Volume II Issue 1(3) Summer 2011 Short Version

8/2/2019 Volume II Issue 1(3) Summer 2011 Short Version

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BiannuallyVolume II

Issue 1(3)

Summer 2011

ISSN 2068-696X

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ASER

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Volume II Issue 1(3) Summer 2011

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Contents:

Journal ofAdvancedResearch in Lawand Economics isdesigned to providean outlet for

theoretical andempirical researchon the interfacebetween economicsand law. TheJournal exploresthe variousunderstandings thateconomic

1

Macroeconomic Analysis ofCorruption among developingCountries

James P. GanderEconomics Department, University ofUtah, Salt Lake City, USA 4

4

Rule of Law, Legal Development andEconomic Growth:Perspectives for Pakistan

Hasan LubnaPakistan Institute of DevelopmentEconomics, Islamabad, Pakistan 48

2

Accomplishing Human RightsJustice in the Context of AssetsConfiscation: an Evaluation of theUnited Kingdom Drug LawsEnforcement

Kato Gogo KingstonSchool of Law, University of EastLondon, United Kingdom 9

5

Rethinking of Rights and ProceduralComplexity in Transfer of Share: aReview under Company Law inBangladesh

Zahid RafiqueDepartment of Law, Prime University,Bangladesh 60

3

Ex-Post Assessment of MergerEffects: the Case of Pfizer andPharmacia (2003)

Nina LeheydaZEW Centre for European EconomicResearch, Germany

Patrick BeschornerZEW Centre for European EconomicResearch, Germany

Kai HschelrathZEW Centre for European EconomicResearch and WHU Otto BeisheimSchool of Management, Germany 18

6

The Relationship between commonManagement and EcotourismRegulation: Tragedy or Triumph of theCommons?A Law and Economics Answer

Danilo SamLUISS Guido Carli University of Rome,Italy 78

Summer 2011Volume II, Issue 1(3)

ditor in ChiefMadalina ConstantinescuSpiru HaretUniversity, Romania

o-Editors

Russell PittmanInternational Technical AssistanceEconomic Analysis Group AntitrustDivision, USA

Eric LanglaisEconomiX CNRS and UniversitParis Ouest-Nanterre, France

ditorial Advisory Board

Huseyin ArasliEastern Mediterranean University,North Cyprus

Jean-Paul GaertnerEcole de Management deStrasbourg, France

ShankarGarghEditor in Chief of Advanced inManagement, India

Arvi Kuura

Prnu College, University of Tartu,Estonia

Piotr MisztalTechnical University of Radom,Economic Department, Poland

Peter SturmUniversit de Grenoble 1 JosephFourier, France

Rajesh K.PillaniaManagement Developement

Institute, IndiaRachelPrice-KreitzEcole de Management deStrasbourg, France

AndyStefanescuUniversity of Craiova, Romania

LauraUngureanuSpiru HaretUniversity, Romania

Hans-Jrgen Weibach, Universityof Applied Sciences - Frankfurt am

Main, Germany

SERS Publishingtp://www.asers.eu/asers-publishingSN 2068-696X


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Journal ofAdvancedResearch in Law andEconomics

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Journal ofAdvancedResearch in Law andEconomicsis designed to provide an outlet for theoretical andempirical research on the interface between economics and law. The Journal explores the variousunderstandings that economic approaches shed on legal institutions.

Journal ofAdvancedResearch in Law andEconomics publishes theoretical and empirical peer-reviewedresearch in law and economics-related subjects.Referees are chosen with one criteria in mind: simultaneously,one should be a lawyer and the other an economist. The journal is edited for readability; both lawyers and

economists, scholars and specialized practitioners count among its readers.To explore the various understandings that economic approaches shed on legal institutions, the Review

applies to legal issues the insights developed in economic disciplines such as microeconomics and game theory,finance, econometrics, and decision theory, as well as in related disciplines such as political economy and publicchoice, behavioural economics and social psychology. Also, Journal of Advanced Research in Law andEconomics publishes research on a broad range of topics including the economic analysis of regulation and thebehaviour of regulated firms, the political economy of legislation and legislative processes, law and finance,corporate finance and governance, and industrial organization.

Its approach is broad-ranging with respect both to methodology and to subject matter. It embracesinterrelationships between economics and procedural or substantive law (including international and EuropeanCommunity law) and also legal institutions, jurisprudence, and legal and politico legal theory.

The quarterly journal reaches an international community of scholars in law and economics.

Submissions to Journal ofAdvancedResearch in Law andEconomicsare welcome. The paper must bean original unpublished work written in English (consistent British or American), not under consideration by otherjournals.

Journal ofAdvancedResearch in Law andEconomics is currently indexed in RePec, CEEOL, EBSCO,ProQuest and IndexCopernicus.

Invited manuscripts will be due till November 15th, 2011, and shall go through the usual, albeit somewhatexpedited, refereeing process.

Deadline for submission of proposals: 15th November 2011Expected Publication Date: 15th December 2011Web:http://www.asers.eu/journals/jarle.htmle-mail:[email protected] authors guidelines are available from:http://www.asers.eu/journals/jarle/instructions-for-authors

Call for PapersWinter_Issue 2011

Journal of Advanced Research in Law and Economics
http://www.asers.eu/journals/jarle.htmlhttp://www.asers.eu/journals/jarle.htmlhttp://www.asers.eu/journals/jarle.htmlmailto:[email protected]:[email protected]:[email protected]://www.asers.eu/journals/jarle/instructions-for-authorshttp://www.asers.eu/journals/jarle/instructions-for-authorshttp://www.asers.eu/journals/jarle/instructions-for-authorsmailto:[email protected]://www.asers.eu/journals/jarle.html


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MACROECONOMIC ANALYSIS OF CORRUPTION AMONGDEVELOPING COUNTRIES

James P. GANDERUniversity of Utah, Economics Department, Salt Lake City, USA

[email protected]

AbstractBased on empirical data, a two-equation game-type corruption reaction function model was developed. A

data to modelapproach was used rather than the usual a priori approach. The general hypothesis tested wasthe monkey see, monkey doprinciple. The latest data on corruption among developing countries was obtainedfrom the Enterprise Surveys done by the World Bank Group in 2010. The key variables were the percent ofdomestic firms expecting to make informal payment to public officials to get things done, and the percent offoreign firms doing like wise. The time span is from 2002-2010. A variety of econometric methods were used.The statistical results were quite good and supported the hypothesis. Both reaction equations were positivelysloped. Time had a reducing effect on the frequency of domestic corruption, yet it had an increasing effect onforeign corruption. Variations in the frequency of corruption across regions of countries were generally not

significant.

Keywords: firm, corruption, Game Model, developing countries

JEL Classification: C51, D81, E60, K49, M29

1. IntroductionIn the true spirit of positive economics, I examine the most recent data on corruption in developing

countries, using a few and very simple assumptions (not always made explicit). My intention is to use what dataare available and to see essentially what the data is telling us about corruption. I do not ignore altogether theneed and usefulness of an a priori modeling approach as a basis for forming the hypotheses of the positive(posterior) empirical approach. But, the modeling exercise is strictly idealistic in the sense that it serves more to

orient the empirical work rather than to capture exactly any real world corruption behavior.The literature on the economics of corruption is extensive. I only give a brief survey here, which

admittedly does not do justice to it. Nevertheless, my main concerns are with what data is available and whatdoes it tell us about corruption. I very much let the facts (so called) speak for themselves or more precisely letthe selected facts speak for themselves, where the selection is not based on a priorireasoning but is based onposteriorreasoning (from the data to the model, rather than the reverse). The literature very much goes from themodel to the data.

To summarize briefly, the classical economic approach to the microeconomics of corruption (or bribery)as simplified by Menezes (2000, and the literature cited therein) and before him by Becker (1968), Becker andStigler (1968), and Rose-Ackerman (1975, 1978), takes a buyer (government official)-seller (firm) approachinvolving specific types of information (like prices, quantities, quality, bribes, probability, profit gains, andpenalties if caught). Closer to the a prioriapproach is the study by Ades and Di Tella (1999) which first focuseson the individual firm and the role of its market structure (competition) in affecting the amount of corruptionengaged in and then turns to the macro data. Another interesting study from the supply side of corruption isRose-Ackerman (1978 and 1999)s studies, which examine competition among government officials. A veryrecent macro study by Mon and Weill (2010) examines the effect of corruption on country productivity based onthe quality of government institutions. Although not a regression study as is the present paper, Hellman, et al.(2000) questioned some 3,000 firms in 20 developing countries to obtain responses for several descriptive-typeprofiles of corruption across countries. Their corruption-type questions are similar to those used for the data ofthe present paper.

In what follows, a simple game theory-type model based on positiveposteriorreasoning is developed inthe next section. Then, the econometric models are presented and the data are explained in the followingsection. The empirical (statistical) results are then presented in the next section. The final section contains a

summary and conclusions.
mailto:[email protected]:[email protected]:[email protected]


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SUR(1) SUR(2) OLS RE(1) RE(2) XTPCSE

FOR on DOM 1.02

(23.86)

YR 1.02 -3.46

(1.98) (-4.58)

DVA -5.51 2.62

(-1.98) (0.61)*

DVL -2.34 -14.89

(0.63)* (-2.60)

DVO -0.25 6.00

(-0.08)* (1.28)*

CON -2052 6981

(-1.98) (4.60)

Rsq .63 .17

Notes: All results have robust standard errors. Log forms of the models produced similar results and are notreported. GLS for the SURs runs produced singular error matrices. A 2 -step approach was used. Sample size is 155 for allruns. RE(1) has 4 regional panels. RE(2) has 102 country panels. GLS regression was used. FE results were less satisfyingand not reported. All coefficients for main variables are significant at p .05. The (.) has the t values or the z values. All Rsqs are significant. The XTPSCE run is cross section/time seriesanalysis with panel corrected standard errors for heteroscedasticity using linear regression. Blank dummy variables werepurposely dropped due to insignificance.

In general, the results in Table 1 are virtually the same and significant as far as goodness of fit goes.There are positive and significant signs for the DOM and FOR coefficients regardless of the model run (see thenotes in Table 1 for model details). Similarly, the sign for the year coefficients is always negative and significantregardless of the run (with one positive exception). The dummy variables coefficients were usually not significantexcept for DVA (Africa region) in a few runs. All standard errors were adjusted for heteroscedasticity. For the firstSUR(1) model, the Breusch-Pagan independence test was rejected. For the second SUR(2) model (where DOMis dropped from the FOR equation), the test was accepted as expected.

Referring to the first full SUR(1) model, the domestic reaction equation is positively sloped (1/b1 = 1.09)and steeper than the foreign reaction equation (B1 = 1.02), as expected for stability (although a Chi-sq test of theequality of the coefficients was not rejected, p = .176). The domestic equation shifts inward overtime whereas theforeign equation shifts up over time (see, Figure 1). So, over time, the percent of domestic firms practicingcorruption is falling for a given foreign value, while it is rising for foreign firms, for a given domestic value. Bothequations follow the monkey see, monkey do principle, but over time domestic firms relative to foreign firms arebecoming less corrupt.

This result is born out by the single-equation runs (OLS, RE(1), RE(2), and XTPCSE) where DOMincreases as FOR increases but decreases over time. Since the negative time coefficient is considerably larger(and significant with a Chi-sq = 21.05 and p = .000) than the positive monkey see, monkey do coefficient for theSUR(1) run, the dynamic picture is one of a contracting domestic corruption regime. In other words, there areforces not in the models operating over time which have a negative effect on domestic corruption. The data setused in this paper does not identify these forces, but we can surmise that they exist (for example, laws andregulations against bribery, a better court system, and improvement in the way government administrationoperates to facilitate domestic businesslicenses, permits, contracts, delays, and the like).

5. Summary and ConclusionsBased on empirical data, a two-equation game-type corruption reaction function model was developed. Adata to model approach was used rather than the usual a prioriapproach. The general hypothesis tested was


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the monkey see, monkey do principle. The latest data on corruption among developing countries was obtainedfrom the Enterprise Surveys done by the World Bank Group in 2010. The key variables were the percent ofdomestic firms expecting to make informal payment to public officials to get things done, and the percent offoreign firms doing like wise. The time span is from 2002-2010. A variety of econometric methods were used.

In general, the statistical results were quite good and supported the hypothesis. Both reaction equationswere positively sloped. Time had a reducing effect on the frequency of domestic corruption, yet it had anincreasing effect on foreign corruption. Variations in the frequency of corruption across regions of countries weregenerally not significant.

The interesting policy implication of the results is that over time developing countries are bring undercontrol the practice of corruption to get things done, at least among domestic firms. On the other hand, foreignfirms have been increasing their frequency of corruption over time. It is possible that foreign firms surmise thatthey are at a competitive disadvantage with respect to domestic firms when dealing with public officials(understandably so, considering the problems of doing business in a foreign country), so bribery is an effectiveand profitable (presumably) way to get things done.

As domestic markets and relevant institutions develop and become more transparent, many of thebusiness services formerly realized by practicing corruption will now be supplied at a price by other firms (forexample, brokers and lobbyists). The cost to get things done will become more institutionalized and transparent,

so, for example, the firms cost of obtaining a speedy utility connection (electric, water, and telephone) will beinternalized into the price of the connection and subject to competitive market forces. Such market developmentsover time should also benefit foreign owned firms and reduce the practice of corruption among them. Only timewill tell.

References[1] Ades, A., and Di Tella, R. 1995. Rents, Competition, and Corruption, American Economic Review,

September, 89(4): 982-993.

[2] Becker, G. S. 1968. Crime and Punishment: An Economic Approach, Journal of Political Economy,March/April, 76(2): 169-217.

[3] Becker, G., and Stigler, G. 1974. Law Enforcement, Malfeasance and the Compensation of Enforcers,

Journal of Legal Studies, January, 3(1): 1-19.[4] Hellman, J. S., Jones, G., Kaufmann D., and Schankerman, M. 2000. Measuring Governance, Corruption,

and State Capture, Policy Research Working Paper, 2312, The World Bank, World Bank Institute,Government, Regulation and Finance and European Bank for Reconstruction and Development, ChiefEconomists Office, April, i-v, and 1-53.

[5] Mon, P.-G., and Weill, L. 2010. Is Corruption an Efficient Grease?. World Development. March, 38(3): 244-259.

[6] Menezes, F. 2000. The Microeconomics of Corruption: The Classical Approach, Economics Working Papers,No. 405, Graduate School of Economics, Getulio Vargas Foundation (Brazil), November: 1-13.

[7] Rose-Ackerman, S. 1975. The Economics of Corruption, Journal of Public Economics, February, 4(2): 187-

203.[8] Rose-Ackerman, S. 1978. Corruption: A Study of Political Economy. New York, Academic Press.

[9] Rose-Ackerman, S. 1999. Corruption and Government: Causes, Consequences, and Reform. Cambridge,UK, Cambridge University Press.

[10]World Bank. Enterprise Surveys, The World Bank Group. Washington DC, USA, 2010. Also,www.enterprisesurveys.org/Portal/unprotected/RegisterExternal.aspx?LibId- 14 (accessed December 27,2010).
http://www.enterprisesurveys.org/Portal/unprotected/RegisterExternal.aspx?LibId-%2014http://www.enterprisesurveys.org/Portal/unprotected/RegisterExternal.aspx?LibId-%2014http://www.enterprisesurveys.org/Portal/unprotected/RegisterExternal.aspx?LibId-%2014


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ACCOMPLISHING HUMAN RIGHTS JUSTICE IN THE CONTEXT OFASSETS CONFISCATION: AN EVALUATION OF THE UNITED

KINGDOM DRUG LAWS ENFORCEMENT

Kato Gogo KINGSTONUniversity of East London, School of Law, United Kingdom

[email protected]

AbstractIt is estimated that crude oil, tourism and illicit drug trade are among the top five most financially inducing

business in the world. Drug cartels conducts sophisticated and well organised activities including moneylaundering and monitoring of large networks of their couriers. In past the decade, the United Kingdom hasincurred large expenditure on the treatment of drug related illnesses and, on the enforcement of drug controllaws. Several drug laws are enacted to dealing with the waves of illicit drugs in the country. There is controversyover the ways by which the properties of the drug traffickers and suspected drug dealer, are seized by the State;in order to seize anyones private property prior to commencement of legal proceedings to effect permanentforfeiture, the law enforcement agencies are only required to show probable cause that the property beingseized is acquired with the profit of drug crime alternatively, that the property facilitates drug criminal activities.Using data from academic materials and United Kingdom case laws, the paper argues that the United Kingdomdrug trafficking laws particularly the enforcement of civil asset recoveryunder the Proceeds of Crime Act 2002and, the Criminal confiscationunder the Drug trafficking Act 1994 violates the International Human Rights Laws.

Keywords: drugs, Human Rights, UK laws, criminal property

JEL Classification: K10, K14, K29

1. IntroductionDrug trafficking is currently one of the worlds fastest growing industry with multi -billion dollars value and,

touching every country. According to the International Monetary Fund (IMF) estimation, between 2 and 5 percentof the worlds Gross Domestic Product are from money laundering (Annan 1998).In recent years, there has been a growing concern over the manner in which properties of drug

traffickers are confiscated or forfeited pursuant to the provisions of the Customs and Excise Management Act1979, the Police and Criminal Evidence Act 1984 (Codes of Practice; Modified Code C and Code D) Order 2002,and Drug Trafficking Act 1994. The only requirement for the law enforcement agencies to be able to confiscate apersons property and initiate court actions for permanent forfeiture is, if they can s how probable cause which isthe least standard of civil proof, that the property was used to facilitate drug related offences or that the propertyis a benefit of drug related offences. In civil proceedings, probable cause can be established by mere hearsayevidence.

The acceptance of probable cause as yardstick to measuring guilt violates the persons right to fairhearing enshrined in various human rights laws, treaties and conventions such as Article 6 of the European

Convention on Human Rights. It defeats the objects of the requirements for the presumption of innocence whichis the cornerstone of legal proceedings in both criminal and civil charges. In the United Kingdom, in some cases,the accused persons are denied the right to question their accusers as to circumvent the burden of proof thattheir properties are not benefits of crime and are not aid to the crime of drug trafficking.

In the circumstances where individual properties can be confiscated based on flimsy evidence such asthe words of informants, who themselves are in some instances, accused criminals, ex-convicts and profit-seekers that benefits from their testimonies, by infringing the due process of law and assisting in the violation ofthe human rights of the of the accused.

In the making of drug policy and in the enactment of drug trafficking legislation worldwide, the policy/lawmakers are typically faced with two issues namely - supply reduction and demand reduction. The former involvesmaking laws and policies tailored towards the reduction of narcotic supply and, the later is about the treatment ofthe treatment of drug related illnesses. The main objective of this paper is to critically evaluate the supply

reduction efforts of the United Kingdom government.


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The compelling of suspects to give evidence is a dent on the long standing legal principle of the rights tosilence for example, in Brown v HM Advocate [1966] SLT 105 it was held that the express right contained in ahuman rights instrument is largely non-negotiable and in Teixera de Castro v Portugal 28 EHRR 101, paragraph36; the European Court of Human Rights held that no policy no matter how commendable is fit to pass the test oflegal scrutiny if its ultimate effect is to dilute fair trial rights and, in Matthews v UK [1999] ECHR 24833/94 theEuropean Court of human Rights court ruled that, international treaties that are passed in the aftermath of theECHR cannot be interpreted so as to limit convention rights (Kingston 2006). The convention rights it seems canonly be infringed where the test for proportionality is passed. In de Freitas v Ministry of Agriculture [1998] 3 WLR675, 684 the court outlined threefold test for proportionality inter alia:

(i) Whether the legislative objective is sufficiently important to justify limiting a fundamental right;(ii)Whether the measures designed to meet the legislative objectives are rationally connected to it; and(iii)Whether the means used to impair the right or freedom are no more than is necessary to accomplish

the objective (Kingston, 2006).In view of the tests in de Freitas, I argue that the UK asset confiscation system is irrational and devoid of

proportional reasoning (Kingston, 2006) for example in R v Michael Tivnan [1998] EWCA Crim 1370 the Court ofAppeal said that, the Drug Trafficking Act 1994 is draconian because (i) there is no time limit for the prosecution

to apply for variation of confiscation orders and, (ii) drug trafficking forfeiture orders are not restricted by anyrequirement that the defendant's realisable assets must be proved to be directly derived from drug dealing orover the period of drug dealing but only by the amount of the total value of the benefits the defendant hasderived from drug dealing and the realisable value of his assets at the time of the order or any further order(Kingston 2006).

The UK drug trafficking laws including the new assets recovery regime enable the State to manipulate thetrial processes in contravention of the laid down standards of various international human rights instruments, forexample, the new principle of reasonable grounds of belief; and the mere suspicion which is inferred asprobable cause gives the law enforcement agencies enough powers to seize an individuals personal assets withthe support of the judiciary; as in R v Montila and others [2003] EWCA Crim 3082 where the court ruled that, onthe true construction of s 49(2) of the 1994 Act it was not necessary, in order to prove an offence under thesubsection, that the property concealed or disguised, converted, transferred or removed from the jurisdiction was

the proceeds of drug trafficking or crime. The target of the subsection was as much the state of mind of thedefendant as his conduct (Kingston, 2006).

The United Kingdom legal system is fast becoming totalitarian as the will of the State is superseding thewell establish human rights. For instance, Liberty (2001) submitted that the current system of criminalconfiscation system not only destroys the essence of the presumption of innocence and also that, with regardsto civil confiscation, it is improper for the laws to authorise the state a power to opt for extensive confiscation ofdefendants assets in circumstances where it does not have sufficient evidence to prosecute them in the criminalcourts and that assuming that there is sufficient evidence to prosecute them, it would be wrong to allow thestate to opt for an easier path of pursuing someone in the civil courts.

The very contentious assets recovery regime is traceable to the ancient system of feudal forfeiture inrem- a legal procedure which focused on the criminal nature of property rather than the criminal conduct of theowner of the property for example in a very ancient case of United States v. La Vengeance 3 Dallas 297 (1796)

the United States Supreme Court ruled that the seizure of the French ship carrying illegal arms was case ofadmiralty law which the cause was civil and that the matter was rested in rem and excluding the person of thedefendant.

4. ConclusionThe implications of the drift towards retribution and deterrence in the sentencing policy for drug traffickers

are all too apparent. The increased numbers imprisoned will contribute to an already grossly overcrowded anddeteriorating prison situation and drug related crime will increase (Henham 1994).

This study has assessed aspects of drug policy enforcement within the context of United Kingdom legalframework, International Human Rights and international drug conventions. Although the study demonstratesthat the United Kingdom is heavy handed in the control of drug trafficking, nevertheless the UK has been able toformulate and implement domestic drug control policy in a way that furthers harm minimization in relation to the

availability of illicit drugs. The United Kingdom has also retained rooms to manoeuvre within the UN conventions(Dorn 2004).


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This study has drawn attention to the intersection between domestic drug policies and international drugpolicies, particularly in relation to implementation policies. Whilst there is no apparent mismatch between theUnited Kingdom domestic drug policy and international policy goals, the latter face strong challenges. On onehand, there is at least some potential for reasonable progress to be made at home. On the other hand there isthe possibility of being completely overwhelmed by abject failures internationally. At the heart of this conundrumis the still evolving relationship between supply reduction and drug policies (Dorn 2004).

Supply reduction will tend to be short-lived unless effective action is also taken to address the demand-side (for example, through drug treatment or effective prevention programmes). This is a matter of basiceconomic laws. If levels of demand are constant, a reduction in the supply of a drug will drive up the street priceand make it more profitable for drug traffickers. If people with serious dependency problems are not beingtreated, they are unlikely to give up using illicit drugs. A similar point applies to the United Kingdom internationalinitiatives towards reducing the production of drugs in Afghanistan, so long as demand for opiates subsist,successful initiatives to cut opium cultivation in one area will always lead to an increase in production elsewhere.

References[1] Annan, K. 1998. Excerpt of statement at the UN Secretary General at the opening of the Twentieth Session

of the General Assembly, Devoted towards countering drug Problem, 8-10 June

[2] Burgess, R. 2003. Disrupting crack markets: A practice Guide; Drug Strategy Directorate (DSD), HomeOffice, London.

[3] Dorn, N. (ed). 1999. Regulating European Drug Problems: Administrative Measures and Civil Law in theControl of Drug Trafficking, Nuisance and Use, Netherlands: Kluwer Law International.

[4] Dorn, N. 2004. UK Policing Of Drug Traffickers And Users: Policy Implementation In The Contexts OfNational Law, European Traditions, International Drug Coventions, And Security After 2001; Journal of DrugIssues, Summer.

[5] Guardian Newspaper. 2005. Revealed: How Drugs War Failed, July 5.

[6] Green, P. (ed). 1996. Drug Couriers A New Perspective, The Howard League Handbooks. Quartet Books.

[7] Green, P., Mills, C., and Read, T. 1994. The Characteristics and sentencing of illegal drug importers; Britt. J.Criminal. 34 (4): 479-486.

[8] Hammond, N.1994. The Value of Pre-sentence Reports on Foreign Nationals, Middlesex Probation Service:Cropwood Fellowship, University of Cambridge.

[9] Hammond, N. 1995. PSRs on Foreign Drugs Traffickers: Present and Future, Probation Journal: 17-23,March.

[10]Hammond, N. 1996. Turning the Clock Back: The implication for Pre-Sentence Reports of the criminalJustice and Public Order Act 1994, in Green P (ed). Drug Couriers: A New Perspective, The Howard LeagueHandbooks. Quartet Books.

[11]Henham, R. 1994. Criminal Justice and Sentencing Policy for Drug Offenders; 22, International Journal of

the Sociology of Law223: 225.[12]Home Office. 1989. Drug Trafficking and Serious Crime, Volume 1, House of Commons, Home Affairs

Committee, Seventh Report, 8 November.

[13]Home Office. 2004. The Drug Treatment and Testing Order: Early lessons, A Report by the Comptroller andAuditor General, HC 366 Session 2003-2004: 26 March.

[14]Kingston, K. 2006. (Unpub) An Analytical Assessment of the United Kingdom Drug Trafficking Laws, Adissertation submitted in partial fulfilment of the requirements of the Master of Laws (LLM) degree at theSchool of Law, University of East London, England, September.

[15]Lea, J. 2004. Hitting Criminals Where It Hurts: Organised crime and the erosion of due process ,CambrianLaw Review(30): 81-96.

[16]Liberty. 2001. (National Council for Civil Liberties), Proceeds of Crime: Consultation on Draft Legislation ;May.
http://www.findarticles.com/p/search?tb=art&qt=%22Dorn%2C+Nicholas%22http://www.findarticles.com/p/articles/mi_qa3733http://www.findarticles.com/p/articles/mi_qa3733http://www.findarticles.com/p/articles/mi_qa3733http://www.findarticles.com/p/articles/mi_qa3733/is_200407http://www.findarticles.com/p/articles/mi_qa3733/is_200407http://www.findarticles.com/p/articles/mi_qa3733http://www.findarticles.com/p/articles/mi_qa3733http://www.findarticles.com/p/search?tb=art&qt=%22Dorn%2C+Nicholas%22


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[17]Roe, S. 2005. Drug Misuse Declared: Findings from the 2004/05 British Crime Survey England and Wales,Home Office Statistical Bulletin, October.

[18]Runciman, Viscountess .1999. Drugs and The Law, Report of the Independent Inquiry Into The Misuse ofDrugs Act 1971, the Police Foundation document, Home Office, London.

[19]Tarzi A, and Hedges J. 1990.A study of Foreign Nationals: A prison within a prison , Inner London ProbationService.

[20]Tiggey, M., Harocopos, A., Turnbull, P. J., and Hough, M. 2000. Serving Up: The impacts of low-level PoliceEnforcement on Drugs Market, Police Research Series Paper 133, November. Online athttp://rds.homeoffice.gov.uk/rds/prgpdfs/prs133.pdf[accessed 1/7/06 and 9/11/2010].

[21]Willoughby, D. 1988. Cocaine, Opium, Marijuana: Global Problems, Global Response, New York: USIS, (1):1-17.

Cases Allenet de Ribemont v France A 308 (1995) 20 EHRR 557. Brown v HM Advocate [1966] SLT 105.

de Freitas v Ministry of Agriculture [1998] 3 WLR 675. Matthews v UK[1999] ECHR 24833/94. R v Aramah [1982] 4 Cr. App R (S) 407. R v Belinski(1987) 9 Cr App R (S) 360. R v Dickens (1990) 12 Cr App R (S) 191. R v Winters [2008] WLR (D) 387. R v Oakes [1986] 1 SCR 103. R v Briggs-Price [2009] UKHL 19. R v Aroyewuni[1994] Crim. LR 695. R v Gallagher(1990) 12 Cr App R (S) 224. R v Jones (1981) 3 Cr App R (S) 51. R v Lambert and others [2001] 2 WLR 211. R v Michael Tivnan [1998] EWCA Crim 1370. R v Montila and others [2003] EWCA Crim 3082. Teixera de Castro v Portugal28 EHRR 101. United States v. La Vengeance 3 Dallas 297 (1796). Van Mechelen v Netherlands 25 EHRR 647. Woolmington v DPP[1935] AC 462, 48.
http://rds.homeoffice.gov.uk/rds/prgpdfs/prs133.pdfhttp://rds.homeoffice.gov.uk/rds/prgpdfs/prs133.pdfhttp://rds.homeoffice.gov.uk/rds/prgpdfs/prs133.pdf


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EX-POST ASSESSMENT OF MERGER EFFECTS:THE CASE OF PFIZER AND PHARMACIA (2003)

Nina LEHEYDAZEW Centre for European Economic Research, Germany

[email protected] BESCHORNERZEW Centre for European Economic Research, Germany

Kai HSCHELRATHZEW Centre for European Economic Research and WHU Otto Beisheim School of Management, Germany

[email protected]

AbstractThe paper studies the effects of the Pfizer and Pharmacia (2003) merger on competition in the Swiss

pharmaceutical market and compares the assessment of the Swiss Competition Commission (COMCO) with the post-merger market developments. We find that the merger has had a miniscule impact on the Swisspharmaceutical market. This has primarily to do with the fact that the product portfolios of both companies have

shown no or only slight overlaps. In both cases of potential anticompetitive effects, the companies successfullyproposed to divest some of their assets in order to prevent a further strengthening of their dominant position. Theremedies included products in the development phase which were not available on the market at the time of thedecision.

Keywords: mergers, ex-post evaluation, pharmaceutical markets

JEL Classification: K21, L42, L62

1. IntroductionAn assessment of the competitive effects of a merger is an integral part of an overall ex-post evaluation of

competition policy. Reflecting upon this key role, the number of internal and external studies conducted bycompetition authorities and outside experts, respectively that focus on an evaluation of merger enforcementhas increased significantly during the last couple of years.1 Generally, an ex-post assessment of mergerdecisions aims to evaluate whether the predictions of the competition authorities at the time of the mergerdecisions coincide with the actual effects of the mergers. In particular, it allows one to investigate the questionwhether the economic arguments applied by the antitrust authorities to evaluate the competitive effects ofmergers have performed well in predicting the price and market share effects of the mergers. Furthermore, anex-post assessment may shed light on the question whether the merger decision was the best possible in thesense that no alternative decision of the competition authority would have led to a better performance in terms oftotal or consumer welfare, respectively.

The pharmaceutical industry has recently experienced numerous mergers and acquisitions. Control ofpharmaceutical mergers involves, on the one hand, the standard analysis focusing on actual and potential pricecompetition as well as market share effects of the merger. On the other hand, however, price competition inpharmaceutical markets may be rather restricted as drugs prices in most countries are subject to regulation.Competition may possibly take place along other dimensions such as innovation or advertising which are oftenmuch more difficult to assess in practice. Furthermore, market shares may also bear little information in such

The authors would like to thank Joseph Clougherty, Sven Michal, Samuel Rutz, Frank Stssi, Spyros Arvanitis,Martin Wrter, David Beil for helpful comments on drafts of the study and Dace Lauberte for excellent research assistance.This paper is based on a larger project on the evaluation of the economic effects of the Swiss Cartel Act commissioned bythe Swiss State Secretariat for Economic Affairs SECO (see Hschelrath et al., 2008). The complete project report Studienzu den Auswirkungen des Kartellgesetzes can be downloaded from the ZEW website (www.zew.de) or the website of theSwiss Competition Commission (www.weko.admin.ch). Please note that the report is available in German language only.

1 See especially Pautler (2003) and LEAR (2006) for academic literature overviews and, for example, Competition

Commission (2003), PricewaterhouseCoopers (2005), CRA International (2007), Competition Commission (2008a) andDeloitte (2009) for studies with a focus on practice. A general overview of ex-post evaluations of merger enforcement andmerger remedies performed by competition authorities can be found in OECD (2005).
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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whether such a partner has been found or what major obstacles have been encountered during the searchprocess. Furthermore, there has been no publicly available information on the further development of thisproduct since 2004. However, generally, the market for products for the treatment of ED has two strong newcompetitors Eli Lilly and Bayer Schering and as a result, Pfizer has considerably lost market share in the lastcouple of years. In this respect, one might raise doubts whether the divestiture of Apomorphine was reallynecessary to solve the competition concerns.

Since both remedies were proposed by the merging parties, an investigation as to whether the sameeffect could have been achieved with weaker interventions is not necessary. Only Pfizers efforts to introduce acompetitive product for the sold product Darifenacin to the market could be seen critically. A temporary non-competition clause which would have given the buyer of the rights for Darifenacin a sufficiently long period oftime to bring a competitive product into the market would have been worth consideration. In retrospect, it wasrevealed that with Novartis, a competent buyer for Darifenacin was found. Thus, Pfizers efforts concerningFesoterodine could be viewed as harmless. In the event that Darifenacin would not have developed into acompetitive product that quickly, a deployment of the COMCO decision could have pronounced a temporary non-compete clause. This assessment holds under the provision that an equivalent regulation is not contained in theEU decision within the scope of the censored fall-back remedy.

The general extent to which the COMCO may or can adopt the decision of the European Commission

systematically should be considered from a legal point of view. In the present case, the chosen approach wasreasonable. However, risks might still be contained in case this practice is thoughtlessly applied to future mergercases. The EU merger decision could be more detailed than the Swiss merger decision and pronouncedundertakings could be withdrawn or weakened after the deployment of the COMCO has already beenpronounced. In order to forestall such a case it is necessary to determine the minimum requirements forundertakings related to the Swiss market. In doing so, it could be ensured that the effective EU remedies meetthe requirements in the Swiss market. It can be anticipated that globally active firms such as Pfizer rather meetthe stricter commitments by the European Commission in order to be allowed to stay active in the Europeanmarket than renounce the European market to meet possibly less strict Swiss commitments and focus solely onthe Swiss market.

Conversely, a stricter commitment in Switzerland involves the danger that a firm completely retreats fromthe Swiss market since it would potentially invoke a loss to a lesser degree than to renounce the European

market a possibility which must also be taken into consideration. In the present case, the pronouncedcommitments are based on suggestions by the applicants. Thus, it can be assumed that the merging parties areunlikely to take any actions to abuse those commitments. The COMCO was also not exposed to the danger thatits remedies were stricter than in the decision of the European Commission. However, what generally needs tobe taken into account is that the merging parties typically have substantial information advantages with respectto the likely effect and consequences of merger remedies.

6. ConclusionThe ex-post assessment of merger effects is a hot topic in antitrust law and economics. On the one

hand, such analyses allow the identification of structural problems in the assessments of competition authoritiesand therefore contribute to the continuous improvement of practical antitrust policy. On the other hand, ex-postassessments of merger effects allow the estimation of the welfare contributions of antitrust policy through

comparisons of the actual development after decisions and the counterfactual scenarios of no investigations anddecisions.

Against this background, the paper studies the effects of one particular merger, namely the merger ofPfizer and Pharmacia (2003) on competition in the Swiss pharmaceutical market and compares the assessmentof the Swiss Competition Commission (COMCO) with the post-merger market developments. We basically findthat the merger did not have a huge influence on the overall competitive landscape of the Swiss pharmaceuticalmarket. This key finding is driven by the fact that the product portfolios of both companies show only two casesof critical overlaps and subsequent potential anticompetitive effects. In both cases, remedies were implementedwhich prevented the companies from strengthening their dominant market position.

In particular, the imposed divestiture in the ED drugs market prevented that patent rights alone couldhave hindered market entry of new products. The patent issue was not subject to any assessment of competitiveeffects and as a consequence, the competition authority would not have been able to intervene for a possible

case of market foreclosure. In case of the market for drugs for the treatment of urinary incontinence, astrengthening of the dominant market position of Pharmacia with its product Detrusitol could have been avoided


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by the divestiture. With Novartis, a competent buyer was located which has already introduced the product to themarket.

In the other markets which showed significant overlaps in the business fields of both firms or in whichone of the firms had a dominant market position, no effects of the merger can be expected either due to theexisting price regulation in the Swiss pharmaceutical market or due to changes in Pfizers product portfolio.Furthermore, it is important to note that some potential effects of the merger on market parameters such asinnovation behaviour, R&D efforts or employment can be at best analyzed on the global company level. Aconclusion on the effect of the merger on these parameters cannot be isolated with the data at hand.

In sum, it can be said that the COMCO was correct in its assessment of the overall impact of the mergeron competition in the Swiss pharmaceutical market. Generally, the case study raises the question how mergersshould be assessed from the competition authorities point of view when the merging firms are headquarteredabroad and these firms have a strong global presence. Many effects take place on the global level such as thedevelopment of innovation and marketing strategies. Therefore, the undertakings must often be viewed as activeon an international or world-wide market. Within this context, the question of an appropriate organization ofinternational cooperation between competition authorities arises. Specifically, overlapping areas in mergercontrol investigations should be detected to avoid the duplication of efforts and to make efficient use of theexisting resources and expertise of the competition authorities - and also to minimize the administrative burden

imposed on the merging parties.Although this paper has focused on an ex-post evaluation of a single merger decision, it nicely illustratesthe fundamental problems of ex-post studies. In order to fully evaluate the work of the competition authority in aparticular case, detailed data (and complementary information) is necessary to allow the use of moresophisticated econometric techniques. However, such information is typically difficult to acquire, largely due todata confidentiality issues. Furthermore, it should be reminded that this paper focused on an assessment of asingle merger and therefore does not allow any conclusion on a more general level. An evaluation of the overallmerger enforcement policy in Switzerland or another country is forced to use a much larger sample of mergers inorder to allow the derivation of broader conclusions about the state of merger control and possible reform needs.

References[1] Ashenfelter, Orley C., and Hosken, D. 2008. The effect of mergers on consumer prices: evidence from

five selected case studies, NBER Working Paper No. 13859.[2] Ashenfelter, Orley C., Hosken, D., and Weinberg, M. 2009. Generating evidence to guide merger

enforcement, NBER Working Paper No. 14798.

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[4] Cockburn, Ian and Henderson, R. 1996. Scale, scope and spillovers: the determinants of researchproductivity in the drug industry, RAND Journal of Economics, 27 (1): 32-59.

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[8] CRA. 2004. Innovation in the pharmaceutical sector, Study undertaken for the European Commission NoENTR/03/28 by Charles River Associates.

[9] CRA International. 2007. Ex post merger review: an evaluation of three Competition Bureau MergerAssessments, Final Report prepared for Canadian Competition Bureau.

[10] Danzon, P. M., Epstein, A., and Nicholson, S. 2004. Mergers and acquisitions in the pharmaceutical andbiotech industries, Mimeo, Wharton School, University of Pennsylvania.

[11] Davies, S., and Lyons, B. 2007. Mergers and merger remedies in the EU: assessing the consequencesfor competition, Edward Elgar, Cheltenham.
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[12] Deloitte. 2009. Review of merger decisions under the Enterprise Act 2002, A report prepared for theCompetition Commission, Office of Fair Trading and the Department for Business, Enterprise andRegulatory Reform.

[13] DTI. 2006. The R&D Scoreboard 2006: the top 800 UK and 1250 global companies by R&D investment,Commentary and Analysis.

[14] Duso, T., Gugler, K., and Yurtoglu, B. 2007a. EU merger remedies: an empirical assessment, in Stennek,Johan and Vivek Ghosal (Eds.), The Political Economy of Antitrust, Contributions to Economic Analysis,North-Holland, pp.302-348.

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eine schnell wachsende Patientengruppe, Press release as of March 18.

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RULE OF LAW, LEGAL DEVELOPMENT AND ECONOMIC GROWTH:PERSPECTIVES FOR PAKISTAN

Hasan LUBNAPakistan Institute of Development Economics, Islamabad, Pakistan

[email protected]

AbstractRule of Law and strong legal systems are considered a pre-condition for sustained development. Their

relative weakness in the under-developed world is considered as the main obstacle to growth. StrengtheningRule of Law and legal systems has, therefore, become a standard advice from the developing community.Pakistan, too, has witnessed a surge in demand for Rule of Law in recent years. Capitalizing on this domesticallygarnered mandate, this paper reviews the legal obstacles to economic growth in Pakistan. It finds significantimpediments for growth and market development due to legal shortcomings in the case of Pakistan.

Keywords: Rule of Law, legal development, economic growth

JEL Classification: K10, O43

1. Introductionthe reformer has enemies in all these who profit by the old order and onlylukewarm defenders in all those who would profit by the new.

Machiavelli, The Prince, Ch. VI

Recent times have witnessed an increased demand for Rule of Law in Pakistan. The movement forrestoration of judiciary, which basically emerged and was sustained by the urban centers of Pakistan and laterevolved into a broader consensus for strengthening Rule of Law, has been considered elitist by its critics. Theirarguments connote Rule of Law as a luxury that is demanded by the urban elites only, while the poor in bothurban and rural areas are concerned more about their livelihoods. This debate rages on in Pakistan at a timewhen the development community is unanimous in its prescription about Rule of Law as a solution to the ills ofunder-development19. This paper argues that Rule of Law and a strong legal system are necessary conditions foreconomically progressing and socially just societies both essential for improving the living conditions ofmasses in Pakistan.

Since, economic growth and improvement in the welfare of its citizen is a prime concern for theGovernment of Pakistan, and realizing that economic development does not take place in a vacuum , theGovernment vows to develop an orderly framework for carrying out its economic reforms . It has undertaken anextensive reform of the laws relating to the banking and financial sector, commerce and industry, energy,information technology, social as well as administrative and judicial system20. The area, however, begs scholarlyattention. The paper tries to fill this gap. The next section lays out how Rule of Law and legal development effecteconomic growth. The third section examines the Pakistans case in the light of this discussion. Section four

concludes the paper.

2. Rule of Law, Legal Development and Economic GrowthRule of law as a concept seeks to ensure that government power is limited and that individual rights are protected. The essence of the rule of law is the sovereignty or supremacy of law over people andgovernments. The rule insists that every person, regardless of position or status in society, will besubject to the law and will be dealt with equally. The rule of law is more than your regulation by law buta guarantee of freedoms, human rights and equal treatment before the law(Watson 2003, 4).

19Major international development and donor agencies place Legal Reforms Law and Development and Rule of

Law on their to-do list for developing countries. The World Bank has Law and Development as a topic of development.

Also see ADB (2004), APEC (2007). Carothers (1998) writes, one cannot get through a foreign policy debate these dayswithout someone proposing the rule of law as a solution to the worlds troubles.20See Hassan (2000) for details.


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Berg 2008). There are a number of laws (inheritance laws, rent laws, tenancy laws, preemption, oral gifts) thatproduce litigation. Courts are choked because of these litigations [ibid]. Long delays in the judicial process areyet another problem. Loopholes in the system promote litigation and cause delays. There are no meaningful costsanctions (culture of not appearing before courts). As a result huge assets are stuck in the legal systems, withserious implications for market transactions (Hasan 2006). Procedural reforms like daily reporting of cases andautomation can have a positive impact on court efficiency and have been an integral part of the Access toJustice Program of the Asian Development Bank (Armytage 2003). The quality of legal education has alsodegraded overtime due to mushroom growth of law colleges, which often disregard the rules that have been setby the Pakistan Bar Council (Government of Pakistan 2006). These declining standards of legal profession are amajor factor in the weak judicial system in Pakistan. There is a perception that recourse to the legal systemappears as an unfavorable and unattractive option for the underprivileged. The National Judicial Policy 2009aims to tackle issues of backlog and delays, as well as the menace of corruption. It is still early to judge theimpact of the policy in resolving perennial issues confronting the justice system in Pakistan (Government ofPakistan 2009).

4. ConclusionThere is overwhelming evidence from around the world that economic growth is conditioned by the legal

setting. Markets thrive in an environment where property and contractual rights are protected and enforced, anddisputes are resolved efficiently by the judicial system. An independent, impartial and efficient judiciary, whichprotects the fundamental rights of the citizens and limits the discretionary powers of the state, is imperative forRule of Law and a peaceful, ordered society.

In Pakistan, legal system poses substantial impediments for the growth process as well for thedevelopment of markets. Our land, equity, and credit markets face several inefficiencies on account of weak lawsand legal infrastructure. Removing these obstacles can unleash the growth potential of the economy. Reformingour judicial system is even more important for guaranteeing fundamental rights of the ordinary Pakistani citizen.Law and Economics is still an underdeveloped and little researched discipline in Pakistan. Scattered researchexists that looks at various dimensions of legal development and growth, but there is a need to bring it under theumbrella of a larger research initiative on Law andEconomics. This paper has sought to pioneer this effort. Itwas not the purpose of this paper to do an exhaustive research, but to set a research agenda for understanding

the linkages between legal system and economic growth in Pakistan. Policy input from carefully investigatedissues would be a welcome respite.

References

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RETHINKING OF RIGHTS AND PROCEDURAL COMPLEXITY INTRANSFER OF SHARE: A REVIEW

UNDER COMPANY LAW IN BANGLADESH

Zahid RAFIQUE

Department of Law, Prime University, [email protected]

AbstractThis paper unveils the pen-picture of rights in transfer of share and the pitfalls in that regard. In order to

find out the pitfalls, the Companies Act 1994 in Bangladesh has been taken as the bedrock for analysis. Also, theListing Regulation of Dhaka Stock Exchange Limited 1996 in Bangladesh has been applied to streamline theanalytical issues. Various forms in transfer of share create a problem for transferor in Bangladesh. Indeed, theprovisions of the Act are manufactured in such way that it throttles the rights of transferor. The confusion overrights in joint shareholding seems to put shareholders at stake owing to the inadequate legal support. Refusal intransfer of share is lamentably more emphasized in the Act than rights and the process of transfer in provisionappears favoring the refusal rather than protecting the rights. All these have been critically extrapolated with thestudy over the relevant English, Indian and Pakistani laws to redress the balance in transfer of share inBangladesh.

Keywords:transfer of share, Companies Act 1994, pre-emption, refusal, director

JEL Classification: D23, K11, K22

1. Initial PhaseShare is generally one kind of interests and of rights owned by a shareholder holding a share in company.

When a person invests his money into company through purchasing share of that company, a bundle of rightsand interests in relation to that company is attached with him.In N.W. Transportation v. Beatty37 it is decided that

a share is a kind of property which is to be enjoyed and exercised for the owners personal advantage and use.On the other hand, it is found that shares in a company are taken as personal estate.38 Also share can be saidas intangibles like chose in action and those are generally available in the company in which the register ofmembers is kept.39

From the above scholarly passage, it is felt that share is a personal property which is used for theshareholders personal utility.

Davies says that though a shareholder holds share in a company through a contract with the companyand thus, he may possesses rights in personam, a share is something more than that (Davies 2008). On theother hand, John Birds and others say that the idea of share bears a dual nature as both contract and property(Birds et al. 2007, 259).

In legislative assertions, section 2(1)(v) of the Companies Act, 19994 in Bangladesh provides that sharemeans a share in the capital of the company and includes stock when a distinction between stock and shares is

expressed or implied.In England, section 540 of the newly passed Companies Act, 2006 provides that share means in the

companys share capital and that it may no longe r be converted into stock; that section also includes thatreferences to shares include stock except where a distinction between share and stock is express or implied. Onthe other hand, section 541 of that Act, the shares or other interests of a member in a company are personalproperty, not in the nature of real estate.

From the above, the views on share of the two Acts Bangladeshi Companies Act 1994 and EnglishCompanies Act 2006, are firstly the same but the English Company Law goes further that the share is personalproperty, not in the nature of real estate at all.

37 (1887) 12 App. Cas. 589 (P.C.) cited in Geoffrey Morse, Charlesworth & Morse Company Law, (London: Sweet &Maxwell, 1995) . 391

38 Mores, Company Law, 23439 International Credit and Investment Co.(overseas) Ltd. v. Adham [1994] 1 BCLC 66 cited in Morse. Company

Law, 234


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Upon the pattern of negative expressions reflecting mandatory force in section 38(7) of the CompaniesAct, 1994, if the negative aspects is manufactured into the other pattern of expressions changing negative wordsor expression, mandatory provisions may be turned into directory provisions or the flexible expressions and theright of parties to transfer of share may prevail over the harsh refusal facts of transfer in all in the negative view.

The view about anything contrary to equity, justice and good conscience bonafide works, giving birth tofraud and bad faith in manufacturing articles should be removed. Insertion of the reasonable provisions in articlesshould be firmed up through the operating of specific directives by insertion of guideline in the provisions oftransfer of share of the Act in Bangladesh. So in section 38 of the Act specific guideline to remove the scope ofthe harmful idea into articles for dealing with transfer of share should exist.

In the Act, there should be a specific guideline about the dividend when transfer of share is pending forfinalization transfer of share legally.

On the view transfer of share reflecting a contract, unless the term of returning consideration in breach ofcontract is provided expressly beforehand, it may be hard to follow up and this may invade the force of rights ofshareholders. Without giving a carte blanche (full freedom) to the transferor, it may be provided that the provisionfor transfer of share should exist perfectly even also at the point of breach of transfer contract for taking backconsideration at refusal of transfer at large in the Companies Act, 1994 in Bangladesh.

3. Concluding RemarksWhere a shareholder holds a property like share, transfer of share is one of the great advantageous rightsof the shareholder and it is expected to run freely without any reasonable pitfalls. Procedure of transfer, refusalto register the new shareholders name in the register, sending information of refusal within the mandated time,excess of application of power by the company to refuse the transfer-all these matters come under the ambit oflegal provisions centrally under section 32, 38, 39 and 43 of Companies Act, 1994. Though sections 32, 38, 39and 43 of the Act become relevant, section 38 of the Act plays a pivotal role to regulate the transfer process atlarge. In Bangladeshi Companies Act 1994, instead of different types of form for transfer of share, one formunder Companies Act, 1994 should be provided so that confusion could not arise any longer. Fairly enough, thewrong procedure and omission of one element of procedure of transfer can make the scope for the refusal butthose provision become clogged up when it is found that only the ground for refusal is provided but after

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Volume II Issue 1(3) Summer 2011 Short Version