Required reading

1. EU: EC Treaty, arts. 43, 46, 48

2. UK: CA 2006, secs. 1046, 1049, 1052

3. US: DGCL, §§ 371, 383; California Corporations Code, § 2115

The dynamics of regulatory competition

The whole and its parts

The term “regulatory competition” refers to a competition that may arise between the laws or other rules (such as stock exchange rules) in different jurisdictions because of differences between the legal requirements for companies. Not all jurisdictions can compete with each other. Some are simply superior to and trump others (such as when the laws of a federal jurisdiction are superior to those of a state jurisdiction). In order to understand how “regulatory competition” has affected the three jurisdictions we address in this text, we must first understand what these jurisdictions are and the nature of their composition. Each is a sub-unit of a larger jurisdiction.

Germany and the UK belong to the EU, and all US states belong to the US. Because both the upper- and the lower-tier jurisdictions enact legislation that is or functions as company law, it is necessary to understand the nature of the rules coming from each jurisdiction and their respective standing vis-à-vis each other. The rule-giving bodies affecting the governance of public companies in each of our jurisdictions are found at the primary, nation or state level (i.e. Germany or Delaware), at an upper, supranational or national level (i.e. the EU or the US), and at the level of a private or quasi-public organization (e.g. the New York Stock Exchange or the UK Takeover Panel).