European company law, i.e., all European Community statutes dealing with company law, has in the past been discussed from three different angles.

It has firstly been regarded as falling within the auspices of the fundamental freedoms guaranteed by the EC Treaty, especially the freedom of establishment, by examining whether the national company law system is compatible with the provisions laid down in primary law. An example of this perspective is the passionate discussion on the questions whether and by what means the EC Treaty directly enables companies to transfer their seat within the European Union to another Member State and to what extent the involved Member States' international company law must take this European right of establishment into consideration. In his 1990 Ernst Rabel Memorial Lecture Wulf-Henning Roth related to his audience the pros and cons. Another example of the submission of national private law under the provisions of the EC Treaty is the question raised by Steindorff whether the national law-making authorities may set standards for shareholder and creditor protection that exceed the standards set by the EC harmonization directives. This field of academic examination of European company law aims primarily at the interpretation and effectiveness of the fundamental freedoms guaranteed by the EC Treaty.

Competition is socially desirable because, in general, in a competitive environment, firms' desire to maximize their profits will force them, in the long run, not only to become as efficient as possible but also to lower their prices to the level of their average (economic) costs.

The reform of the enterprise sector in the former socialist countries has been at the core of the economic reform programs, which were launched ten years ago, beginning in Poland and followed by other governments throughout the region. A key element of the enterprise reform package was privatisation. Depending on the country and the specific area of the law in question, this reform measure was preceded, accompanied, or followed by legal reforms. Legal reforms in the region have been comprehensive and affected not only areas immediately relevant for the enterprise sector, but the entire legal system ranging from constitutional, administrative, criminal and civil law to the organization and procedural rules of the court system. This paper focuses on laws that are immediately relevant for the restructuring and financing of enterprises, in particular the rights of shareholders as stipulated in company laws, securities regulations, and the right of creditors as holders of collateral and in bankruptcy. The paper investigates the patterns of legal change in these areas of the law and identifies key determinants of legal change. The method employed is a formalised comparison of legal change based on pre-defined legal indicators. A data base was constructed, which codes the development of shareholder and creditor rights from 1990 through 1998 for 24 transition economies (excluding only Serbia, Tadjikistan and Turkmenistan). The paper joins a growing literature that uses cross-country formalised legal indicators to investigate the interaction between legal and economic change using statistical tools. It introduces the data used and descriptively analyses the patterns of legal change that can be observed. A statistical analysis of the interaction between legal and economic change is addressed in a separate paper.

This is the time of the making or breaking of Europe. When over one generation from now we will be looking back at this period of the turn of the century we will recognize this as the period during which we finally made it, or we finally blew it. By the time the new EURO notes will slide through the money machines, the Europe that we have known will have changed forever. The reason lies in the stark political choices that are facing the European Union. The outcome of these political choices will be decisive for the shape of the European tax policy in the years to come.2