A few months ago, we posted on this blog about a Study on the Law Applicable to Companies we conducted for the European Commission. The general background of this study was that, while the case law of the Court of Justice has been supportive of foreign incorporations and cross-border corporate mobility in the EU, many problems still persist in practice. The study, therefore, analysed these practical problems and the relevant domestic rules of all 28 Member States of the EU, followed by normative recommendations.
Now, in this blog post, we would like to provide an update and report on three further publications – and distinct findings – related to the initial study:
The first one is our paper on Cross-Border Reincorporations in the European Union: The Case for Comprehensive Harmonisation (published early-view version here). It explains in detail how several Member States still fail to allow intra-EU reincorporations or, at least, render their implementation impossible or impractical. Even where reincorporations are available in principle, significant legal uncertainties often exist due to a lack of clear and interoperable rules. This situation may, for instance, jeopardise the interests of creditors and minority shareholders of the emigrating companies in circumstances where the involved jurisdictions do not provide for an explicit regulation of cross-border reincorporations aimed at protecting these stakeholders. Furthermore, when procedural rules are unclear or lacking, companies might be struck from the relevant register of the country of origin without being entered in the register of any other Member States. As a consequence, we argue in this paper that harmonisation of the reincorporation process is necessary, and that it is desirable to reach a high minimum standard of creditor and minority shareholder protection. We also make a number of detailed proposals for a potential harmonising directive.
The second paper deals with the question: Why Do Businesses Incorporate in Other EU Member States? An Empirical Analysis of the Role of Conflict of Laws Rules. It observes that empirical research about corporate mobility in the EU has so far been limited in two respects: it has focussed on the analysis of companies incorporated in the UK and it has mainly been concerned with differences in the costs of incorporation such as minimum capital requirements. This paper aims to fill these gaps. It is the first paper that estimates the volume of incorporations of foreign businesses on the basis of commercial register data from each EU Member State. It is also the first to assess the impact of differences in the conflict of laws rules applicable to companies as they reflect the case law of the Court of Justice on the freedom of establishment. It finds that countries which have a clear-cut version of the ‘incorporation theory’ attract more incorporations than countries which have retained elements of the ‘real seat theory’. The paper also discusses the policy implications that follow from these findings for EU harmonisation in this field.
Thirdly, the four of us are in the process of editing a book on The Private International Law of Companies in Europe which will be published in 2018. This book will focus on the comparative findings of the study and provide an up-to-date analysis for all Member States. It will include the country reports of the study which, by contrast to the main report, have not been made available online. Thus, we hope that this book will also be of interest to both practitioners working on cross-border transactions and legal scholars with an interest in company law, private international law and EU law.
Carsten Gerner-Beuerle is a Professor of Commercial Law at UCL, Federico M. Mucciarelli (and here) is a Reader in Financial Law at the SOAS University of London and an Associate Professor of Business Law at the University of Modena and Reggio Emilia, Edmund Schuster is an Associate Professor of Law at the LSE, and Mathias Siems is a Professor of Commercial Law at Durham University.