Understanding Corporate Mobility in the EU Towards the Foundations of a European ‘Internal Affairs...
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Transcript of Understanding Corporate Mobility in the EU Towards the Foundations of a European ‘Internal Affairs...
Understanding Corporate Mobility in the EU
Towards the Foundations of a European ‘Internal Affairs Doctrine’
Joseph A. McCahery and Erik P.M. Vermeulen
Berlin, 27 and 28 June 2007
The History of Corporate Mobility in the EU
Non-Mobility Equilibrium
-Different History, Culture, Language
-Real Seat Doctrine Prevails
-‘Pseudo-foreign’ companies
-NO Brussels Convention on mutual recognition (1968)
1973
The Lisbon-Agenda... How To Get There?
Comparison with the United States: The Internal Affairs Rule
(Judge-Made and Codified in Restatement)
Delaware Inc.
MiamiHouston
Detroit
Minneapolis
Los Angeles
EU Harmonizing Company Laws 1970s and 1980s
Mandatory approach
Facilitating approach
Corporate Law Not Fully Harmonized; Mobility Not Fully Realized
1st Generation 2nd Generation 3rd Generation 4th Generation
1st Dir. 68/1512nd Dir. 77/91
3rd Dir. 78/8554th Dir. 78/6606th Dir. 82/8917th Dir. 83/3498th Dir. 84/253
11th Dir. 89/66612th Dir. 89/667
Dir. takeover bidsDir. modification of 1st Dir. 68/151
Corp
ora
te L
aw
C
onse
nsu
sC
orp
ora
te L
aw
D
isagre
em
ent
Costs
EU-Level Business Forms - The Societas Europaea
European
Corporate Governance
- Employee Participation- Capital Requirements- Reference to National Company Law
- Cross-border Restructuring- European Expansion and Acceptance
- Board Composition- One-tier System
“Registration Agents”
“Foratis AG begins trading in SEs”
The SE in Practice - More Mobility?
“Popular” in countries with rigid companies laws and
widespread participation rights
Mostly established by conversion
No change of registered office and seat of administration
“More effective” corporategovernance system - one-tier and/or“international” board composition
Source: Adapted from information available at www.seeurope-network.org
Post-Centros Case Law:Incorporation Mobility
UK LimitedUK Limited
1997 1998 1999 2000 2001 2002 2003 2004 2005
Centros Überseering
Inspire Art
Approx. 20,000
Registration Agents
(1) ‘Round-trippers’(2) Costs (not the
law)(3) Reform National
Corporate Laws(4) Disclosure Issues
with UK Limited(5) Financing
Problems(6) First Bankruptcies
The Future?
Source: Adapted from Becht, et al, Where Do Firms Incorporate?
Does Europe Offer the Right Framework?
Corporate Mobility?
EULegislativeMeasures
The European Union
ECJCase-Law
EU Legislative Measures are Incomplete
EULegislativeMeasures
ECJCase-Law
Directive 2005/56/EC on Cross-Border Mergers of Limited Liability Companies does not cover
all types of companies
Fourteenth directive on seat transfer isstill in the drafting stage
ECJ moves faster
ECJ in Sevic - Harmonization Directivesare no precondition for corporate mobility
ECJ Case Law Is Interpreted (Too) Narrowly
EULegislativeMeasures
ECJCase-Law
ECJ Case law has eliminated many restrictions to corporate mobility
However, member states tend to favour anarrow and strict interpretation of
the judgments
Non-mobility equilibrium still prevails
More case law needed to eliminate “all”restrictions
One More Thing ....Tax reasons are the main mobility “drivers” or “blockers”
Will the European Court of Justice “reverse” the Daily Mail decision?
And extend its decision in Lasteyrie du Saillant to legal entities?
Conclusion
ECJ Case Law and EU Legislative Measures Complement Each Other
Thank you!
Case Law EU LegislationPost-Centros line of Reasoning:
(1) Eliminate Tax Barriers
(2) Transfer of Statutory Seat
14th Directive (?)
RestatementApproach - Proposal Professor Sonnenberger