Dr. Marios Koutsias, Senior Lecturer in Law at the University of Essex, has a new publication in the European Business Law Review entitled ‘Exit Britain Enter the Stakeholders: Could Brexit End the Cultural Wars within the European Union Company Law and Give Birth to a Truly “European Company”?’
The history of European Union company law is a very troubled one. It is a history of national conflicts and debates which resulted in the inability of the EU to create a common body of EU company law. The article argues that national company laws are deeply rooted in national culture.
Corporate governance in particular evolved into an arena where fierce corporate culture wars were fought for decades. This is why the European Company – the so-called Societas Europea – failed to evolve into a truly supranational corporate form. While all member states have their own distinctive systems of corporate governance, the failure in question has been mostly fuelled by the conflict between the two widely-opposed corporate governance systems of the UK and Germany.
The UK endorses the so-called contractual model of corporate governance. Germany on the other hand employs the so-called stakeholder system of corporate governance. The rest of the member states of the EU lie between those two opposing poles. The conflict between the two European pillars of widely opposed corporate philosophies and consequently laws – the UK and Germany – has been so intense that it undermined any attempt to create a single European company.
The article argues that Brexit can change that. The exit of one of the two main pillars of the conflict may pave the way for the dominance of the stakeholder model of corporate governance in the EU. A post-Brexit EU would lack the most vocal and influential supporter of contractualism. This should allow the remaining member states to converge into a standard that would be closer to the stakeholder model.
The article appears in Volume 30, Issue 6, pp. 881-907 of the European Business Law Review.