Which country wrote the first company law

43 Competition in company law as a new element of internal market integration Christoph Teichmann In his company law textbook from 1980, which is still well worth reading, Herbert Wiedemann writes: “The principle of competition is not an appropriate standard for the legislator.” 1 Stefan Grundmann, who twenty-four years later is just as readable Book on European company law, sees it differently. In his opinion, competition among legislators is not only sensible, but also “required under EC constitutional law” .2 Within a little more than two decades, the condemnation of legislative competition became its canonization, so to speak. The background to this is well known: it begins in 1897 in the tranquil US state of New Jersey and ends in 2003 in the equally tranquil Luxembourg before the European Court of Justice.3 The lessons of this development are traced in the first part, before the second part of the question It is a question of whether such a development is actually required under EU constitutional law or is just one of many conceivable forms of internal market integration. Insofar as the legislators generally support the emergence of competition, the third part contains conceptual considerations about the framework conditions this competition requires in the European internal market. A. Background to US and European law In the United States of America, New Jersey was the first state to transition from a state concession system to a liberal founding system in 1894.4 This liberalization was such a success that the governor gave few of his fellow citizens Years later announced that they were no longer needed to finance the state budget. The necessary government revenues could be covered in full with fees and taxes from the registration of companies. In 1913, however, New Jersey gambled away with 1 Wiedemann, Company Law Volume I: Basics, 1980, p. 783. 2 Grundmann, European Company Law, 2004, § 5 Rn. 158. 3 With the decision of 30.9.2003, case C- 167/01, Inspire Art, Coll. 2003, I-10155. 4 For the historical development of the US American competition for the best company law described here, see the descriptive description of Papmehl, ZVglRWiss 101 (2002), 200 ff. The small neighboring state of Delaware did not miss this historic opportunity. In the same year he took over the lead in the number of newly registered companies and holds this top position to this day.5 The attractiveness of the state of Delaware was for a long time attributed to its particularly liberal company law. The freedom for management has been expanded and shareholders' rights have been reduced. The fact that many other states followed suit in order not to lose their companies to Delaware prompted William Cary of Columbia University in 1974 to criticize the well-known criticism that a “race to the bottom” was taking place.6 Loosely translated: Company law is getting worse and worse . Because it reveals its real purpose, which, especially in the public company, is to protect the shareholders against potential abuse of power by the managers. - Far from it, answers Ralph Winter from Yale three years later.7 He sees the liberation of management as a downright fountain of youth for companies. Because a company management freed from all ties can devote itself to its actual task, making money. The shareholders will also benefit from this. Even if management can save a few breadcrumbs for itself, that is still better than a manager who does not make any profits because, due to sheer shareholder rights, he no longer has his head free for the business decisions that are his job. If Cary were right, Winter said, the stock exchange would give a Delaware corporation bad marks. In fact, there are no indications that the Delaware registration would have a negative impact on the stock market price. On the other hand, Winter's theses do not yet plausibly explain why Delaware in particular took the lead on a permanent basis. Many other states have followed suit and have also liberalized their corporate law. Even so, of the largest publicly traded companies, about half are and remain in Delaware. Roberta Romano was the first to provide a plausible explanation for this: 8 She found that Delaware is only very rarely chosen for start-ups. The far more common case is the relocation of the registered office of existing companies. It is not uncommon for this to be associated with the preparation of corporate transactions that are legally complex and prone to conflict. What is particularly appreciated about Delaware is apparently the outstanding system of administration of justice. A small 5 See von Hein, The Reception US-American Corporate Law in Germany, 2008, p. 476 ff. With further references; see also the official website of the State of Delaware: Delaware‘s Legal System Ranked # 1 in Nation for Fourth Consecutive Year,