Property and contract in contemporary corporate theory

This paper critically evaluates the contractual theories of companies and company law which have risen to prominence in recent years. It argues that history reveals as misguided the attempt to depict public companies as essentially contractual in nature, one of the most striking features of the development in nineteenth century Britain of the first body of (joint stock) company law having been its gradual move away from the principles of agency and contract underlying the law of partnership from which it emerged. Against this backdrop, the paper moves on to explore the ways in which theorists have tried, against the odds, to characterise public Companies as contractual and the reasons for their attempting to do so. While it might be apposite to view many private or closely held companies through the prism of contract, the paper argues, public companies and much of company law itself can only properly be understood when viewed through the prism of financial property. Indeed, it suggests, this is implicitly confirmed by the Company Law Review and (paradoxically) by the recent work of corporate governance specialists and financial economists in the US, with its focus on investor protection and the preservation of financial property's integrity, and its emphasis on the crucial role of (public) regulation in these processes. The paper concludes that these property forms are not merely the objects, but the products of regulation and that this has important implications for our understanding of both company law and corporate governance. In making these arguments, it seeks to cast some light on the nature of intangible property, on the differences between contract-based and property-based rights, on the neo-liberal idea of 'deregulation', and on the unity and scope of company law as a legal category.