Abstract
By making comparison among cases from the Unites States (“US”), the European Union (“EU”) and Taiwan, this paper looks into how jurisdictional competition contributed to the reduction or abolishment of minimum capital requirements. Examining the evolutionary processes of minimum capital requirements in American, European and Taiwanese company law provides us the opportunity to scrutinize the O’Hara-Ribstein law market theory in the international context and, more importantly, to have a general and fresh look at the interaction between jurisdictional competition and legal restrictions. Specifically, this paper analyzes how the ability to choose the jurisdiction of incorporation has posed a competitive threat to local legislators. This paper continues to explain how the following jurisdictional competition affected company law reforms, particularly the reduction or abolition of minimum capital requirements. This paper asserts that the pressure of jurisdictional competition drove the US, EU and Taiwan toward the liberalization of minimum capital requirements. Above all, the case of Taiwan demonstrates that such an international organization as the World Bank through annually publishing “Doing Business” surveys since 2003 have been promoting international jurisdictional competition. This jurisdictional competition arguably compelled Taiwan to abolish the statutory minimum capital in 2009. The findings in this paper have three significant implications. First, jurisdictional competition has long been at work both across states or nations and in different times. Second, by explicating how jurisdictional competition leads to the liberalization of minimum capital requirements, this paper demonstrates that while there are in appearance some differences, similar law market dynamics exists in the jurisdictional competition, no matter under federalism, such as the US or EU federal system, or in the international setting, such as Taiwan's case. Finally, by echoing the argument made by O’Hara and Ribstein that jurisdictional competition provides a significant check on governments, this paper argues that jurisdictional competition also acts as a restraint on the sort of jurisdiction that overlooks business demands for legal flexibility