1st Edition

Shareholder Primacy and Global Business Re-clothing the EU Corporate Law

By Lela Mélon Copyright 2019
    286 Pages
    by Routledge

    285 Pages
    by Routledge

    In the context of growing public interest in sustainability, Corporate Social Responsibility (CSR) has not brought about the expected improvement in terms of sustainable business. Self-regulation has been unable to provide appropriate answers for unsustainable business frameworks, despite empirical proof that sustainable behaviour is entirely in corporate enlightened self-interest. The lack of success of the soft law approach suggests that hard law regulation may be needed after all. This book discusses these options, alongside the issue of shareholder primacy and its externalities in corporate, social, and natural environment.

    To escape the "prisoner’s dilemma" European corporations and their global counterparts have found themselves in, help is needed in the form of EU hard law to advocate sustainability through mandatory rules. This book argues that the necessity of these laws is based on the first-mover’s advantage of such corporate law approach towards sustainable development. In the current EU law environment, where codification of corporate law is sought for, forming and defining a general EU policy could not only help corporations embrace this self-enlightened behaviour but could also build the necessary "EU corporate citizenship" atmosphere. Considering the developments in the field of CSR as attempts to mitigate negative externalities resulting from inappropriate shareholder primacy use, the book is centred around a discussion of the shareholder primacy paradigm, its legal position and its (un)suitability for modern global business.

    Going beyond solely legal analysis, juxtaposing legal principles and argumentation with economic theoretic approaches and, more importantly, real-life examples, this book is accessible to both professionals and academics working within the fields of business, economics, corporate governance and corporate law.



    1. Corporations, shareholders and society: where do we start? *

    2. The incompleteness of modern corporate laws *

    2.1 Shareholder primacy as a legal rule – case of the UK *

    2.2 Shareholder primacy in the U.S.: not a legal rule yet mandated by the market? Using Adam Smith’s Invisible Hand *

    2.3 Shareholder primacy as a binding corporate law precedent? The U.S. and UK example *

    2.3.1 Takeovers as a specific corporate situation – shareholders in the forefront *

    2.3.2 The Myth Lives Nonetheless *

    2.3.3 Corporate Right to Its Own Decisions *

    2.3.4 US case law as pro- ‘traditional shareholder primacy’ *

    2.3.5 The UK case law as pro- ‘traditional shareholder primacy’ *

    2.4 Berle and Means and the shareholder primacy *

    2.5 The Efficiency Arguments in Legal Academia *

    2.5.1 Manne and Friedman: Old Premises, New Theory *

    2.5.2 Friedman expanded and re-shaped *

    2.5.3 Efficiency as the guaranteed outcome of shareholder primacy *

    2.6 The penetration of the shareholder primacy in the EU corporate law system *

    2.6.1 The End of History thesis and its pitfalls *

    2.6.2 The EU and the shareholder-primacy: historical and conceptual perspective *

    a) The EU harmonization task limited by stakeholder considerations *

    b) The call of the globalised capital markets *

    c) The CJEU and shareholder-value orientation *

    d) The end result: the misfit of the EU company law and the shareholder value orientation *

    2.6.3 The EU need of sustainable companies *

    3. Future developments: how can corporate law contribute to sustainable development? The notion of ‘sustainable company’ *

    3.1 Preliminary question: does corporate law matter for business development? *

    3.2 The pressing need for sustainable and all-inclusive business framework *

    3.3 The sphere of corporate influence *

    3.4 Corporate Social Responsibility as a partial remedy *

    3.4.1 The impact of CSR *

    3.4.2 ‘Soft’ and diversified approach to CSR *

    3.4.3 From the regulation for business to the regulation of business *

    3.5 The obsoleteness of the EU CSR and the topicality of the EU sustainable company *

    3.5.1 CSR 3.0: Sustainable Company and the EU Corporate Law *

    3.5.2 The extension of the prisoner’s dilemma: The Mutual Assured Environmental Destruction Game *

    3.5.3 The presence of EU’s first-mover advantage: time to act! *

    3.5.4 A centipede game of irrational behaviour? *

    3.6 Corporate law re-clothed: suggestions for EU legislative changes *

    4. The EU’s competence for becoming global sustainability leader *

    4.1 The existing possibilities for action under the EU corporate law framework *

    4.2 Treaty provisions imposing consideration of sustainability on EU bodies *

    4.2.1 EU competence and legal basis *

    4.2.2 The substance of the EU regulatory action *

    4.3 Embedding sustainability in EU corporate law framework *

    4.4 Planned and existing EU instruments for furthering corporate sustainability policy *

    4.4.1 The Non-Financial Reporting Directive *

    4.4.2 ‘The Experiment’ and Example of Public Procurement Rules: EU leading by example *

    4.5 The EU Prospects *

    5. Conclusions *

    6. Bibliography *

    Book *

    Contribution *

    Court Decision *

    Internet Document *

    Journal Article *

    Report or Gray Literature *

    Statute or Regulation *

    Miscellaneous *



    Dr. Lela Mélon is a Marie Curie Fellow at the University Pompeu Fabra – UPF, Spain.