Self-dealing: racing away from the top
The law of self-dealing has often been approached from a comparative perspective by reference to the notion of “efficient corporate law”, and, with a normative stance, the notion of “the most efficient corporate law”. However, both a theoretical and empirical analysis of self-dealing law show that the notion of the “one efficient duty of loyalty” is ill-conceived. Different approaches to self-dealing will trigger different type of costs, whose magnitude is itself dependent on the considered judicial system, the characteristics of the market for securities, as well as cultural differences. Path-dependency seems therefore unescapable. This is especially true when solutions are framed in terms of authorisation vs fairness test, a contrast found in applicable rules in the UK vs the US. However, practice shows that rules in these jurisdictions are often set and replaced by a cleansing procedure of authorisation at the board level. This practice, that incidentally converges with requirements existing in civil law jurisdictions, may not be understood as the triumph of “the most efficient corporate law” but rather as an illustration of an evolution in the role of the board across jurisdictions.
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