Regulatory Competition Versus Harmonisation in European Company Law

The harmonisation of company law in Europe has done little to remove diversity in the legal systems of the member states. The impact of directives has been significant in certain areas, such as basic accounting standards and the rules of capital maintenance. Nevertheless, the continuing divergence between 'insider' systems, which place a strong emphasis on stakeholder forms of representation, and 'outsider' systems, which stress liquid stock markets and the protection of shareholder interests, is reflected in the failure of the member states to reach agreement on a number of key proposals, in particular the model constitution for transnational enterprises which is contained in the draft European Company Statute. At the same time, the prospects of US-style regulatory competition emerging in the near future are remote, since this would also require harmonisation, in this case of the rules of conflict of laws. However, diversity is in many ways a strength of the European company law systems, which, paradoxically, 'reflexive' harmonisation has sought to preserve while also encouraging innovation in forms of self-regulation in the corporate and financial spheres. Co-evolution based on diversity at the level of national legal systems, coupled with encouragement from transnational norms for devolved solutions, is a more likely path for European company law than the type of convergence around a single, dominant regime which appears to characterise the Delaware effect in the US context.