Relevance of long-term interests in the decision-making processes of company directors in the UK, Delaware and Germany: a critical evaluation
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Date
2016-06-30Author
Chałaczkiewicz-Ładna, Katarzyna
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This thesis explores the extent to which the law in the UK, Delaware and Germany imposes
an obligation on directors of solvent public companies to take into account the long-term
consequences of their decisions while establishing the content and scope of long-termism in
these three legal systems. It adopts a comparative methodology with the aim of determining
whether the approaches taken in the chosen jurisdictions regarding both the parameters of
long-termism and its legal sources and forms are radically different or very similar. It is also
scrutinised here if it can be stated with any certainty that the approach taken in any particular
jurisdiction regarding long-termism is ‘better’ for the protection of a company’s interests.
This thesis makes four original contributions. Firstly, it conducts a comprehensive,
comparative study on the relevance of long-term considerations. The concept of long-termism
is analysed in the contexts of current legislation, case law, soft law, academic
literature, and incentives that encourage long-termism decision-making. Secondly, hard law
in the UK, Delaware and Germany does not currently offer much guidance regarding the
content and scope of long-termism. A key original contribution made by this research draws
on the academic literature and performs a gap-filling exercise by identifying examples of
long-term decision-making in these jurisdictions, as well as examples of decision-making
and conduct that is not long-term in nature. In the gap-filling exercise, case studies are
presented in the context of (i) the contemporary shareholder v. stakeholder debate in
corporate governance scholarship and (ii) the relevance of the share ownership structure of
the company. These two important debates are used as variables to cast light on the ambit of
the notion of long-termism, and the structural differences and similarities between the
corporate governance systems and concepts of long-termism in the UK, Delaware and
Germany. Thirdly, this thesis identifies specific and concrete factual examples of the
incentives that the legal systems in the UK, Delaware and Germany do or could provide to
encourage long-term managerial decision-making. Finally, it will make a positive
contribution to the ongoing ‘convergence v. divergence’ debate, as the thesis has the scope to
offer insights into whether the law on the duties of directors is converging in different legal
systems particularly in the specific context of what is meant by long-term decision-making
by such directors.