UK Company Law Review

I am starting to dig into this massive piece of legislative rearrangement or radical company law review. I have printed out what is available online from the Company Law Steering Group and ordered its Final Report, along with obtaining several articles and books. Reading through Jonathan Rickford's summary of the history and events leading up to the said overhaul of UK Company Law, I am almost scared of reading on. I cannot help but wonder if the parties in question have bitten off more than they can chew. In reading various sources and reference material, the prelude to this initiative is to a certain extent based on “political sales pitching”. This was one of the major initiatives which the Labour Government wanted to introduce and move the UK business environment into the new millennium. It was stated that the state of UK company law had become such a legal minefield that it was impossible to steer through, it had been updated with temporary fixes and undeveloped band-aids at regular intervals, making it an incomprehensible mess of legal instruments, where some had relevance and meaning, while others had remained in there for the sake of legal conservatism, without legal effect or purpose.

A review of outdated, irrelevant, incoherent, prehistoric legal text is both necessary from time to time and in good order if proceeded with care, with competent reviewers, prominent experts for consultation and generally a responsible approach to such updating. Upon reading the introductory sections to the company law review and the aim of Mrs. Margaret Beckett in March 1998 to create “a modern law for a modern world” I do however start to wonder. The emphasis of the Labour Government from 1997, coupled with the statements of the said Secretary of State for Trade and Industry and the emphasis of finishing the review before the 2001 elections, gives me a bitter political aftertaste. Not to mention the position which “Corporate Governance” has taken as a political lapdog, in election campaigns for parties throughout Northern Europe. True, political support is required for getting legislative and regulatory change across and the preceding Conservative Government had not shown great interest in the subject, but the Labour focus takes it one step too far from my perspective. The Government seemed to aim at turning company law upside down, shaking out all old idiosyncrasies and leftover legal cobweb, through its “radical review” and present a new, clear, streamlined, cost efficient company law system. This is an excellent election promise, a comprehensible company law environment to further enhance the UK business environment, where the average entrepreneur, manager and director could get a good sense of the law and navigate through it himself, in a much easier manner. I am not, as an advocate, making a case for legal fees and the necessity of professional legal advice in business, what I am however saying is that such super-sounding political promises, can in turn be legal nightmare to implement.

Legal systems, particularly common law systems develop and mature over time, adding depth, provisions, resources, means and implementations as the years, decades and centuries go by. The fact that Victorian text remained in such pieces of legislation does not have to be a sign of outdating, rather of clever legal thinking centuries ago. The law most however develop continuously. Most preferably are such additions and enhancements are contributed by the participants within that particular area of law, in this case the market. By deciding one day, to turn everything upside down, radically cut out old weed and perplexing provisions, install new and clearer wording, may not lead to the result hoped for. Trimming company law provisions is not like trimming an overgrown, weed-infested garden. Company law develops over time, it is based on trust and stability, which are some of the key components for a successful business environment. It is an intricate system, with interrelated and supplementing provisions, which must only be tampered with carefully, with utmost knowledge and last but not least with considerable time. These immature thoughts of mine are in no way intended to reflect poorly on the fine experts of the Steering Group and the numerous prominent experts that contributed to the work, but regardless of how elite a group is given this responsibility, to rewrite such an extensive and delicate area of law, must be next to impossible to be done comprehensively and in a fully functional manner by a group of experts and within the time span of 3 to 6 years.

Although I am just starting out researching this Review, I did come across an excellent article by prof. Eilís Ferran in the Rabels Zeitschrift, volume 69, 4th issue, which gives a progess report on the reform and touches upon this subject and the fact that now almost 8 years later, this entire transformation seems to have failed to materialise, at least to the extent promised in the beginning. At any rate significant developments need to see the light of day within the next few months. Perhaps this is an area of law where you must choose your battles, use what already exists, has proven to work and update within that context. Issues of Corporate Governance should not be political merchandise as seems to be the case.

These are my initial and undeveloped thoughts on this subject, which I am certain will change as I read through the material. Perhaps the conservative nature is built into advocates, but at the outset of this part of my project, I am at best sceptical of the initial intentions.