publication . Preprint . Part of book or chapter of book . Article . 2006

Legal capital: an outdated concept

John Armour;
Open Access
  • Published: 01 Mar 2006
  • Country: United Kingdom
This paper reviews the case for and against mandatory legal capital rules in European corporate codes. It is argued that legal capital is no longer an appropriate means of safeguarding creditors' interests. This is most clearly the case as regards mandatory rules. Moreover, it is suggested that even an 'opt in' (or default) legal capital regime is unlikely to be a useful mechanism. However, the advent of regulatory arbitrage in European corporate law will provide a way of gathering information regarding investors' preferences in relation to such rules. Those creditor protection rules that do not further the interests of adjusting creditors will become subject to...
free text keywords: Corporate Law, Creditor Protection, Legal Capital, Regulatory Competition, Political Science and International Relations, Business and International Management, Law, jel:G32, jel:G38, jel:K12, jel:K22, Corporate law, Opt-in email, Arbitrage, Regulatory competition, Economics, Legal capital, Creditor, Accounting, business.industry, business, Legislature, European Union law
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