(1) Rule-based comparison
In both academia and legal practice, a rule-based comparison of corporate law is often a natural starting point. For example, a scholar or practitioner from a civil-law jurisdiction may want to find out whether certain incorporation requirements from her country also apply elsewhere, say, the provision of minimum share capital or the notarial authorisation requirements. If the result is then that in other countries (e.g. in some common law countries) there are no such requirements, that would already be an interesting finding for such a study (Van Hulle and Gesell 2006; see also section (4) below).
Table 1.1 Overview of relationship between comparative and corporate law
Theme of comparative law | Typical question for comparative corporate law | Examples of research: |
with a legal focus | with an interdisciplinary perspective |
|
(1) Rule-based comparison | Does paiticular domestic rule of corporate law also exist in other countries? | ā¢ description of differences in legal rules and principles | ā¢ coding of rules based on model of one country |
ā¢ search for universal rules in company law | |
(2) Functional comparison | How is particular corporate problem addressed in particular countries? | ā¢ themalically oriented country chapters | ā¢ principal-agent problems to identify similarities and differences |
ā¢ application of Common Core approach to company law | ā¢ coding of rules based on problem case |
(3) Classifications of legal systems | How does corporate law differ at a wider level (e.g. globally)? | ā¢ classifications according to sources of law, board models, and shareholder/stakeholder interests | ā¢ ownership structure and insider/outsider models |
| ā¢ broad models: e.g. AngloāSaxon, continental and Asian; legal origins |
(4) Comparative law in context | Why are insights o! differences and similarities in corporate law of more general interest? | ā¢ substitutes or complementarities of rules from different areas | ā¢ qualitative research on specific countries |
ā¢ role of lawyers, auditors, courts, supervisory authorities etc. | ā¢ quantitative research on incorporation costs, role of culture and ālaw and financeā |
(5) Historical comparative perspective | How far does history explain similarities and differences in corporate law? | ā¢ differences in industrialisation and politics; path dependencies | ā¢ drives for convergence, including regulator competition |
ā¢ historical commonalities and recent convergence | ā¢ qualitative and quantitative challenges to causal effect of corporate law |
(6) Transnational and comparative law | Is a countiy-level perspective of corporate law still accurate? | ā¢ beyond-state law in EU and US | ā¢ Doing Business Reportās index on investor protection and criticism |
ā¢ OECD Principles of Corporate Governance and how they work | ā¢ UN initiatives; discussion about role of limited liability in MNlis |
(7) Applied comparative law | What are possible policy implications that can follow from comparing corporate laws? | ā¢ main beneficiaries of comparative corporate law | ā¢ corporate law and development; empirical research |
ā¢ types of reforms from small to large-scale | ā¢ non-economic considerations |
A rule-based comparison can also be of a more conceptual nature. For instance, the discussion about the applicable rules of corporate law (i.e. the private international law of corporations) typically does not start with a question about the precise legal rules but with the divide between countries that follow the āincorporation theoryā or the āreal seat theoryā, namely whether a country determines the applicable law only based on the place of incorporation (the āstatutory seatā) or whether it also considers the place of the headquarters (the āreal seatā) (Gerner-Beuerle and Schuster 2014: 310ā14).
Such a more conceptual rule-based comparison can also be revealing in order to identify similarities. For instance, a controversial article by Hansmann and Kraakman (2001) suggests that across jurisdictions all modern corporate laws share the following core characteristics: full legal personality, limited liability for owners and managers, shared ownership by investors of capital, delegated management under a board structure and transferable shares. Identifying similarities of rules and concepts across countries is also important for the question of whether transnational law-makers can develop a common position that is acceptable across legal systems, for example, as far as European harmonisation is concerned (Bachner 2009, justifying a doctrinal approach for comparative corporate law) or for global benchmarks such as the OECD Principles of Corporate Governance (discussed in section (6) below).
It may seem that research with an interdisciplinary perspective would not be interested in a rule-based comparison. However, La Porta and others (1998) ā an article by a group of financial economists ā includes such a comparison. La Porta and others use a quantitative methodology in order to examine the differences in shareholder and creditor protection in 49 countries and its impact on financial development. For example, for shareholder protection, they use an index on āanti-director rightsā that codes (with ā1ā or ā0ā) the rules on āproxy by mail allowedā, āshares not blocked before the meetingā, ācumulative votingā, āoppressed minorities mechanismā, āshare capital required to call an extraordinary shareholder meetingā and āpre-emptive rights to new issuesā.
Subsequent scholarship has identified problems with the coding of these variables (Spamann 2010), but in the present context the main problem to note is that the selection of these variables is not based on a comparative analysis of legal tools available in different legal traditions. Rather, La Porta and others usually follow the US model, thus, implicitly benchmarking how similar legal systems are to that of the US (and whether this makes a difference in terms of financial development; see also section (4) below). Such an approach is problematic because it disregards that shareholder protection ā or āanti-director rightsā ā may be based on other rules in other countries. Therefore, a functional comparison is often seen as preferable.
(2) Functional comparison
According to the traditional method of comparative law, the initial research question should not simply refer to the law of one legal system, but should be posed in functional terms (Zweigert and Kƶtz 1998: 38, 43). For example, following the approach of the Common Core project,1 a comparatist may start with a hypothetical or real-life problem in order to examine how a problem would be solved in different legal systems. This has the advantage that preconceptions based upon the comparatistās own legal tradition will not lead to a āfalse negativeā, with their personal bias leading them to fail to consider functional equivalents in other jurisdictions.
In comparative corporate law, a functional approach is very popular. The books by Fleckner and Hopt (2013) and Puchniak and others (2012) have the term āfunctionalā in their titles. They both deal with questions of corporate governance and derivative actions in selected jurisdictions and present those in separate country chapters. Siems and Cabrelliās (2013) Comparative Company Law: A Case-based Approach follows more closely the approach of the Common Core project. The main chapters of this book are based on 10 hypothetical cases, which are subsequently examined according to the laws of eight European countries, as well as the US and Japan. The project was coordinated by the two editors who appointed one or two country experts for each of the 10 jurisdictions. Each of the country experts (or the two experts from one country) also suggested one hypothetical case in order to achieve a good mix and balance of cases.
The concluding chapter of Siems and Cabrelli (2013), as well as the accompanying article by Cabrelli and Siems (2015), relate the results of the cases to differences and similarities in legal rules and sources of law. It is found that there is a strong correlation between the results of the cases (e.g. whether they favour directors or shareholders; shareholders or creditors; minority or majority shareholders) and the legal rules in question. By contrast, there is a weaker link between the relevant sources of law (case law, statute law, articles of association etc) and the results. In particular, it is not found that the case law of common law countries is a crucial determinant for higher levels of shareholder protection (a topic to be discussed further in the next section). Such a functional approach can therefore contribute to core themes of comparative corporate law.
A limitation of the approach taken in Siems and Cabrelli (2013) is that it mainly examines the legal solutions to the 10 cases. Such a ālegal focusā is in line with the books of the Common Core project. However, a functional comparative perspective by nature is not restricted to a legal approach; for example, it may be the case that the protection of shareholders provided by the law in some countries is provided by extra-legal factors in others. It is therefore no coincidence that interdisciplinary research has also used the functional approach.
One example for a functional and law-...