ntroduction What kind of corporate law should govern publicly owned companies in emerging markets, including newly privatizing economies? This important question has no ready answer Corporate law, we believe, should have the same principal goal in developed and emerging economies-- succinctly stated, to provide governance rules that maximize the value of corporate enterprises to investors. However, emerging economies cannot simply copy the corporate laws of developed economies. These laws depend upon highlyevolved market, legal, and governmental institutions and cultural norms that often do not exist in emerging economies. Developed country corporate laws also reflect the idiosyncratic history of their country of origin. They are not necessarily efficient at home, let alone when transplanted to foreign soil. Moreover, in many emerging markets, corporate law must serve a second central goal that is less pressing in mature market economies: fostering public confidence in capitalism and in private ownership of large business enterprises Thus, corporate law must be designed substantially from scratch to work within the infrastructure available in an emerging market. Fortunately, this can be politically feasible Precisely because existing institutions( to which the law must adapt )are often weak or missing, one can rethink from first principles what corporate law ought to look like and what related institutions it ought to rely on and promote Beyond producing a new model for emerging markets, the effort to develop corporate law from scratch can expose weaknesses and idiosyncracies in the corporate laws of developed countries. The model can highlight the ways in which these laws did not simply evolve toward efficiency, but instead evolved from historically contingent starting places to ending places shaped by preexisting institutions, by the inertial power of the status quo, and by the preferences of key participants in the corporate enterprise. For example, German corporate law adapted to strong banks and labor unions, while american law adapted to strong capital markets, weak financial institutions, and strong corporate managers In this Article, we sketch the basic elements of a"self-enforcing"model of corporate law, designed for an emerging economy. The model is grounded in a case study: the effort, in which we participated, to develop a new corporate law for Russia. We begin with three We use the term"institution"in a broad sense to include private organizational structures such as stock ading systems and securities registrars; public organizational structures such as securities regulators, courts with experience in commercial matters, an honest police force, and a reliable mail system; and mixed public private structures such as self-regulatory organizations, an accounting profession, and sophisticated financial accounting rules 2 A modified version of our proposed law was adopted in December 1995 as the company law of the Russian Federation. See Federal Law of the Russian Federation on Joint-Stock Companies, No. 208-FZ(1995) published in Rossiiskaya Gazeta, Dec. 29, 1995, at 1, translation available in Westlaw, Rusline Database 1995 WL 798968. An annotated English translation of the law(by Bernard Black and Anna Tarassova) available from Professor black1 We use the term "institution" in a broad sense to include private organizational structures such as stock trading systems and securities registrars; public organizational structures such as securities regulators, courts with experience in commercial matters, an honest police force, and a reliable mail system; and mixed public￾private structures such as self-regulatory organizations, an accounting profession, and sophisticated financial accounting rules. 2 A modified version of our proposed law was adopted in December 1995 as the company law of the Russian Federation. See Federal Law of the Russian Federation on Joint-Stock Companies, No. 208-FZ (1995), published in Rossiiskaya Gazeta, Dec. 29, 1995, at 1, translation available in Westlaw, Rusline Database, 1995 WL 798968. An annotated English translation of the law (by Bernard Black and Anna Tarassova) is available from Professor Black. 1 Introduction What kind of corporate law should govern publicly owned companies in emerging markets, including newly privatizing economies? This important question has no ready answer. Corporate law, we believe, should have the same principal goal in developed and emerging economies -- succinctly stated, to provide governance rules that maximize the value of corporate enterprises to investors. However, emerging economies cannot simply copy the corporate laws of developed economies. These laws depend upon highly evolved market, legal, and governmental institutions and cultural norms that often do not exist in emerging economies.1 Developed country corporate laws also reflect the idiosyncratic history of their country of origin. They are not necessarily efficient at home, let alone when transplanted to foreign soil. Moreover, in many emerging markets, corporate law must serve a second central goal that is less pressing in mature market economies: fostering public confidence in capitalism and in private ownership of large business enterprises. Thus, corporate law must be designed substantially from scratch to work within the infrastructure available in an emerging market. Fortunately, this can be politically feasible. Precisely because existing institutions (to which the law must adapt) are often weak or missing, one can rethink from first principles what corporate law ought to look like and what related institutions it ought to rely on and promote. Beyond producing a new model for emerging markets, the effort to develop corporate law from scratch can expose weaknesses and idiosyncracies in the corporate laws of developed countries. The model can highlight the ways in which these laws did not simply evolve toward efficiency, but instead evolved from historically contingent starting places to ending places shaped by preexisting institutions, by the inertial power of the status quo, and by the preferences of key participants in the corporate enterprise. For example, German corporate law adapted to strong banks and labor unions, while American law adapted to strong capital markets, weak financial institutions, and strong corporate managers. In this Article, we sketch the basic elements of a "self-enforcing" model of corporate law, designed for an emerging economy. The model is grounded in a case study: the effort, in which we participated, to develop a new corporate law for Russia.2 We begin with three