Page 192 2. Anonymity of the bearer shareholder......Page 194 3. Anonymity of the ‘spurious’ shareholder......Page 195 4. Anonymity of the influential shareholder......Page 198 5. Conclusions......Page 199 V. Conclusions to this chapter......Page 200 5 The shareholder in the power structure of the company......Page 202 a) Legal bases......Page 203 b) Decisions on conduct of business......Page 205 c) Regular decisions......Page 208 d) Fundamental changes......Page 213 f) Conclusions......Page 220 a) Relative, absolute and qualified majorities......Page 222 b) Cumulative voting rights......Page 225 3. Conclusion......Page 226 1. Protection against management......Page 227 a) The ranking of shareholder interests......Page 228 b) Oversight of management......Page 244 2. Protection against the shareholder majority......Page 252 a) Voting in case of special interests......Page 253 b) Substantive control of decisions......Page 255 c) Leaving the company......Page 259 d) Conclusion......Page 263 III. The litigating shareholder......Page 264 1. Actions against management conduct......Page 266 2. Actions against resolutions of the general meeting......Page 272 3. Conclusions......Page 275 IV. Conclusions to this chapter......Page 276 I. Divergence and convergence......Page 278 II. Globalization and Americanization......Page 280 III. Convergence and artificial convergence......Page 282 Part III Developmental trends and patterns......Page 283 1. The causality problem......Page 285 a) Voters, parties and politicians......Page 288 b) Problems of application......Page 289 3. The influence of interest groups......Page 290 4. Conclusion......Page 292 1. Multinational firms and national law......Page 293 2. Internationalization......Page 294 3. Regionalization......Page 296 1. Statute and case law......Page 298 2. Company and securities law......Page 299 3. Corporate governance codes......Page 301 IV. Conclusions to this chapter......Page 302 1. ‘Clash’ or ‘convergence’ of cultures......Page 304 2. ‘TINA’ or ‘THEMBA’......Page 307 1. The importance of legal culture......Page 309 a) Civil and common law......Page 310 b) Western and Asian law......Page 312 c) Conclusion......Page 316 1. International economic law......Page 317 2. Internationalization through ‘new media’......Page 320 3. The internationalization of private institutions......Page 321 a) International mergers......Page 322 b) Foreign investors......Page 324 c) Exchange listings abroad......Page 325 d) Enterprise culture......Page 330 a) The role of law and politics......Page 331 b) The role of private law-making and individualism......Page 334 2. The decline in concentrated shareholder structures......Page 335 a) Features to date......Page 336 b) Current developments......Page 339 3. The influence of institutional investors......Page 342 1. Reform and reception......Page 344 2. Path dependencies......Page 347 b) Strong path dependencies......Page 348 3. Conclusion......Page 350 1. Regulatory competition......Page 351 a) Supply......Page 352 b) Demand......Page 357 c) Conclusion......Page 360 II. Pressure from management......Page 361 a) Supply......Page 364 b) Demand......Page 365 2. Other forms of pressure......Page 367 IV. Pressure from other interest groups......Page 368 V. Pressure from international organizations and foreign states......Page 370 VI. Legislative responses......Page 371 1. Competition for the seat of companies......Page 372 a) The position in the US......Page 373 b) The position in the European Union......Page 375 c) Divergence and convergence......Page 376 a) International lobbying......Page 377 b) National lobbying......Page 378 a) The evolutionary position......Page 381 b) Limits to convergence......Page 383 c) Conclusion......Page 388 4. Conclusions......Page 389 I. The ‘shareholder as such’......Page 390 1. The profit-oriented shareholder......Page 391 2. The modern shareholder......Page 392 a) The international shareholder......Page 393 b) The delegating shareholder......Page 397 c) The information-seeking shareholder......Page 400 d) The postmodern shareholder......Page 402 e) Conclusions......Page 406 II. The shareholder in the power structure of the company......Page 407 1. The deciding shareholder......Page 408 a) Protection against management......Page 410 b) Protection against the shareholder majority......Page 414 3. The litigating shareholder......Page 416 4. Conclusions......Page 418 I. Re-regulation......Page 420 II. Convergence forces......Page 421 III. Changes in future law......Page 422 Part IV Conclusion......Page 425 1. Reasons for unification of law......Page 427 a) Uniform law......Page 429 b) Means towards convergence ‘from above’......Page 431 3. Interim finding......Page 434 1. National legislators......Page 435 a) Regulatory competition......Page 436 b) Convergence through lobbying......Page 438 2. Case law......Page 440 3. Self-regulation......Page 441 1. The powerless shareholder?......Page 445 3. The empowered shareholder......Page 447 IV. Conclusion......Page 449 13 Summary of principal findings......Page 450 References......Page 455 Index......Page 505 On the one hand, it can be argued that the increasing economic and political interdependence of countries has led to the convergence of national legal systems. On the other hand, advocates of the counter-hypothesis maintain that this development is both unrealistic and unnecessary.

Mathias Siems examines the company law of the UK, the USA, Germany, France, Japan and China to see how this issue affects shareholder law. The author subsequently analyses economic and political factors which may or may not lead to convergence, and assesses the extent of this development. Thus, Convergence in Shareholder Law not only provides a thorough comparative legal analysis but also shows how company law interconnects with political forces and economic development, and helps in evaluating whether harmonisation and shareholder protection should be enhanced.

About the Author:
Mathias M. Siems is a Reader in Commercial Law at the University of Edinburgh and a research associate at the Centre for Business Research at the University of Cambridge

On The One Hand, It Can Be Argued That The Increasing Economic And Political Interdependence Of Countries Has Led To The Convergence Of National Legal Systems. On The Other Hand, Advocates Of The Counter-hypothesis Maintain That This Development Is Both Unrealistic And Unnecessary. Mathias Siems Examines The Company Law Of The Uk, The Usa, Germany, France, Japan And China To See How This Issue Affects Shareholder Law. The Author Subsequently Analyses Economic And Political Factors Which May Or May Not Lead To Convergence, And Assesses The Extent Of This Development. Thus, Convergence Of Shareholder Law Not Only Provides A Thorough Comparative Legal Analysis But Also Shows How Company Law Interconnects With Political Forces And Economic Development And Helps In Evaluating Whether Harmonisation And Shareholder Protection Should Be Enhanced.--book Jacket. The Object And Course Of The Investigation -- The Status Quo Of Convergence -- Developmental Trends And Patterns. Mathias M. Siems. Includes Bibliographical References (p. 401-450) And Index. On the one hand, it can be argued that the increasing economic and political interdependence of countries has led to the convergence of national legal systems. On the other hand, advocates of the counterhypothesis maintain that this development is both unrealistic and unnecessary. Mathias M. Siems examines the company law of the UK, the USA, Germany, France, Japan and China to see how this issue affects shareholder law. The author subsequently analyses economic and political factors which may or may not lead to convergence, and assesses the extent of this development. Convergence of Shareholder Law not only provides a thorough comparative legal analysis but also shows how company law interconnects with political forces and economic development and helps in evaluating whether harmonisation and shareholder protection should be enhanced. Has the increasing economic and political interdependence of countries led to the convergence of national legal systems, or is this development unrealistic and unnecessary? Siems examines company law to see how this issue affects shareholder law, and analyses economic and political factors which may or may not lead to convergence. Mathias Siems examines whether the shareholder law of six countries is becoming more similar internationally