Professor Paul Davies delivers EW Barker Centre for Law & Business Distinguished Visitor in Commercial Law Lecture

On Monday 30 January 2023, Professor Paul Davies KC, FBA, Professor of Corporate Law Emeritus, University of Oxford delivered the EW Barker Centre for Law & Business Distinguished Visitor in Commercial Law Lecture titled “The Functions of Corporate Law in the 21^st Century” at the NUS Bukit Timah Campus. The lecture was moderated by Professor Tan Cheng Han.

The lecture discussed the functions of corporate law over two broad periods. The first period was the 1970s to the Global Financial Crisis and the second period referred to the time since the Global Financial Crisis. In the first period, the focus of company law was on the internal relations of the company. The dominant law and economics approach characterized the role of company law as reducing the costs of carrying on business through the corporate form for the purposes of operational efficiency and social welfare. Agency theory was central to this approach to frame the problem of agency costs which applied to all voluntary relations with the company as well as techniques to address these issues.

The second period shifted to a focus on the impact of corporate behaviour on those outside the company as a result of the Global Financial Crisis and the growing awareness of human rights and climate change issues. In the first period, corporate analysis spent little time on the issue of negative externalities which was generally regarded as something addressed by areas of law other than company law. However, the question now was whether the response to externalities should be through state regulation or a broader reach of company law.

Professor Davies argued that the state has a competitive advantage in regulating companies as well as better capacity and political legitimacy to govern consumers. He opposed the shifting of the burden of managing externalities from the state to the company, although he proposed that corporate law could be used to nudge companies. In this regard, he cited the example of the proposed EU Corporate Sustainability Due Diligence Directive and the 2021 Hague District Court case of Milieudefensie v Royal Dutch Shell. The particular issue of director supervision of delegated tasks and breaches arising in the course of supervision as well as the expected extra-EU impact of the external dimension of European companies’ policy options with regard to global supply chains was also discussed.

In summary, Professor Davies stated that he was far from convinced that regulation was not the best way to address externalities, the benefits of focusing on the internal relations of the company still remain relevant and company law could be used in support of, but not in substitution of regulation.

(From left) Associate Professor Wee Meng Seng (NUS Law), Professor Tan Cheng Han, S.C. (NUS Law), Professor Paul Davies (University of Oxford) and Professor Tjio Hans (NUS Law)

Almost full house for the lecture at the Wee Chong Jin Moot Court

Professor Tan Cheng Han, S.C., moderating a candid Q&A

Professor Tjio Hans posing a question

ABOUT PROFESSOR PAUL DAVIES, KC, FBA

Professor Paul Davies is currently a Senior Research Fellow at the Commercial Law Centre, Harris Manchester College, University of Oxford. He was the Allen & Overy Professor of Corporate Law, University of Oxford, from 2009-2014; Cassel Professor of Commercial Law at the London School of Economics and Political Science, 1998-2009; and, before that, Professor of the Law of the Enterprise, University of Oxford. He was elected a Fellow of the British Academy in 2000; appointed an honorary Queen’s Counsel in 2006 and elected an honorary Bencher of Gray’s Inn in 2007.

His main interests are in labour law, corporate law and banking law. He is an editor of Gower’s Principles of Modern Company Law; an author of The Anatomy of Corporate Law and of Principles of Financial Regulation; and Introduction to Company Law. He also contributes to Palmer’s Company Law.

He was a member of the Steering Group whose reports led to the Companies Act 2006 (UK). He carried out a review for the UK Treasury which led to a reform in 2010 of the law on the liability of issuers for inaccurate statements to the market.

He is a Fellow and Research Member of the European Corporate Governance Institute (ecgi.global) and is an active member of the European Company Law Experts Group.