Hi.My Name is Niklas Arvidsson.I am an associate professor ofthe Faculty of Law at Lund University.My teaching and research mainly focuses oncompany law and commercial contract law.This lecture aims to give you a basic butcritical introduction into company law andits European dimension.First, it is important to realizethat both company and contract law,whatever they are, deal with the phenomenaof huge importance for us all.This is quite easily understood.Society at large isdependent upon markets, andmarket transactions are inessence contractual transactions.So without contracts,there simply is no market.But markets also presuppose the existenceof stuff to be bought and sold.As we all know,this stuff is called goods and services.Without them,there will be no transaction.The reason is, that the very functionof transactions is to create rights andduties over the stuff.But goods and services aren'tgiven by God, not directly anyway.Instead, someone has to invent andproduce them.And this someone is often a company.Why?Because invention andproduction comes at a cost.And this cost often exceedsthe means of a single person.This is especially true of production.A single person might invent something.He might even produce somethingout of his invention.But he will certainly find massproduction very hard to accomplish.Companies are designed toovercome these difficulties.Basically, a company is a legal tool foraccumulating resources, including moneyand people, in order to sell stuff.And as I mentioned, contractsare the legal tool for selling andbuying stuff, of course,all this is extremely simplified,but in essence, it is nevertheless true.In fact, companies are also closelyrelated to contracts in another sense.Generally speaking, a company is a voluntary association formed andorganized to carry on a business.And the fact that companiesare voluntary association,means that they are contractually orsemi-contractually based.Okay.So what does European lawhave to say about companies?Unfortunately, this questioncannot be answered unless wefirst pursue an answerto another question.The question I have in mind is whatit means to speak about company law.An answer to this question is logicallyneeded in order even to understandthe first question, furthermore,our answer has to be universal.Without a universal concept of companylaw, it is impossible to speak ofcompany law across jurisdictions,as I'm certainly trying to do right now.Here we are touching uponreally interesting stuff.To what extent is it reallypossible to communicate legalknowledge across jurisdictions.And the different languagesthat are tied to them.I don't know.One thing is sure though,legal science is completely andradically different from natural sciences.Don't be fooled by those saying otherwise.There are universal descriptivetheories of particle physics, butthere can be no universal descriptivetheories of law, including company law.Having said this,I still think it's possible to elaborate,the minimalist universalconcept of company law.Let me at least try.Roughly speaking, company law is lawspecifically targeted at companies.As we remember, a company isa voluntary association formed andorganized to carry on a business.This definition is large enough tocomprise both companies limited byshares and partnerships.It should be mentioned however,that the word company often is used asa short hand for company limited byshares, also known as corporations.According to this usage,partnerships are not companies at all.But here, I don't use the wordin such a narrow meaning.No doubt, the vast majority of the lawsapplicable to companies are notpart of company law, instead, these lawsare usually members of other areas of law,such as contract law, securities law,tort law or tax law, company law.Well, this law applicable to andonly to companies.Now, a universal concept of companylaw cannot be too content focused.The reason is that thereare huge differences betweendifferent jurisdictions as tohow companies are regulated.One kind of differences concernsavailable company forms.Most company forms are not shared byall jurisdictions on the planet earth.However, some forms are more orless universal,such as the company limited by shares andthe general partnership.The trouble is that within such more orless universal forms, there are stilldifferences as to, to applicable rules.The differences and similarities betweenjurisdictions are discussed withinan international disciplinecalled comparative company law.In view of the pluralism, however,it has become fashionable to shiftfocus from rules to functions.The underlying idea is that rulesaddress extra legal problems andthat different rules canaddress the same problem.Hence, in spite of the fact thatthere are a few universal rules,maybe there are universal functions.And maybe, a universal theory of companylaw could be built upon such functions.The problem here is thatthe word function is ambiguous.Sometimes it is used to describe effects,andsometimes it is used todescribe intended effects.And as we all know, there is no guaranteethat a rule has the intended effect.As a matter of fact,there is no guarantee at all that a ruleis underpinned by any intentions.I am aware that this might sound strange.We are so used to view law instrumentally.That we often have a hard time acceptingthe possibility of purposeless rules.Anyway, the dominating functionalistview of company law is built uponeconomics.The point of departureconsists of the so called agency theory.According to this theory,the problems of any company laware derived from information asymmetriesbetween so-called agents and principals.The reason is, that these asymmetriesgive rise to so-called agency costs.And company law, it is thought,can best be explained as motivated byan endeavour to minimize such costs.In its most general form,the principal is anyone who'sinterests are affected bythe actions of another person.This other person then is an agent.And thus, if A and B are persons andA's decisions influence B's welfare, thenB is A's principal, and A is B's agent.However, in law, agency relationshipspresuppose the existence of direct orindirect legal relationshipsbetween agents and principals.In the context of a company, thereusually are multiple agency relations.For an example, such relations existbetween the company's members.They also exist between,on the one hand members, andon the other hand non-members, who areinvested with decision-making authority.And, they exist between members andother company stakeholders,including the company's creditors.No doubt agency theory hasproven very fruitful inexplaining the fundamentalproblems of company law.But I will not dwell on this theory here,instead, I would like to construct a morerule oriented concept of company law.In spite of the difficulties, I believethat such an account is possible butof course,it has to be sufficiently general incharacter to accommodate very differentcompany forms and company rules.I will however, only speak of companieswith so called legal personality.This means that I'm only interested incompany forms which as a matter of law,can have rights and duties.The core of company lawhas three components.First, there have to be rulesconcerning the decision makingprocedures within a company.This rules organize andregulate the decision makingauthority on behalf of the company.In that way, they construct what is knownas the company's internal relations.Secondly, there had to berules that organized andregulate the representation ofauthority on behalf of the company.These rules concern what is known asthe company's external relations.And thirdly, there have to be rulesregarding the responsibilities forthe company's debts.Rules regarding decision making proceduresare necessary since companies usually havemany members, often they also have otherpersons involved in the decision making,such as directors and officers.Due to this pluralism,there had to be rules that decidewhen a company decision exists.In other words, these rules identifythe conditions under which the decision issubscribed to the company.For example, within a companylimited by shares, the individualshareholders usually have no decisionmaking authority on behalf of the company.Instead, this authority is granted toentities such as the general meeting andthe board of directors.But the rules that help us identifycompany decisions are insufficient.Instead, they had to be complimentedwith another type of rules.These are rules which decide when a givencompany decision is lawful and ornot, from the perspective of company law.Even though the person or entity mighthave decision making authority onbehalf of the company,that authority is not only potent.Instead, it is circumscribedby other rules,these rules limit the decisionmaking authority.And they do so in order to safeguardthe interests of some kind oflegally recognizedstakeholders in the company.Such stakeholders typicallyinclude company members andthe company's creditors.An intensely debated normative questionconcerns, how the relevance stakeholdersshould be conceived, especially inthe context of multinational corporations.This question has a defining character forthe international movement that calls foran enlarged corporatesocial responsibility.This is not the place todiscuss these things further.Let me just say that the issuemight be explained in terms ofso-called externalities.Actions taken by multinationalcorporations no doubt havean enormous societal impact.It seems clear then that the welfareof humankind at large isstrongly affected by corporate actions forgood and evil.