Company Law as an Instrument of Inclusion: Re-regulating Stakeholder Relations in the Context of Takeovers

Abstract

This paper considers a number of potential justifications for regulatory intervention aimed at overcoming 'contractual failure' in stakeholder relations. Two distinct functions of stakeholding are identified, in terms of 'contract' and 'innovation' respectively. These conceptions are linked to two distinct approaches to the regulation of stakeholder relations, one based on 'rights' and the other on 'cooperation'. The implications of an innovation based approach for reform of the law relating to hostile takeovers in the UK are considered. The paper concludes by suggesting that the effectiveness of regulation will depend on the capacity of legal rules and procedures to promote cooperation within stakeholder relations, in particular by generating markets for information.