The Role of Interjurisdictional Competition in Shaping Canadian Corporate Law

Abstract

While competitive corporate law production has been well documented in the United States, there is a comparative dearth of Canadian evidence. This article addresses the question of whether the competitive model of corporate law production has operated, or could operate, in Canada. To this end, both the supply side and the demand side of the Canadian incorporation market are critically examined. The theory and empirical evidence indicate that institutional barriers have limited the extent of competitive corporate law production. The Uniformity Hypothesis, which postulates a legislative maximand of uniformity of provincial laws and not revenues derived from incorporation business, is advanced as a more compelling account of the observed pattern of Canadian corporate law reform. The evidence is consistent with related research indicating that jurisdiction shopping for corporate charters has not always resulted in gains for shareholders of Canadian corporations.

JEL Classification: K00, K22, G38