The background:
The Republic of Gualda is a small country, which has recently experienced very quick economic development as a result of substantial oil reserves being found in its territory. Oil profits have been intelligently managed by Gualda’s sovereign fund, and have soon led to the development of a significant and growing industry in many fields: technology, entertainment, transportation, tourism, food, engineering, finance, insurance etc.
The Republic, however, wants to take its business sector to the next level, in order to become the leading business regional power. The idea is to attract foreign investment in order for Gualdan companies to finance their global expansion and, at the same, to attract the most talented managers (both national and international) who will provide the necessary leadership to Gualdan business.
The problem:
It is believed by the Gualdan government that “good law” might be one of the factors contributing to attract foreign investment. However, having traditionally been a rather small economy based on agriculture, the Republic now faces an enormous challenge: it needs to build a sophisticated corporate law regime, which is able to tackle the kind of problems historically confronted by major commercial jurisdictions as the US, the UK or Germany. Notably, the system must guarantee that managers or controlling shareholders in Gualdan companies will not expropriate shareholders’ investments. At present, the Gualdan business community is equally divided between companies with and without a controlling shareholder. In addition to this, Gualdan law must provide a framework that makes it possible to offer sufficient incentives to attract and motivate managers.
Your task:
As a prominent and experienced member of the global corporate law community, you are commissioned by the government of Gualda to provide guidelines for the new corporate regulation to be passed by the end of 2013. You are expected to examine the different corporate law strategies that have been rehearsed throughout the world and explain and justify which of those strategies -or combination of strategies- should, in your view, be incorporated to the Gualdan Corporate Law system, and on what terms. The government expects not only an analysis of what strategies might be theoretically preferable, but also, if necessary, an explanation of what extra-legal factors might be important to promote those strategies’ effectiveness.
The memorandum must not exceed 3.000 words.