Regulating Corporate Behaviour – The Paradigm of Regulatory Capitalism and Looking Forward

Inaugural Lecture

Speaker: Professor Iris Chiu (Faculty of Laws, UCL)
Chair: Professor Alan Neal (Professor of Law in the University of Warwick and an Employment Judge in the London Central office of the Employment Tribunals)
Series: Current Legal Problems 2017-18

About the lecture:

The regulation of corporate behaviour has persisted in spite of peaks of neo-liberalism in many developed jurisdictions of the world, including the UK. This paradox is described as ‘regulatory capitalism’ by a number of scholars. Although caricatured as a burden-imposing and costly exercise, the paper clarifies that regulatory capitalism in the UK, in its three key tenets applicable to corporate regulation, reflects, and is not antagonistic to, the spirit of the liberal market economy embraced in the UK. These tenets of regulatory capitalism in the UK have however over time, exposed gaps in relation to the social expectations of regulation of corporate behaviour.

These gaps have become the subject of debates in the realm of ‘corporate social responsibility’, where business, civil society and state frame the expectations of corporate behaviour in contested aspects such as in relation to scope, motivations, theoretical and practical premises. In the aftermath of the global financial crisis 2007-9, we observe increasing legalisation of CSR issues. These take the form of clarifying the delineation of corporate responsibility and liability and usually involves enhanced scrutiny of corporations by markets, regulators and stakeholders.

This paper argues that such legalisation is attributed to political disruptions that reflect underlying instability in social contentment and the persistence of critical CSR. Politicians have become more willing to introduce shifts in the equilibria of government-business relationships in light of perceived instability to their power in democratic polities. Is such legalisation a reflection of the ‘same-old’ regulatory capitalism, or indicative of ideological and policy changes?

The paper critically discusses the nature and characteristics in the legalisation achieved in: the EU Non-financial Disclosure Directive 2015 transposed in the UK Companies Act, the introduction of corporate obligations in the Modern Slavery Act 2015 and Criminal Finances Act 2017, and the enforcement of the Bribery Act 2010 which we regard as an achievement of legalisation that traverses pre and post-crisis sentiment.

Learning outcomes:

• A critical and high level perspective on the nature and trajectory of corporate regulation through the lens of regulatory capitalism.
• Specific critical discussion of the theoretical nature of modern post-crisis corporate regulation and whether such may represent change in regulatory ideology and approach.

About the speaker:

Iris H-Y Chiu is Professor of Corporate Law and Financial Regulation at University College London. She previously held academic appointments at King’s College London and University of Leicester, and was a legislative draftsman at the Attorney-General’s Chambers, Singapore prior to joining academia. She is co-Director of the Centre for Ethics and Law, and has published numerous articles and books on theoretical perspectives in financial regulation, corporate law and governance with Oxford University Press, Hart Publishing, Routledge and Edward Elgar.