Table of contents Introduction . The National Contexts That Shape Corporate Law A. Corporate Law in Developed Economies B. The Goals of Corporate Law in Emerging Economies 778 C. Legal and Market Controls in Emerging Economies 13 D. Cultural Norms for Manager and Large Shareholder Behavior 15 IL. A Self-Enforcement Approach to Corporate Law A. The Prohibitive model B. The Self-Enforcing Model 18 1. Structural Constraints 19 2. Simple, Bright-Line Rules and Strong Remedies C. The limits to the Self-Enforcement Approach D. Can Law Function Without Official Enforcement? Ill. Governance Structure and Voting rules A. Allocation of decisionmaking power B. Allocation of Voting Power: One Share, One Vote C. Voting for Directors: Cumulative voting D. Voting procedures Universal ballot E. Protecting Honesty and Quality in Voting V. Structural Constraints on Particular Corporate Actions A. Mergers and Other major transactions 1. Shareholder Approval 2. Appraisal Rights 3. Determining Market value B. Self-Interested Transactions C. Control Transactions 45 D. Issuance and Repurchase of Shares 1. Share Issuances 2. Repurchase of Shares E. Protecting Creditors and Preferred Shareholders F The state as part-Owner VI. The Path-Dependent Evolution of Developed Country Corporate Law Conclusion: Self-Enforcing Law in Emerging EconomiesTable of Contents Introduction ......................................................... . 1 I. The National Contexts That Shape Corporate Law .......................... . 7 A. Corporate Law in Developed Economies ........................... . 7 B. The Goals of Corporate Law in Emerging Economies .................. . 8 C. Legal and Market Controls in Emerging Economies .................. . 13 D. Cultural Norms for Manager and Large Shareholder Behavior .......... . 15 II. A Self-Enforcement Approach to Corporate Law .......................... . 16 A. The Prohibitive Model ........................................ . 17 B. The Self-Enforcing Model ..................................... . 18 1. Structural Constraints .................................... . 19 2. Simple, Bright-Line Rules and Strong Remedies ................ . 21 C. The Limits to the Self-Enforcement Approach ...................... . 23 D. Can Law Function Without Official Enforcement? ................... . 26 III. Governance Structure and Voting Rules ................................ . 29 A. Allocation of Decisionmaking Power ............................. . 29 B. Allocation of Voting Power: One Share, One Vote ................... . 31 C. Voting for Directors: Cumulative Voting .......................... . 33 D. Voting Procedures: Universal Ballot .............................. . 35 E. Protecting Honesty and Quality in Voting .......................... . 36 IV. Structural Constraints on Particular Corporate Actions ..................... . 38 A. Mergers and Other Major Transactions ............................ . 38 1. Shareholder Approval .................................... . 39 2. Appraisal Rights ........................................ . 41 3. Determining Market Value ................................ . 42 B. Self-Interested Transactions .................................... . 43 C. Control Transactions ......................................... . 45 D. Issuance and Repurchase of Shares ............................... . 49 1. Share Issuances. ........................................ . 49 2. Repurchase of Shares .................................... . 51 E. Protecting Creditors and Preferred Shareholders ..................... . 52 F. The State as Part-Owner ....................................... . 55 V. Remedies ........................................................ . 55 VI. The Path-Dependent Evolution of Developed Country Corporate Law ......... . 58 Conclusion: Self-Enforcing Law in Emerging Economies ....................... . 61