- Over the last few years I have written about four core inter-linked phrases, which can be summarised as:- too much law; too much complex law; law which is unenforceable; and law which is unenforced. To me, these phrases suggested among other things an absence of common sense in the corporate and commercial legal processes. They could apply to many areas of law; I am concentrating on business law.
- As part of my interest in these and related topics I gave a lecture at UCL Centre for Commercial Law, entitled “Common Sense – the Dark Matter of Business Law”. Research for that paper included a survey of owner/managers of SMEs who produced comments such as:-
“…a director of a small company is far too busy keeping his head above water to worry too much about regulations. I would say that the attitude towards all this is to ignore it, fear it, hope it goes away and hope you won’t be caught doing something you didn’t know was wrong in the first place. I would also say that most directors of small companies run their businesses using common sense and by hard work and a desire to make money, grow the business, employ the people and so on. Regulation is a barrier to this”.
- My paper looked at the “disconnect” between (i) those who decide on the framework of rules and those who draft them, and (ii) the “users” of those rules. I wondered whether common sense could have any part to play in drafting legislation, because if people can’t or don’t (for whatever reason) understand the law, they might ignore it; they might also do the same if it makes no “sense”. I also wondered about issues of legislation being micro-managed, resulting in an enormous piece of domestic legislation of particular concern to me (Companies Act 2006 and its dozens of accompanying statutory instruments).
4. I summarised my ideas follows:-
In respect of SMEs, as well as many other groups, there are far too many rules, most of which are too complex for their constituents to understand without costly assistance;
If laws are going to be passed there should be an acceptance that they will, whenever possible, be clear for their core constituents;
One size generally does not fit all companies/constituents and we should stop trying to draft laws as if it does;
Too often the wrong people appear to have been consulted during the discussion stages of the legislative process, when that process applies to smaller businesses;
Legislators should not try and micro-manage the regulations of every sort of business – some need it more than others;
If those who wish to encourage SMEs, and economic growth through that part of the private sector are serious about doing so, then not only do we need less complex legislation, we need appropriate legislation; and
If a halt to legislation is not possible, appropriate rules need to be introduced; in the case of some SMEs, a Smaller Companies (Companies) Act, about which more ideas to follow
It seems to me that there is a strong case for those teaching company law in its widest sense to become involved in this debate, to shape future regulation by broadening the views of practitioners. I appreciate that some of these issues may not be within the direct scope of undergraduate law courses, but I believe that those teaching company law could assist by finding a way to introduce some of these issues.
It leads on to another area about which there will be more to follow if I can gather any enthusiasm. the breaking down of “ silos” !