Passports, Private Choice, and Private Interests: Regulatory Competition and Cooperation in Corporate, Securities, and Bankruptcy Law

In this article, I discuss regulatory competition in the related areas of corporate, securities, and bankruptcy law. As all of these areas address firms' relations with investors, they share an affinity that offers a natural focus of inquiry. I contrast two different forms that regulatory competition may take. The first is private choice, or what I call "direct competition." In this arrangement, firms are free to elect the regulatory regime that will govern their affairs, regardless of the location of a firm's assets, personnel, registered office, or transactions.

The paradigmatic example is corporate charter competition among US states. The second form of competition I refer to as the "regulatory passport" arrangement, which has also been variously described as "mutual recognition" and "reciprocity." In this scenario, states agree to recognize the extraterritorial reach of firms' home country regulatory regimes, forswearing territorial regulation by host countries. [CONT]