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The Anatomy of Corporate LawA Comparative and Functional Approach$
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Reinier Kraakman, John Armour, Paul Davies, Luca Enriques, Henry Hansmann, Gerard Hertig, Klaus Hopt, Hideki Kanda, Mariana Pargendler, Wolf-Georg Ringe, and Edward Rock

Print publication date: 2017

Print ISBN-13: 9780198739630

Published to Oxford Scholarship Online: March 2017

DOI: 10.1093/acprof:oso/9780198739630.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use.date: 18 May 2022

The Basic Governance Structure: Minority Shareholders and Non-Shareholder Constituencies

The Basic Governance Structure: Minority Shareholders and Non-Shareholder Constituencies

(p.79) 4 The Basic Governance Structure: Minority Shareholders and Non-Shareholder Constituencies
The Anatomy of Corporate Law

Luca Enriques

Henry Hansmann

Reinier Kraakman

Mariana Pargendler

Oxford University Press

This chapter examines the legal strategies used by representative “core jurisdictions” to support the interests of minority shareholders, employees, and external constituencies. The starting point is the agency problem between controlling and non-controlling shareholders.A variety of strategies are employed to protect minority shareholders: special appointment and decision rights, trusteeship strategies, the equal treatment rule, and other legal constraints. The chapter then reviews the use of corporate law to protect non-shareholder constituencies. It introduces the economic justifications for protecting employees through corporate law, and surveys the strategies adopted in this area. The use of corporate law to protect workers is most conspicuous in Germany, which focuses on appointment rights and, to a lesser extent, decision rights. Core jurisdictions have also increasingly resorted to corporate law strategies to protect external constituencies, and thereby tackle broader social objectives. The chapter concludes by examining the correlation between the “law in the books” and the “law in practice” in these areas, and the differences and similarities encountered among core jurisdictions.

Keywords:   agency problem, minority shareholders, controlling shareholders, appointment rights, decision rights, workers, co-determination, external constituencies, law in the books, law in practice

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