Why do Shareholder Derivative Suits Remain Rare in Continental Europe?

On the Foundations of Corporate Social Responsibility

“…In addition, countries under different legal regimes manage conflicts between firms, their suppliers, and their customers differently. Countries with a common law origin rely to a greater degree on ex post settling up through judicial mechanisms, whereas civil law countries rely more heavily on rules‐based mechanisms that restrict behavior ex ante (Enriques (), Cheffins and Black (), La Porta, López‐de‐Silanes, and Shleifer (), Issacharoff and Miller (), Cox and Thomas (2009), Gelter ()). The different balance between rules and discretion in corporate decision making in civil versus common law countries is likely driven by supply‐ and demand‐side considerations, which lead to predictions about differences in CSR activity across legal regimes.…”

“…In common law countries, CSR adoption is determined largely by corporate discretion, whereas in civil law countries, CSR adoption is determined by rules, which can be either explicit (such as laws and regulations) or implicit (such as societal preferences). For example, in civil law countries where the risk of shareholder litigation against management or directors is lower, firms have more freedom to engage in CSR activities (which are often beyond regulation) (Enriques (), Cheffins and Black (), La Porta, López‐de‐Silanes, and Shleifer (), Issacharoff and Miller (), Cox and Thomas (2009), Gelter ()). Similarly, when a firm's decision‐making process is ex ante insulated from the short‐term pressures of shareholders (for example, through the presence of a supermajority vote requirement in the corporate charter or bylaws), the firm will be more willing to engage in CSR activities, which are often more long‐term oriented in nature (Cremers and Sepe ()).…”

“…When the risk of shareholder litigation is low, firms are more willing to engage in CSR activities that often go beyond what is required by law, and common law countries tend to utilize ex post shareholder litigation mechanisms to a greater extent to empower shareholders to sue corporate directors (La Porta et al. (), Issacharoff and Miller (), Cox and Thomas (2009), Gelter ()). Similarly, we investigate whether the level of CSR is higher when a firm's decision‐making process is ex ante insulated from the pressures of its (different types of) shareholders through the presence of a supermajority vote requirement in its corporate charter or bylaws, which is more prevalent under civil law systems (Hopt (), Cheffins and Black ()).…”

The Costs of Separation: Friction Between Company and Insolvency Law in the Single Market

“…In some jurisdictions, for example France, enforcement takes place largely through criminal litigation, on which shareholder may 'piggyback'. 191 The French regulatory regime constraining managerial decision-making would not be complete if the criminal sanctions, and the institutional apparatus used to enforce them, were disregarded. This part of the regulatory architecture, of course, will not be 'imported' where the lex fori refers to French law as lex causae and the criminal act has been committed within the territory of the lex fori.…”

Friends with Benefits?!

“…Standing for shareholders (and holders of depository receipts) is, however, more restricted, given the threshold of 10%, which is meant to impede an abundance of claims 205 and which especially hits private companies. The rather unrestricted possibility for employees' unions and for contractual modulation of standing are particularly proof of the accommodating character of Dutch company law as regards claims against board decisions.…”