Chapter 12 examines European (EEC, EC, and EU) efforts to harmonize European company law since the establishment of the European Economic Community. It identifies two distinct periods in which harmonization between national laws was sought, periods characterized by different models of capitalism and thus different approaches to harmonization. The first period was characterized by a harmonization program outlined largely before the UK’s accession to the then-European Economic Community, one dominated by a German approach emphasizing a ‘coordinated’ model of capitalism that did not centre on shareholder value maximization. The second period, which began in the late 1990s after a lull in harmonization efforts, was in contrast more heavily influenced by the UK and centred on a more ‘liberal’ model of capitalism focusing on shareholders and, increasingly, the stock market.
This chapter compares various forms of shareholder lawsuits found in the United States, the United Kingdom, and several European and Asian countries. The chapter attempts to create a taxonomy of shareholder lawsuits addressing conflicts of interest across countries. Many jurisdictions have procedural mechanisms that allow shareholders to bring a lawsuit on their own with varying limitations of the types of claims or suits that may be brought. The chapter discusses the various types of suits, such as direct, derivative, and rescission suits, that are presented to shareholders in each jurisdiction as well as the mechanisms, the difficulties therein, and the effectiveness of such lawsuits in deterring or remedying unfavorable actions. The chapter concludes with an evaluation of the efficacy of each jurisdiction’s models of shareholder litigation and highlights the difficulties in creating a perfect system that could ensure the protection of shareholders’ rights while preventing nonmeritorious or even abusive lawsuits.
Martin Gelter and Geneviève Helleringer
Fiduciary duties are often today held out as typical instruments of shareholder protection in the common law of both the US and the UK, which are sometimes cited as examples for a consensus model for what is considered good corporate law conducive to good capital market development. However, fiduciary duties in these two jurisdictions often operate in strikingly different ways. This chapter looks at the specific example of corporate opportunities, with which the UK and the US deal in remarkably different ways. Each of them focuses on a starting point: avoiding conflicts of interest in the UK approach versus identifying the correct owner of the opportunity in the US approach. While the US relies on an open-ended standard, the UK corporate opportunities doctrine effectively constitutes a rule. In this chapter, we suggest an explanation for why the two core jurisdictions of the common law world have developed so differently in this respect. We argue that only in the US fiduciary duties are typically enforced by the courts, whereas in the UK, corporate law enforcement is typically left to ex ante monitoring by outside directors and institutional investors. Only courts, in applying an ex post substantive assessment, are capable of implementing a complex “standard” for corporate opportunities. Institutional enforcement, as in the UK, lends itself better to a hard-and-fast rule. We suggest that this distinction is only an example of a larger distinction between the corporate laws of these two jurisdictions, and indicative of a broader difference in how corporate fiduciary duties operate.