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Paul Davies

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Professor of Corporate Law

Paul Davies is the Allen & Overy Professor of Corporate Law and Professorial Fellow of Jesus College. He was educated at the Universities of Oxford (MA), London (LLM) and Yale (LLM). He was elected a Fellow of the British Academy in 2000, an honorary Queen's Counsel in 2006 and an honorary Bencher of Gray's Inn in 2007. He is a deputy chairman of the Central Arbitration Committee. His first teaching job was as Lecturer in Law at the University of Warwick (1969-1973). Then he was elected Fellow and Tutor in Law at Balliol College Oxford and successively CUF Lecturer, Reader and Professor in the Faculty. Between 1998 and 2009 he was the Cassel Professor of Commercial Law at the London School of Economics and Political Science.



Publications

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Journal Articles

P Davies and Klaus J Hopt, 'Boards in Europe - Accountability and Convergence' (2013) 61 American Journal of Comparative Law 301 [...]

Corporate boards play a central role in corporate governance and therefore are regulated in the corporate law and corporate governance codes of all industrialized countries. Yet while there is a common core of rules on the boards, considerable differences remain, not only in detail, but sometimes also as to main issues. These differences depend partly on shareholder structure (dispersed or blockholding), partly on path dependent historical, political and social developments, especially employee representation on the board. More recently, in particular with the rise of the international corporate governance code movement there is a clear tendency towards convergence, at least in terms of the formal provisions of the codes. This article analyses the corporate boards, their regulation in law and codes and their actual functioning in nine European countries (Belgium, France, Germany, Italy, the Netherlands, Poland, Sweden, Switzerland and the United Kingdom) in a functional and comparative method. Issues dealt with are inter alia board structure, composition and functioning (one tier v. two tier, independent directors, expertise and diversity, separating the chair and the CEO functions, information streams, committees, voting and employee representation) and enforcement by liability rules (in particular conflicts of interest), incentive structures (remuneration) and shareholder activism. The article finds convergence in these European countries due to the pressures of competition, a pro-shareholder change supported by government and institutional investors and, to a certain degree, the impact of the EU. This convergence shows more in the codes and the ensuing practice than in the statutes. On the other side considerable differences remain, in particular as a result of the failure to adopt a mandatory "no frustration" rule for takeovers at EU level and diverging systems of labor codetermination. The result is an unstable balance between convergence and divergence, shareholder and stakeholder influence and European v. national rulemaking.


ISBN: 0002-919X

P Davies, 'Federal Deposit Insurance Corporation and Bank of England memorandum on resolving globally active systemically important financial institutions' (2013) 7 Law and Financial Markets Review 304 [...]

DOI: 10.5235/17521440.7.6.304

The cross-border co-ordination necessary for the successful resolution of global systemically important financial institutions (G-SIFIs) has emerged as a major issue in the post-crisis reforms. In particular, the Financial Stability Board addressed this issue in its “Key Attributes of Effective Resolution for Financial Institutions”, adopted in 2011. However, little exists by way of operational machinery to give effect to the Key Attributes. The memorandum of December 2012 setting out the understandings of the resolution authorities in the US and the UK as to how they will effect a “single point of entry” resolution of a G-SIFI is thus an important first step. This article analyses the agreement, identifying the conditions necessary for it to operate successfully. It is noted that, for understandable reasons, both countries have also put in place resolution mechanisms which do not depend upon appropriate action by the home-state regulator.


ISBN: ISSN 1752-1440

P Davies, 'Liquidity Safety Nets for Banks' (2013) 13 Journal of Corporate Law Studies 285 [...]

DOI: 10.5235/14735970.13.2.287

Liquidity shocks are a core risk of the business model of commercial banks, which is founded on a liquidity mismatch between the banks’ liabilities and assets. A substantial part of the banks’ funding comes from short-term retail and wholesale funding, whilst a substantial part of the assets are long-term and illiquid loans. This is the source of the banks’ profi ts, but also of their claim to fulfi l an important social role. Having argued that leaving the solution to this problem to the banks alone is unsafe, this article turns to examine three regulatory strategies for reducing the incidence of liquidity shocks or making banks more resilient to them. They are: regulating the level of banks’ liquidity reserves, insuring the value of the banks’ long-term assets and guaranteeing the discharge of the banks’ short-term liabilities. The criteria of assessment are the least impact on the banks’ social role of transforming short-term deposits into long-term loans, coupled with the least incentive for banks to take excessive risk, the least subsidy to banking and the least cost to the public purse. It is suggested that insuring the value of the banks’ long-term assets emerges as the most attractive strategy.


ISBN: 1473-5970

P Davies, 'Liability for Misstatements to the Market' (2010) 5 Capital Markets Law Journal 443 [...]

The Liability of Issuers Regulations introduce a revised statutory scheme of liability for issuers in respect of misstatements to the market. This article considers how the revised scheme differs from the stop-gap regime introduced in 2006, notably by extending the range of misstatements and markets to which the regime applies. The new regime also includes liability for delayed statements and increases the range of potential claimants. However, fraud as the basis for issuer liability is retained, as is the exclusion of liability to investors of the directors of issuers.


ISBN: 1750-7219

P Davies, 'Liability for Misstatements to the Market: Some Reflections' (2009) 9 Journal of Corporate Law Studies 295 [...]

This article considers some of the fundamental issues arising out of the Davies Review of Issuer Liability. That Review recommended only a limited role for private enforcement of the continuing disclosure obligations imposed upon issuers. The article considers whether such a limited role can be justified, from both a compensation and a deterrence standpoint. It concludes that it can, provided there is a sound system of public enforcement of those obligations in place. Whether the recent changes in the role of the Financial Services Authority will provide an appropriate level of public enforcement is not yet clear.


ISBN: 1473-5970

Books

P Davies, Gower and Davies Principles of Modern Company Law (Paul Davies and Sarah Worthington eds, 9th edn, Sweet & Maxwell 2012)

Geoffrey Morse and others, Palmer's Limited Liability Partnership Law (2nd edn, Sweet & Maxwell 2011)

P Davies, Introduction to Company Law 2nd ed (OUP, Clarendon Law Series 2010)

P Davies, R Kraakman, J Armour and L Enriques, The Anatomy of Corporate Law, Second Edition (OUP 2009) [...]

This book explains in detail how and why the principal European jurisdictions, Japan, and the United States sometimes select identical legal strategies to address a given corporate law problem, and sometimes make divergent choices. After an introductory discussion of agency issues and legal strategies, the book addresses the basic governance structure of the corporation, including the powers of the board of directors and the shareholders meeting. It proceeds to creditor protection measures, related-party transactions, and fundamental corporate actions such as mergers and charter amendments. Finally, it concludes with an examination of friendly acquisitions, hostile takeovers, and the regulation of the capital markets


ISBN: 978-0-19-956584-9

P Davies, Gower and Davies Principles of Modern Company Law, Eighth Edition (Thomson/Sweet & Maxwell 2008) [...]

This is a textbook on English company law which deals with all the elements of core company law (separate legal personality, limited liability, board and shareholder relations, majority and minority shareholder relations, accounts and audit) as well as with corporate finace (including share issues, market manipulation and takeovers). It aims to provide a strong analytical structure as well as a detailed treatment of the law.


ISBN: 978-0421-94900-3

P Davies and M Freedland, Towards a Flexible Labour Market (OUP: Oxford Monographs on Labour Law 2007) [...]

Taking as its starting point the authors’ earlier work on Labour Legislation and Public Policy, this book provides a detailed account and critical analysis of British labour legislation and labour market regulation since the early 1990s. Referring back to the earlier history, and filling in the gaps in the early and mid-1990s, the work concentrates mainly on the legislation and policy measures in the employment sphere of the New Labour governments which have been in power since 1997, placing those developments in the context of the relevant aspects of European Community law. The work argues for an understanding of this body of legislation and regulatory activity as being directed towards the realisation of a flexible labour market, and shows how this objective has been pursued in three intersecting areas, those of regulating personal or individual employment relations, regulating collective representation, and promoting work. It explores the methods of regulation which have been used, developing a taxonomy of regulation and a notion of ‘light regulation’ to characterise some recent legislative interventions. It considers how far the administration of Prime Minister Tony Blair has fulfilled its promises or claims of ‘fairness at work’, ‘welfare to work’ and ‘success at work’. It is intended to be of interest to those concerned with the study of British and European labour or employment law, employee relations or human resource management, labour market economics, and contemporary politics.


ISBN: 978-0-19-921788-5

Chapters

P Davies, K Hopt, R Nowak, G Van Solinge, 'Boards in Law and Practice: A Cross-Country Analysis in Europe' in Paul Davies, Klaus Hopt, Richard Nowak, Gerard Van Solinge (eds), Corporate Boards in Law and Practice (OUP 2013) [...]

This is the general report analysing a group of national reports on the role and function of the board in European public companies. The report assesses how far the role and function of the board have converged in different European countries and how far divergences continue to exist. It explains convergencs and divergences by reference to the forces of globalisation, differences in shareholder structure and in differing perceptions of the board as a monitor on behalf of shareholders or as a mediator among stakeholder groups. The book analyses not only corporate laws but also corporate governance codes and looks at enforcement as well as at law 'in the book's


ISBN: 978-0-19-870515-4

P Davies, 'Corporate Boards in the United Kingdom' in Paul Davies, Klaus Hopt, Richard Nowak, Gerard Van Solinge (eds), Corporate Boards in Law and Practice ( 2013) [...]

This is the UK national report for Corporate Boards in Law and Practice (qv)


ISBN: 978-0-19-870515-4

P Davies, E Schuster and E van de Walle de Ghelcke, 'The Takeover Directive as a Protectionist Tool?' in Ulf Bernitz and Wolf-Georg Ringe (eds), Company Law and Economic Protectionism - New Challenges to Economic Integration (OUP 2010) [...]

DOI: 10.2139/ssrn.1554616

When the European Commission first proposed a harmonised legal framework for takeovers in the EU, its aim was to facilitate takeover bids in order to create a more effi cient and competitive corporate landscape and to further the single market. In the view of the Commission, a functioning market of corporate control required rebalancing the division of powers between shareholders and management in companies facing a takeover bid. Taking the UK, EU’s most active takeover market, as a model, the Commission proposed to assign the sole decisionmaking power regarding the bid to the shareholders, with management primarily playing an advisory role. This so-called board neutrality rule, however, caused much controversy among the member states, and it was one of the main reasons for the Takeover Directive’s notoriously long adoption history. Failing to achieve consensus on this topic, the Takeover Directive was finally adopted in a “watered down” version, without a mandatory board neutrality rule. Instead, a rather complicated system of “options” was introduced, both at member state and at company level. Although it was clear that this approach would not create the same barrier-free market for corporate control the Commission originally had in mind, it was still hoped that it would be a step in this direction. At the very least, it was certainly expected that this approach would retain the status quo. This paper examines how the implementation of the Directive changed the takeover rules applicable to European companies. To that end, we analyse the pre-implementation rules regarding management’s role in takeovers in all member states, and compare them with the current legal framework. We find that, instead of facilitating the Commission’s ideal of a comprehensive, mandatory board neutrality rule, the Directive has, in aggregate, likely had an opposite effect. We argue that there are signs of protectionist motives driving member states’ choices regarding board neutrality, and we fi nd that the system of company-level choices is ineffective in its current form. We propose a simplifi ed and more coherent board neutrality rule, solely based on shareholder decision making. Acknowledging that a system allowing management to prevent unwanted bids might have advantages over a pure board neutrality rule in certain circumstances, we argue that shareholders are in a better position to decide on the optimal rules for a particular company than legislators.


ISBN: 978-0-19-959145

Internet Publications

P Bockli and others, 'Making Corporate Governance Codes More Effective: A Response to the European Commission\'s Action Plan of December 2012 ' (2013) [...]

This paper contains the European Company Law Experts' response to one of the main issues raised in the European Commission’s Action Plan of 12 December 2012, namely how to make corporate governance codes more effective. The concept of “codes’ effectiveness” has two meanings: effectiveness of the comply-explain mechanism (disclosure effectiveness) and level of adoption of the codes’ recommendations themselves (substantive effectiveness). The ECLE believes that it is of crucial importance to keep the advantages of regulation by codes while finding adequate improvements of the quality of the reports and the explanations. The relationship between the content of corporate governance codes and disclosure is discussed. A “culture of departure from code recommendations”, if well explained, is needed. The quality of corporate governance reports and the explanations should primarily be improved by incentives, but non-legal and legal sanctions may help. Improvements may also be possible by mobilizing private actors and/or by charging public or private agents and agencies with inspection and monitoring.


P Bockli and others, 'Response to the European Commission's Report on the Application of the Takeover Bids Directive ' (2013) [...]

This paper contains the European Company Law Experts' response to the report of the European Commission of 28 June 2012 on the application of the Takeover Bids Directive of 2004 and the reform initiatives announced. For evaluating these initiatives the rationale of the mandatory bid rule is relevant (exit rationale, control premium rationale and undistorted choice rationale). On this basis the paper discusses each of the concerns raised by the European Commission: 1) The concept of "acting in concert": The ECLE are of the opinion that a uniform concept for the Takeover Bids Directive, the Transparency Directive and the Acquisition Directive is not useful because of the different objectives of these Directives. As to the Takeover Directive it should be made clear that joint engagement activities of investors should not trigger a mandatory offer. 2) National derogations to the mandatory offer rule differ widely, but there are different types of derogations that pose different concerns. The ECLE recommend that the Directive should provide for a review process with respect to national derogations. 3) The ECLE believe that there are good reasons to close the loopholes against the “creep in” and the “creep on” acquisitions. 4) As to board neutrality and the break-through rule the ECLE believe that the default rules should be changed. The option rights should be given to the shareholders, not to the member states. The reciprocity rule is flawed. 5) The protection of the rights of employees should be addressed in a wider context and should not be taken up specifically for one type of transaction such as takeover bids.


Peter Boeckli and others, 'The Future of European Company Law' (2012) ECLE

P Davies and others, 'Response to the European Commission’s Green Paper: The EU Corporate Governance Framework' (2011)

P Davies, 'The European Private Company (SPE): Uniformity, Flexibility, Competition and the Persistence of National Laws' (2010) ECGI Working Paper 154/2010 [...]

In 2008 the European Commission put forward proposals for a European Private Company (SPE), following up on the adoption of the European Public Company legislation of 2001. Although speedy adoption of the SPE proposals was initially hoped for, subsequent negotiations among the member states have stalled, despite at least two revised drafts of the proposals having been produced by the Presidency of the European Council. This article seeks to identify the challenges posed to the national company laws of the member states by the Commission’s proposals for a ‘simple and flexible’ Community form of incorporation. It seeks to argue that the discussions among the member states have revolved mainly around the question of the appropriate role for mandatory rules in modern company law. Member states have been reluctant to see the SPE freed from mandatory rules to which their national companies are subject, because of the competition to their national laws which the SPE would generate. On the other hand, member states with few mandatory rules in their domestic law have been reluctant to see the SPE burdened with mandatory rules which do not apply to domestic companies, because otherwise their businesses will be deterred from taking up the new European form and obtaining its advantages. The article predicts that, of the possible legislative solutions to this confl ict, referring more of the rules applicable to the SPE to the national law of the state in which the SPE is registered is likely to be the dominant one, even though this will undermine both the uniformity and flexibility goals of the proposed legislation. It also considers how effective the ‘national law’ strategy is likely to be in the light of the Treaty provisions on freedom of establishment



News

Law and Finance conference at Merton College

The annual Oxford-LSE conference on Law and Finance was held at Merton College on Friday May 23, 2014 […]

Interests

Teaching: Company Law; Corporate Finance; Comparative and European Corporate Law; Principles of Financial Regulation; Law and Finance

Research: Corporate governance, corporate finance, regulation of securities markets, collective representation of employees

Other details

Correspondence address:

Jesus College
Turl Street, Oxford OX1 3DW




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