3CL/CPLC Webinar: 'Company Law – An Entity Theory'

Speaker: Professor Eva Micheler (LSE)

This presentation advances an entity theory of company law. It builds on the insight that organisations or firms are autonomous actors in their own right. They are more than the sum of the contributions of their participants. They also act independently of the views and interests of their participants. This occurs because human beings change their behaviour when they act as members of a group or an organisation. In a group we tend to develop and conform to a shared standard. When we act in organisations routines and procedures form and a culture emerges. These over time take on a life of their own affecting the behaviour of the participants. Participants can themselves affect organisational behaviour and modify routines, procedures and culture but this takes time and effort.

Organisations are a social phenomenon outside of company law. Company law finds this phenomenon and provides it with a legal structure. It makes available legal personality and a procedural framework facilitating corporate decision making and corporate acting. Company law evolves with a view to supporting autonomous action through organisations.

It will be shown in this paper that a framework that conceives companies as vehicles for autonomous organisational entities that are characterised by their routines, procedures and culture explains the law as it stands at a positive level. The framework also helps to formulate normative recommendations guiding law reform and judicial decision making.

An entity approach is sometimes associated with a normative argument advocating for more influence for stakeholders such as employees. This paper does not take a position on the normative question whether stakeholders should have more influence than they currently have. The thesis of this paper holds irrespective of how the law fine-tunes the influence over corporate decision making.

Eva Micheler studied law at the University of Vienna and at the University of Oxford before joining the LSE Law Department in 2001. She is an Associate Professor in Law at the London School of Economics and an ausserordentlicher Universitätsprofessor at the University of Economics in Vienna, where she took Habilitation in 2003. Professor Micheler is also on the management committee of the Systemic Risk Centre at LSE. She was a TMR fellow at the Faculty of Law of the University of Oxford and teaches regularly at Bucerius Law School in Hamburg.

For meeting details, contact privatelaw@law.cam.ac.uk