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Introduction

Harmonisation is a process that is commonly associated with the European Union's (EU) efforts to provide an environment in which its aim of achieving the free movement of goods and services and a single market can be achieved (Nobes, 1990; Paisey, 1991; Smit and Herzog, 1990; Van Hulle, 1992). Harmonisation has been defined as a process of increasing the compatibility of practices by setting bounds on their degree of variation (Nobes, 1990). Importantly, harmonisation is not the same as standardisation or uniformity (Roberts , 2002). Thus, harmonisation implies a reduction in the scale of differences to the extent that there is a broad similarity between systems, but nonetheless some differences may remain. This definition is crucial and its implications will be addressed later in this paper.

Discussion

Several benefits are claimed for harmonisation in the business field. Given the global nature of trade and commerce, firms are required to engage worldwide and it is in their interests that there is some commonality in underlying business systems (Nobes and Parker, 2002). International investment analysts, investors and business analysts will be assisted if there is a broad comparability between systems (Roberts , 2002). Other users of business information, such as governments, quasi-governmental bodies and trade unions will also be aided in their decision-making if they can broadly understand systems in different countries (Nobes, 1990). Within the EU, the Treaty of Rome (1957) envisaged a common market and established the free movement of persons, capital, goods and services (Paisey, 1991). This concept was extended with the passing of the Single European Act in 1986 which sets the aim of removing all barriers between states, whether physical, technical or fiscal, and the resultant single market was in place by 1992 (Roberts , 2002). Harmonisation is seen as crucial to this process since a truly single market cannot be achieved if significant underlying differences remain between member states that would act as barriers to trade (Nobes and Parker, 2002).

The aim of this paper is to consider whether UK legal history can offer any insight into the process of harmonisation. First, approaches to company law in the United Kingdom and the remainder of the EU are outlined in order to identify key differences and to explain why harmonisation is desired. Secondly, the UK position is considered and historical attempts to lessen legal differences between Scots and English mercantile laws are examined, focusing on attempts to harmonise. Finally, by reflecting on the UK experience, implications for the EU company law harmonisation programme are drawn.

Approaches to company law in the EU

The United Kingdom

The earliest companies in the United Kingdom tended to be set-up for specific ventures and began to be formed in significant numbers in the 18th century. One notorious example is the South Seas Company, described as “a company calculated for scheming rather than trading” by an unknown pamphleteer cited in Schmitthoff (1987, p. 1009). Indeed, such was parliament's disquiet at the prevalence of fraudulent corporate ventures that it passed the so-called Bubble Act of 1720 which prohibited ...