From Traditional Oversight to Network Governance in Commercial Companies: Rethinking the Corporate Oversight Model in Iranian Law in Light of the English Experience

Abstract

Far-reaching economic developments and the increasing complexity of commercial corporate structures have seriously challenged the effectiveness of traditional models of corporate oversight. In modern legal systems, corporate oversight is no longer exercised exclusively through legislation, general meetings of shareholders, and statutory inspectors; rather, a network of formal and informal actors participates in the oversight process. This study aims to rethink the corporate oversight model in Iranian law by examining the transition from traditional oversight to network governance in light of the experience of English law. The principal research question is whether the Iranian legal system has the capacity to transition from a hierarchical model of oversight to network governance and what lessons the English experience offers for redesigning Iran’s corporate oversight system. The study employs a descriptive-analytical method and a comparative approach. The findings demonstrate that the corporate oversight structure in Iran remains predominantly rule-based, centralized, and reliant on formal enforcement mechanisms. By contrast, the English experience reflects the development of a multilayered network of oversight actors, including the legislature, regulatory bodies, the capital market, institutional investors, independent auditors, courts, and information-disclosure mechanisms. The results indicate that the weaknesses of Iran’s corporate oversight system arise less from a shortage of legal rules than from a lack of institutional coordination, the restricted role of shareholders, weak shareholder activism, and the absence of a network-based oversight architecture. Accordingly, this article proposes a five-layer network governance model as a framework for redesigning Iran’s corporate oversight system.