With the case for withdrawal remedies made and critical comparative analysis of several jurisdictional variants conducted earlier in the book, Chapter VIII integrates insights from the theoretical and comparative analyses into a jurisdiction-neutral model withdrawal solution. This ‘Model Remedy’ gives effect to private ordering arrangements and offers judicially administered solutions where contract is absent or otherwise defective. Chapter VIII also explains the Model Remedy’s key features: a trichotomous classification of withdrawal grounds (fault, non-fault, and at will), and a combination of mandatory, sticky default, and default rules and standards differentiated by the grounds involved. Drawing on and improving upon existing legal regimes, the Model Remedy provides practical guidance on the design and implementation of calibrated withdrawal solutions responsive to a broad range of scenarios. It will be useful for legislators and judges seeking to address intracorporate conflicts in close corporations, and for legal practitioners drafting close corporation constitutions and shareholder agreements.

Chapter V turns to the UK, whose withdrawal remedy has served as the model for similar remedies across the Anglo-Commonwealth. While the ‘unfair prejudice’ remedy was initially a great success that spawned a rapidly developing jurisprudence, the perception of an explosion in shareholder litigation in the courts and mushrooming costs against the backdrop of ongoing civil justice system reforms caused serious backlash in the 1990s. On the judicial front, Lord Hoffmann’s seminal speech in O’Neill v Phillips effectively became the last word on unfair prejudice. Contemporaneously, law reform attempts aimed at addressing the perceived problems of unfair prejudice ultimately led nowhere. The meteoric rise and gradual fall of the unfair prejudice remedy in the UK is a cautionary tale of the power of judges to obstruct, of how one decisive voice prevailed over many divided against themselves, and of the limits of legislative reform in close corporation law.

Chapter VI turns to the US, where various states developed diverse solutions to shareholder conflict for over one hundred close corporation legal forms. While many US states recognize withdrawal as a solution to majority-minority shareholder conflict in US close corporations, several states have resisted or even renounced withdrawal. The attitude towards LLCs, which are rapidly growing in popularity across the US, is more ambivalent, as state legislatures and judges have been slow to respond to problems of intracorporate conflict and oppression. While the contractarian-led scholarly debate on whether corporate law should be mandatory or default is instructive, the reality that withdrawal is often missing from state LLC statutes is not attributable to state legislatures taking reasoned policy positions. Rather, withdrawal’s absence in LLCs is caused by incentives created by federal taxation policy. There are signs that history moves in circles as withdrawal remedies seem to be (re)emerging in LLCs.

Chapter III centres on the jurisdiction-neutral analytical framework applied in Chapters IV–VII, the target jurisdiction-specific chapters. The analysis covers the history, grounds, scope of protection, applicable parties, and the mandatory/default nature of each jurisdiction’s withdrawal remedy. Key findings from each jurisdictional chapter are summarised and compared, with salient similarities and differences, such as the fault/non-fault distinction, between the jurisdictions in these aspects highlighted. Observations about the legal actors (judges, legislators, scholars) involved in the creation and development of withdrawal regimes, and other themes emerging from this, are made. Further, this Chapter identifies the phenomenon of ‘spontaneous functional convergence’ of the four jurisdictions towards two distinct conceptual models of withdrawal (‘corrective’ and ‘insurance’ models), situating this contribution within the broader corporate law convergence and divergence debate. The comparative findings and insights from the four target jurisdictional studies in this Chapter form the basis of a model withdrawal remedy that is presented in Chapter VIII.

This Book critically examines the theory and operation of withdrawal remedies in the world’s four largest developed economies, the United States, the United Kingdom, Germany, and Japan. This Chapter opens by introducing the legal problem at the core of the Book: the need for minority shareholder protection in situations of shareholder conflict in close corporations. After explaining out the objectives, choice of target jurisdictions, terminology, and the ‘tripartite method’ employed, this Chapter ends with an overview of the remaining Chapters in the Book.

Chapter VII tackles the intriguing puzzle of Japan. Until relatively recently, shareholders and members of Japan’s close corporations had no access to withdrawal under the law, as neither of Japan’s then-dominant close corporation forms offered this. By revealing how shareholders in Japan responded to the absence of withdrawal, I show how Japan’s experience serves as a historical counterfactual that powerfully demonstrates the demand for and importance of withdrawal remedies in practice. More recently, withdrawal remedies at law became available in Japan, for the first time and for a true close corporation form – by semi-accident. The Godo Kaisha (GK), the new and American-inspired close corporation form, offers withdrawal remedies unprecedented even by comparative law standards, but numerous challenges lie ahead. While the GK’s withdrawal regime has yet to establish itself as an integral part of the corporate law landscape, Japan demonstrates the potential pitfalls involved in introducing close corporation withdrawal by legislation.

Chapter IV examines the withdrawal remedy in Germany, arguably the earliest major jurisdiction to introduce a close corporation legal form – the GmbH. The history of German GmbH law, especially the law of member withdrawal, belies Germany’s image and reputation as a ‘civilian’ jurisdiction. Despite the GmbH’s beginnings as a revolutionary invention of the German legislator, GmbH law is since little touched by major legislative reform, and heavily shaped then and now through German judicial precedent and academic literature. Member withdrawal for ‘good cause’ (Austritt aus wichtigem Grund), developed in the absence of express statutory provision, is an example of this par excellence. The flexible core concept of ‘wichtiger Grund’, which supports withdrawal in a wide variety of circumstances, powerfully demonstrates withdrawal’s value in the close corporation context. Germany’s experience illuminates the path for jurists of any jurisdiction interested in developing a functioning withdrawal regime of its own – even if politician-legislators accomplish and contribute nothing.

The Book’s theoretical core, Chapter II focuses on two fundamental concepts: the close corporation, and withdrawal. After explaining the close corporation’s distinctive features, I set out its cardinal problems: conflict between minority and majority shareholders, and the enhanced risk of inter-shareholder exploitation. Over time, leading jurisdictions have converged upon shareholder exit as the ultimate solution to shareholder conflict. This Chapter introduces the concept of ‘withdrawal remedies’ as legal mechanisms enabling voluntary shareholder exit from the corporation coupled with an enforceable monetary claim for the value of the withdrawing shareholder’s membership interest. I show how withdrawal remedies are the only class of solutions that 1) resolve intractable conflict and 2) protect minority shareholders. Reasons why shareholders (minority and majority) might find access to withdrawal desirable – and why they might not – are analysed by applying insights and concepts from behavioural law and economics such as ‘sticky defaults’ to the close corporation withdrawal context.