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Company Law
Company law plays a key role in market economies as it establishes guidelines for the internal organization of private companies and for corporate governance. Along with securities legislation, company law tries to protect outside investors and the public by specifying minimum requirements for capital and for the publication of information about the company. It also aims to encourage entrepreneurship by setting limits on the liability of investors. In this sense, it is the bedrock of the commercial system.
It is well established that for-profit enterprise development (e.g., partnerships, corporations, sole proprietorships, etc.) cannot flourish without active governance mechanisms that help assure stability, predictability, and transparency in the rules that govern how firms are created and operate in the market. If for example, the rights of shareholders are not defined, or enforced, can a market-based privatization on a national scale succeed? Experience in the region with various experiments in privatization is mixed, and a debate continues on what worked and what did not. In one sense, this is a classic "chicken or the egg" argument, where the need for sound governance mechanisms arises (in theory) after privatization, yet privatization itself requires a mechanism through which to operate. Did the existence, or non-existence, of sound corporate governance mechanisms in some countries help, or hinder, the transformation to the market?
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