D. D. PRENTICE
As regards the content of a course on company law, let us accept for the sake of argument that at a broad level the subject matter is a particular type of business form organized for the pooling of capital under centralized control. In the case of the public company this produces a degree of specialization--the function of providing capital being separated from the function of managing the capital on behalf of its owners. This split is not present in the case of a private company where there is identity between capital provider and managers; in other words, there is an identity between the risk bearers and the risk takers.1 But even in this situation the company provides a collective mechanism for conducting business. While this affords a general guide as to what is the subject matter of the course, even this is problematical because it does not furnish an answer as to whether partnership, specialist companies (e.g. insurance companies), or co-operatives fall within its remit. There is no compelling reason why they should as an a priori matter be excluded. But if we assume that the motif around which the course is organized is the centralized control of economic resources, the starting point can be entities registered under the Companies Act 1985. The more general point about this orientation is that it accepts (what seems to me to be a profound insight to the obvious) that company law is about capitalism. With this as background, there are a number of general observations that one can make on the teaching of company law.
It is my impression that Company Law courses in general tend to concentrate on the pathology of the subject, that is, situations where there has been a departure from the norms that regulate the system. It is almost as if companies were set up so that they could enter into ultra vires transactions, directors could breach their duties and minority shareholders could be oppressed. This has at least two shortcomings. First, it concentrates on the pathology as manifested in the reported cases and this in many ways is a somewhat arbitrary sample. Arguably the most frequent breach of the Companies Act 1985 is a failure to comply with the reporting provisions of the Act, yet the philosophy of disclosure does not figure in many Company Law courses to any great extent. And when it does, it deals more with the mechanics of disclosures rather than with the general policy justifications for mandated, uniform disclosure. The second problem is more serious. The concentration on corporate deviancy results in a failure to bring out the facilitative aspects of company law, that is, that it is designed to make available (cheaply and with minimum barriers to accessibility) a particular type of economic organization. It may be that Company Law's concentration on the pathology of the subject merely reflects the way in which many courses at undergraduate level are taught. The 'case' is the major intellectual building block in many undergraduate law courses and this inevitably results in courses concentrating on situations where something has gone awry. But whatever the reason, the result is unfortunate.
This is to some extent a variation on what was said in the previous section. Company Law, arguably more than most subjects, is very much an 'iceberg subject' in the sense that many of its problems are known to those in practice but they do not have visibility outside the world of practice. This has two aspects. The first is doctrinal and that is a failure to address many issues of legal significance simply because they lack visibility. This in itself may not be particularly serious since there is no compelling reason why a university course in law should mimic the concerns of practice. But ignorance is scarcely a sound basis on which to structure a course. The second aspect of the problem is more serious and that is an absence of conveniently available information relating to the context in which company law operates. For example, it is now a commonplace observation that the holding of shares in publicly listed companies is being more and more concentrated in the hands of institutional investors2 and this has obvious implications for the debate on corporate governance. But there are aspects of this on which we lack information which would enable us to evaluate the impact of institutional investment. For example: (i) do the various categories of institutional investor (pension fund, insurance company, unit trust, or____________________