Paul Davies QC (hon)

Biography

Paul Davies is a Senior Research Fellow at Harris Manchester College, and a Fellow of the Commercial Law Centre at Harris Manchester College. He was the Allen & Overy Professor of Corporate Law from 2009 to 2014. 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 was a deputy chairman of the Central Arbitration Committee between 2001-2015. 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

Recent additions

P Davies, 'Related Party Transactions on the London Stock Exchange: What Works and What Does Not?' (2022) 43 Business Law Review 2

The rules governing companies listed on the Main Market of the London Stock Exchange (LSE) and its Alternative Investment Market (AIM) fill an important gap in the general law regulat- ing related party transactions (RPT). The regulatory techniques used in these ‘Exchange rules’ are principally disclosure to the market at the time of the transaction and, in a more limited range of cases under the Main Market rules, prior approval of the transaction by a majority of the uninvolved shareholders. This article investigates the outcomes of these rules by analysing the RPT announcements made by companies on these two markets over a twelve-month period beginning in June 2019. These announcements related to nearly 500 RPT. The article concludes that neither mechanism works at an optimum level. The Main Market shareholder approval requirements catch only a small number of companies, predomi- nantly outside the FTSE 350. The disclosure rules omit an important element in the information the market needs, namely the company’s analysis why the transaction is considered fair. In cases where there is an operative shareholder approval require- ment (from whatever source), then the need to obtain share- holder approval is likely to force revelation of the company’s fairness analysis, but this driver does not operate across the majority of RPT. The article makes some suggestions for simple reforms to address these defects.
ISBN: 0143-6295
P Davies, 'From Free Will to Duties of Vigilance: Corporate Liability for Wrongdoing' in Ronald J. Gilson, Mats Isaksson, Erik Lidman Johan Munck and Erik Sjöman (eds), Festschrift in honour of Rolf Skog (Norstedts Juridik 2021)

Also available at SSRN: https://ssrn.com/abstract=3940444
This piece examines a number of possible doctrinal approaches to corporate liability for wrongdoing and analyses their functional significance. It starts by identifying a starting point common to many jurisdictions whereby liability for wrongdoing on the part of those in some way connected with the company was attributed to the company itself. Vicarious liability generally worked well in relation to tortious (delictual) liability but proved controversial in many jurisdictions where criminal liability was at issue. Doubts about the appropriateness of vicarious criminal liability led to restricted corporate liability for serious crimes. The article then identifies an increasingly common way of circumventing this problem in the criminal law area by shifting the basis of corporate liability onto an analysis of managerial failings which caused or facilitated the commission of a crime. Crucially, this analysis does not depend upon finding that any particular director, executive or employee of the company is individually criminally liable. It is enough to attribute managerial acts or omissions to the company and then to ask whether those are sufficient to constitute a crime on the part of the company. In a third stage, companies are made liable on an accessory basis, namely, that the company displays a “corporate culture” which encouraged or permitted the commission of crimes by individuals associated with the company. In this stage, the commission of a crime by a connected person underpins the corporate liability, but the company is not liable for the individual crime on a vicarious basis but independently for “permitting” the crime to occur. The corporate culture analysis was most fully developed in Australia, but it has become more widespread, though normally only in relation to particular crimes, under the heading of “failure to prevent” liability. “Failure to prevent” liability can be seen as the beginnings of a fourth stage, since the company now has an incentive to take steps to prevent crimes being committed within the organisation rather than just avoiding the creation of culture which permits infractions. The full development of the fourth stage is to be found, however, in corporate “duties of vigilance”. Pioneered in France but now proposed on a wide scale by the European Commission, the occurrence of a wrong is no longer a necessary element for corporate liability. It is enough that the company has no prepared, put in place and effectively operated a corporate strategy for assessing and reducing the risks of wrongdoing within the organisation. Liability can arise even though no infraction has occurred, on the grounds that the company has not discharge its vigilance duty. Equally important, duties of vigilance are proposed or have been imposed beyond the criminal law so as to embrace breaches of international human rights and environmental standards as well as international economic crimes. It is argued that the implementation of this fourth stage requires much greater precision about how far companies are required to go in discharging their duties, especially when operating in countries which do not accept that a breach has occurred or that the standard is applicable in the jurisdiction. [enter Abstract Body] Keywords: Corporate crime, vicarious liability, managerial failure, corporate culture, failure to prevent, duty of vigilance
P Davies, S Worthington and C Hare, Gower Principles of Modern Company Law (11th edn Sweet & Maxwell 2021)

ISBN: 978-0-414-08812-2

Journal Article (8)

P Davies, 'Related Party Transactions on the London Stock Exchange: What Works and What Does Not?' (2022) 43 Business Law Review 2

The rules governing companies listed on the Main Market of the London Stock Exchange (LSE) and its Alternative Investment Market (AIM) fill an important gap in the general law regulat- ing related party transactions (RPT). The regulatory techniques used in these ‘Exchange rules’ are principally disclosure to the market at the time of the transaction and, in a more limited range of cases under the Main Market rules, prior approval of the transaction by a majority of the uninvolved shareholders. This article investigates the outcomes of these rules by analysing the RPT announcements made by companies on these two markets over a twelve-month period beginning in June 2019. These announcements related to nearly 500 RPT. The article concludes that neither mechanism works at an optimum level. The Main Market shareholder approval requirements catch only a small number of companies, predomi- nantly outside the FTSE 350. The disclosure rules omit an important element in the information the market needs, namely the company’s analysis why the transaction is considered fair. In cases where there is an operative shareholder approval require- ment (from whatever source), then the need to obtain share- holder approval is likely to force revelation of the company’s fairness analysis, but this driver does not operate across the majority of RPT. The article makes some suggestions for simple reforms to address these defects.

ISBN: 0143-6295

P Davies, S Emmenegger, E Ferran and G Ferrarini and others, 'The Commission's 2018 Proposal on Cross-Border Mobility - An Assessment' (2019) 16 European Company and Financial Law Review 196

Also available as Oxford Legal Studies Research Paper 25/2018 (available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3257846#)

Currently, the Council of the European Union is negotiating the European Commission’s recent proposal on cross-border mobility. This paper provides an overall assessment based on the proposal’s central pillars: freedom of establishment and protection of the interests of creditors, shareholders, and employees. The proposed directive meets a real necessity for regulation on a European level and pursues an ambitious agenda. While the general approach is excellent, there is room for improvement on some issues of importance

ISBN: 1613-2548

P Davies, 'The Fall and Rise of Debt: Bank Capital Regulation After the Crisis ' (2015) 16 European Business Organization Law Review

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, '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, '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, '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

Chapter (14)

P Davies, 'From Free Will to Duties of Vigilance: Corporate Liability for Wrongdoing' in Ronald J. Gilson, Mats Isaksson, Erik Lidman Johan Munck and Erik Sjöman (eds), Festschrift in honour of Rolf Skog (Norstedts Juridik 2021)

Also available at SSRN: https://ssrn.com/abstract=3940444

This piece examines a number of possible doctrinal approaches to corporate liability for wrongdoing and analyses their functional significance. It starts by identifying a starting point common to many jurisdictions whereby liability for wrongdoing on the part of those in some way connected with the company was attributed to the company itself. Vicarious liability generally worked well in relation to tortious (delictual) liability but proved controversial in many jurisdictions where criminal liability was at issue. Doubts about the appropriateness of vicarious criminal liability led to restricted corporate liability for serious crimes. The article then identifies an increasingly common way of circumventing this problem in the criminal law area by shifting the basis of corporate liability onto an analysis of managerial failings which caused or facilitated the commission of a crime. Crucially, this analysis does not depend upon finding that any particular director, executive or employee of the company is individually criminally liable. It is enough to attribute managerial acts or omissions to the company and then to ask whether those are sufficient to constitute a crime on the part of the company. In a third stage, companies are made liable on an accessory basis, namely, that the company displays a “corporate culture” which encouraged or permitted the commission of crimes by individuals associated with the company. In this stage, the commission of a crime by a connected person underpins the corporate liability, but the company is not liable for the individual crime on a vicarious basis but independently for “permitting” the crime to occur. The corporate culture analysis was most fully developed in Australia, but it has become more widespread, though normally only in relation to particular crimes, under the heading of “failure to prevent” liability. “Failure to prevent” liability can be seen as the beginnings of a fourth stage, since the company now has an incentive to take steps to prevent crimes being committed within the organisation rather than just avoiding the creation of culture which permits infractions. The full development of the fourth stage is to be found, however, in corporate “duties of vigilance”. Pioneered in France but now proposed on a wide scale by the European Commission, the occurrence of a wrong is no longer a necessary element for corporate liability. It is enough that the company has no prepared, put in place and effectively operated a corporate strategy for assessing and reducing the risks of wrongdoing within the organisation. Liability can arise even though no infraction has occurred, on the grounds that the company has not discharge its vigilance duty. Equally important, duties of vigilance are proposed or have been imposed beyond the criminal law so as to embrace breaches of international human rights and environmental standards as well as international economic crimes. It is argued that the implementation of this fourth stage requires much greater precision about how far companies are required to go in discharging their duties, especially when operating in countries which do not accept that a breach has occurred or that the standard is applicable in the jurisdiction. [enter Abstract Body] Keywords: Corporate crime, vicarious liability, managerial failure, corporate culture, failure to prevent, duty of vigilance

P Davies, 'Financial Stability and the Global Reach of EU Law' in Marise Cremona Joanne Scott (ed), EU Law Beyond EU Borders (OUP 2019)

This chapter considers the influence of European Union law in the post-crisis regulation of financial institutions. The global nature of the financial crisis of 2007-2009 created incentives for jurisdictions to “export” their legislative solutions globally, in order to promote domestic stability. The chapter begins by using an analysis of the development of the crisis from a domestic US sub-prime lending problem into a global lack of trust in financial institutions, with a consequent credit crunch and state bail-outs of the biggest failing institutions, to illustrate these incentives. However, a crude strategy of export is likely to produce adverse reactions from other jurisdictions. The potential for friction was reduced by two developments. First, a rapid expansion of international standards of financial regulation and, second, using some form of mutual recognition strategy at the level of individual jurisdictions. The chapter argues that the European Union had relatively little influence on the first strategy because representation of “Europe” within international standard-setters is still dominated by the individual Member States rather than by the EU institutions. On the other hand, with the adoption of a Union level common rule book, implementation of the second strategy did fall into the hands of Union institutions. The second part of the chapter consists of a case study of the long drawn-out process whereby the EU and the US achieved recognition of each other’s rules on central counterparties for derivatives clearing. Despite the existence at G20 level of an agreement on the central clearing of derivatives, which both the EU and the US sought to implement, achievement of mutual recognition on this topic was slow, marked by bad-tempered interchanges and initially developed through a process likely to highlight differences rather than commonalities. The chapter concludes by exploring some possible explanations for this history and examines the potential operation of the equivalence regime in a post-Brexit world. Financial crisis; international standards; mutual recognition; central clearing; equivalence.

ISBN: 978 0 19 884217 0

P Davies, 'Investment Chains and Corporate Governance' in Louse Gullifer and Jenny Payne (eds), Intermediation and Beyond (Hart 2019)

Long chains of intermediaries may constrain the right to vote. Information about the voting opportunity may not reach the persons at the end of the chain in time for them to formulate a considered view, and instructions about how those persons wish to vote may not reach the company in time for the vote to be counted (or, perhaps,at all). These problems will be exacerbated if, as is the case in the UK, the person at the end of the chain of intermediaries and who has the economic incentive to vote, is not treated by the relevant corporate law system as the shareholder for the purpose of the exercise of voting rights. So long as voting was regarded as a private matter, it was possible to take a sanguine view of these problems. Various workarounds were available and those at the end of intermediary chains could make use of them, to the extent that the benefi ts of voting were thought to outweigh the costs of the work-arounds. In the current era of shareholder ‘ engagement ’ , where shareholders, especially institutional ones, are under public pressure to vote and to vote thoughtfully, difficulties in actually voting are much less easy to ignore. This chapter explores the operation of the current voting system where there are chains of intermediaries and some possible reforms.

ISBN: 9781509919901

P Davies and Klaus Hopt, 'Non-Shareholder Voice in Bank Governance: Board Composition, Performance and Liability' in D Busch, G Ferrarini, G Van Solinge (ed), Governance of Financial Institutions (Oxford University Press 2019)

Starting from the well-evidenced fact that banks with shareholder-focussed corporate governance fared worse in the financial crisis than those without, this paper considers various initiatives and proposals to re-orient board rules in relation to banks. The paper considers three type change. First, increased influence over board composition and behaviour without granting new rights of board representation to any group of persons. In this section we look at influence for the general public interest in bank stability via an increased role for bank supervisors in the selection and monitoring of bank directors and significant bank executives, and at an increased role for long-term creditors, in particular bondholders. The former is partly already in place and for the latter we suggest ways in which changes could be made, mainly via contract. Second, we look at influence via board representation, mainly for creditors but also for the public interest. We are sceptical about the scale of the benefits such representation is likely to afford and point out some of the costs of these proposals. Finally, we look at enhanced liability, whether regulatory, criminal or civil. There are many proposals for change in this area, some very far-reaching. We doubt the benefits of enhanced criminal liability, but think that more enforcement effort, especially in the regulatory field, but also as to civil liability, would yield positive results.

ISBN: 978-0-19-879997-9

P Davies, 'Related Party Transactions: UK Model' in L Enriques and T Troeger (eds), The Law and Finance of Related Party Transactions (Cambridge U P 2019)

DOI: 10.1017/9781108554442

Also available in an earlier version as an ECGI working paper: https://ecgi.global/working-paper/related-party-transactions-uk-model

This paper analyses the regulation of related party transactions in the UK through two comparative lenses, one external, the other internal. The external comparison is between English law and the law on RPTs in the United States, especially in Delaware. The internal comparison is between the English corporate law applying to all companies and the additional rules applicable to companies quoted on the London Stock Exchange, both those with a premium listing on the Main Market and those traded on the Alternative Investment Market. The first external comparison highlights two features of the general regulation of RPTs in the UK. The first is the adherence of English law to the classical concept of a fiduciary and the second is reluctance to use assessment of the substantive fairness of the transaction as a test for the legality of the RPT and, in consequence, its reliance on wholly procedural controls. The first feature made it difficult for the general law to handle RPTs with shareholders, including directors in their capacity as shareholders. The second came into prominence when the private-ordering model which underlies UK company law led to the shift of the procedural controls from the shareholders to the board. For both problems, UK statute law developed some work-arounds, but without comprehensive revision of these underlying characteristics of the general law. The comparison with the rules for publicly traded companies shows how rules might develop when the starting point is a functional one. Substantial shareholders are as much subject to the constraints as directors and fairness opinions are routinely utilised. However, exchanges have become subject to much sharper regulatory competition than national legal systems. Rule-makers are cautious in their use of exchange rules to promote corporate governance objectives which go beyond what is internationally acceptable. As early as 1993 the London Stock Exchange seems to have pulled back from a widespread application of majority-of-the-minority shareholder approval for RPTs and this century it has wavered in its policies towards subjecting controlling shareholders to effective constraints on RPTs.

ISBN: 978-1-108-42928-3

P Davies, 'Control Shifts via Share Acquisition Contracts with Shareholders ' in Jeffrey Gordon and Wolf-Georg Ringe (eds), Oxford Handbook on Corporate Law and Corporate Governance (OUP 2018)

This chapter examines the regulatory issues and policy choices which arise when the contractual mechanism of a general offer to acquire shares is used to shift control of a company from its current location into the hands of an acquirer.

ISBN: 978-0-19-874368-2

P Davies, 'Damages Actions by Investors on the Back of Market Disclosure Requirements' in D Busch, E Avgouleas, G Ferrarini (ed), Capital Markets Union in Europe (Oxford University Press 2018)

This chapter elaborates the principles upon which investors should be permitted to sue for damages in respect of market disclosure rules. Its starting point is that the EU instruments in this field, whether relating to prospectuses or continuing disclosures, have left this issue by and large to the Member States.The purpose of the piece is to design a framework for the construction of a common liability regime in the EU, whether that framework is implemented top-down by the EU legislature or bottom-up by the Member States themselves.

ISBN: 978-0-19-88139-2

P Davies, 'The Transactional Scope of Takeover Law in Comparative Perspective' in Umakanth Varottil, Wai Yee Wan (ed), Comparative Takeover Regulation (Cambridge U P 2017)

DOI: 10.1017/9781108163965

The core activity regulated by takeover codes is the voluntary offer by a bidder addressed to all the shareholders of a target company (other than the bidder) to acquire their shares in order to give the bidder control of the company. Around this core transaction, however, takeover codes regulate a range of other transactions. This paper explores four such transactions. Two of them are offers by persons already in control of the company: first, where the offer is made by the controller voluntarily (the ‘consolidating’ offer) and, second, where the offer is required by regulation (the mandatory bid rule). The third transaction is where shares move into the hands of an acquirer, not by reason of a contract between acquirer and shareholders, but by reason of powers conferred by statute. The clearest examples are statutory merger provisions and schemes of arrangement. The fourth transaction is a control shift produced by contract between company and shareholders or investors without any contracting between acquirer and existing shareholders. The example examined in detail is the share buy-back. The purpose of the analysis is to determine the rationale for applying rules formulated for general, voluntary offers to acquire control to these peripheral transactions – either in full or in part. The focus of the analysis is on the UK Takeover Code and the variants of it which have been adopted in various Far East jurisdictions. To some extent the drafters of the UK Code faced the same problems as those in the other jurisdictions and the resulting rules have a high degree of commonality across the codes. However, the dominant shareholder structure of public companies in the other jurisdictions is very different from the dispersed UK pattern. The drafters of the non-UK codes have thus faced difficult issues about how to shape relations between controlling and non-controlling shareholders which the UK code is able to ignore or downplay. Some reference is also made to the law of Delaware, which, whilst not a Code jurisdiction, has an innovative approach to protection of minorities against controlling shareholders.

ISBN: 978-1-107-19527

P Davies, 'Efficiency Arguments for the Collective Representation of Workers' in Alan Bogg, Cathryn Costello, ACL Davies, Jeremias Prassl (ed), The Autonomy of Labour Law (Hart Publishing 2015)

The dominant agency-cost paradigm for the analysis of corporate law is based on the proposition that the welfare of society is best met by rules which minimise the costs of production through the corporate form. This is typically interpreted to mean that the agency costs of shareholders should be minimised, so as to reduce the companys cost of capital. However, it is clear that the agency cost analysis admits of the theoretical possibility that a companys overall costs of production might be minimised even in the presence of sub-optimal rules relating to the cost of capital if those additional capital costs were outweighed by a greater reduction in the costs of contracting for other inputs necessary for the companys productive activities. It has often been asserted that this situation obtains in relation to labour inputs. This essay seeks to establish the basis on which this argument might be formulated, dealing in particular with the proposition that employees can obtain full protection for their exchange relationship through contracting with the company. It then considers what empirical evidence is available about the production costs of companies in systems with high levels of mandatory employee involvement in decision-making. It focuses in particular on the tripartite system of employee representation in Germany board representation, works councils and collective bargaining. Finally, it speculates about the conditions under which high levels of employee involvement might reduce a companys overall costs of production or, by contrast, might increase those costs.

P Davies, 'Resolution of Cross-Border Groups ' in Matthias Haentjens and Bob Wessels (eds), Research Handbook on Crisis Management in the Banking Sector (Edward Elgar 2015)

P Davies, 'Shareholders in the United Kingdom' in Randall Thomas and Jennifer Hill (eds), Research Handbook on Shareholder Power (Edward Elgar 2015)

P Davies, K Hopt, R Nowak and G Van Solinge, 'Boards in Law and Practice: A Cross-Country Analysis in Europe' in Paul Davies, Klaus Hopt, Richard Nowak, Gerard Van Solinge (ed), 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 (ed), 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, EUs 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 Directives 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 managements role in takeovers in all member states, and compare them with the current legal framework. We find that, instead of facilitating the Commissions 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

Book (8)

P Davies, S Worthington and C Hare, Gower Principles of Modern Company Law (11th edn Sweet & Maxwell 2021)

ISBN: 978-0-414-08812-2

P Davies, Introduction to Company Law (3rd edn OUP 2020)

The book analyses the mechanisms through which the law provides an organisational structure for the conduct of business. Given that structure, the book then discusses how the law seeks to reduce the costs of using it, whether these are costs for managers, shareholders as a class, non-controlling shareholders, creditors or employees, identifying the trade-offs involved. This discussion takes in both the Companies Act 2006 and various types of “soft law”, notably the Corporate Governance and Stewardship Codes. This third edition contains two new chapters: one on liability and enforcement and the other on the social function of corporate law. Both are issues that have come to prominence in the aftermath of the financial crisis of 2007 to 2009.

ISBN: 978-0-19-885492-0

R Kraakman, J Armour, P Davies and L Enriques and others, The Anatomy of Corporate Law, (3rd edn OUP 2017)

This book explains in detail how and why the principal European jurisdictions, Japan, Brazil 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: 978-0-19-873963

J Armour, D Awrey, P Davies and L Enriques, Principles of Financial Regulation (OUP 2016)

P Davies and Sarah Worthington, Gower and Davies Principles of Modern Company Law (10th edn Thomson/Sweet & Maxwell 2016)

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

Geoffrey Morse, P Davies, Ian Fletcher and David Milman, Palmer's Limited Liability Partnership Law (2nd edn Sweet & Maxwell 2011)

ISBN: 9781847036360

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

ISBN: 978-0-19-920776-3

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

Internet Publication (7)

P Davies, 'THE UK STEWARDSHIP CODE 2010-2020 From Saving the Company to Saving the Planet?' (2020) European Corporate Governance Institute

The United Kingdom introduced a Stewardship Code in 2010, followed by a slightly revised iteration in 2012 (the “first version” of the SC). It was premised upon the corporate governance advantages of engagement between institutional investors and corporate boards and was designed to redress what were perceived to be the weaknesses in the model of the monitoring board as revealed during the financial crisis. In short, the institutions were to monitor the monitor. The first version was officially branded as ineffective in a government appointed reviews at the end of 2018. It was recommended that the first version should either be abandoned or revised so as to focus more on the results of engagement. Surprisingly, the Financial Reporting Council chose not only to revise the SC in the hope of making it effective within the engagement framework, but also to expand the Code’s concept of stewardship so as to embrace environmental, social and governance matters (including climate change). This “second version” came into effect at the beginning of 2020. The purpose of this paper is to assess the chances of the second version being more successful than the first. It begins by examining the most plausible reasons for the failure of the first version, by reference to the capacity and the incentives of institutional investors to discharge the engagement function which the first version cast upon them. It concludes that the incentives and capacities were weak. Turning to predictions for the second version, it concludes that, in relation to engagement as envisaged in the first version, the second version has not effectively addressed the causes of the weakness of the first version. However, in relation to ESG factors, especially climate change, there are reasons to expect a more positive impact from the second version, mainly because governmental policy has increased the reputational incentives for institutions to exercise stewardship in this area. These reputational incentives may also be supported by changes in investors’ preferences. Overall, the second version may turn out to operate along the same lines as other changes in society rather than as an isolated reform, as with the first version. However, this optimistic prediction is conditional upon the continuance of the governmental policy and social changes which support the second version of the SC.

J Armour, D Awrey, P Davies and J Gordon, 'Principles of Financial Regulation' (2014) SSRN

Abstract: Inadequate regulation of the financial system is widely thought to have contributed to the financial crisis. The purpose of the book is to articulate a framework within which financial regulation can be analysed in a coherent and comprehensive fashion. The books approach is distinctive in several respects. First, it views the subject from a multidisciplinary perspective of economics, finance and law. Second, it takes a holistic approach, starting from the premise that financial regulation is best understood in the context of an appreciation of the entire financial system. Third it is international and comparative in nature, contrasting approaches, in particular in the EU and US. The book focuses on underlying policies and the objectives of regulation, using specific regulatory measures as examples. This allows the reader to compare choices in respect of the same policy issue in different regulatory frameworks. This introductory chapter sets out the motivation for the project and outlines the books analytic framework and contents.

P Bockli, P Davies, E Ferran and G Ferrarini 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 Commissions 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, P Davies, E Ferran and G Ferrarini 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, P Davies, Eilis Ferran and Guido Ferrarini and others, 'The Future of European Company Law' (2012) ECLE

DOI: 10.2139/ssrn.2075034

P Davies, Guido Ferrarini, Klaus Hopt and Alain Pietrancosta, 'Response to the European Commissions Green Paper: The EU Corporate Governance Framework' (2011)

DOI: 10.2139/ssrn.1912548

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 Commissions 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