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Over more than forty years, the European Union (formerly the European Community) has enacted a large number of directives aimed at harmonising company law rules across Member States. Nevertheless, differences across Member States persist with regard to company law rules. Member States’ regimes share a core of fundamental features: shareholders are not liable for the company's debts; companies have a separate legal personality; and the capital investment is commodified through the vehicle of freely disposable shares. Beyond these fundamental elements, it is more uncertain whether other general principles, having legal relevance, exist throughout the EU. By looking at national company law regimes and EU harmonising directives, this work has isolated only two principles that seem sufficiently general, common, and fundamental. The first principle is the unrestricted powers of directors to act on behalf of the company: this principle is based upon the German tradition and has been extended to public companies of all Member States by the First Company Law Directive of 1968. The second principle is equal treatment of shareholders who are in the same condition: this is a general duty that all companies’ bodies should respect when they make decisions that affect shareholders. Such a principle, however, is not a rigid equality rule, as differentiated treatment might still be justified in the interest of the company. However, its status within case-law of the European Court of Justice it is still unclear: on the one hand, the Court has denied that this duty is a general principle of EU law, with the consequence that it only applies within the scope of the specific provisions entailing this rule; on the other hand, other decisions of the Court seem to follow an opposite logic. Concerning insolvency law, it is much more controversial whether general principles exist within the EU legal order. Insolvency proceedings are country-specific, as most of their rules have a re-distributive impact on a broad range of stakeholders of the company, such as employees, creditors, and customers. Therefore, insolvency regimes are strictly related to political balances and national social security policies. The only common denominator of Member States insolvency regimes seems to be the duty to treat creditors equally and respect pre-insolvency entitlement and creditor ranking. Nevertheless, there is also an intricate web of exceptions to this principle, which vary broadly across jurisdictions and aim at protecting specific classes of creditors.

The Court of Justice of the European Union has recently clarified that the EU freedom of establishment also covers companies’ right to re-register throughout the EU. Hence, companies can, at least in theory, re-incorporate from a member state to another. Despite this recent case law, however, only some member states allow cross-border re-incorporations by way of relocation of registered office, while many other either do not regulate this transaction or outright ban the relocation of registered office. In this uncertain scenario, cross-border mergers can be vehicles for reincorporations, by establishing a new entity in the ‘target’ state and then merging into it. Cross-border mergers’ proceeding protects the interests of minority shareholders and creditors; additionally, there are clear rules for cancelling the company from the original register and re-registering in the register of the target state. On the other hand, this proceeding could be burdensome and time-consuming, as no ‘fast-track procedure’ is available when a cross-border merger only aims at relocating the company’s registered office. Eventually, several hidden obstacles might emerge, due to the different regulatory frameworks involved and the discrepancies that may arise regarding the required documents or the procedural timing according to the law of the countries involved. Therefore, cross-border mergers seem to be a suitable vehicle only for re-incorporations of big companies.

This work addresses the impact of language diversity and nation-specific doctrinal structures on harmonized company law in the EU. With this aim, two emblematic case studies will be analysed. The first case study is related to the definition of ‘merger’ adopted in the Company Law Directive 2017/1132 (originally in the Third Company Law Directive and the Cross-Border Merger Directive); by relying on the example of the SEVIC case decided by the Court of Justice of the European Union (CJEU), it will be shown that scholars’ and courts’ conception of the definition of ‘merger’ varies according to own domestic doctrinal structures. The second case study is related to the notion of ‘registered office’, which is key for establishing the scope of several harmonizing provisions and the freedom of establishment; this paper analyses terminological fluctuations across language versions of EU legislation and the impact of domestic taxonomies and legal debates upon the interpretation of these notions. These case studies show that company law concepts, despite their highly technical nature, are influenced by discourse constructions conducted within national interpretative communities, and by the language used to draft statutory instruments and discuss legal issues. The task of the CJEU is to counterbalance these local tendencies, and yet it is unlikely that doctrinal structures, rooted in national languages and legal cultures, will disappear.

This paper compares the legal frameworks for corporate reincorporations of all EU Member States, relying on a Study prepared by the authors for the European Commission and accompanied by detailed national reports. It is shown that, despite recent decisions of the Court of Justice that liberalise inbound and outbound reincorporations, several Member States still prohibit these transactions or make them 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. We argue that, as a consequence, harmonisation of the reincorporation process is necessary, and that it is desirable to reach a high minimum standard of creditor and minority shareholder protection and define clear rules for the cancellation of companies from the domestic register.

Certain insolvency law rules, like creditors’ priorities and set-off rights, have a distributive impact on creditors. Distributional rules reflect the hierarchies of values and interests in each jurisdiction and, as a result, have high political relevance and pose an obstacle to reforming the EU Insolvency Regulation. This paper will show the difficulty of reform by addressing two alternative options to regulate cross-border insolvencies in the European Union. The first one is the ‘choice model’, under which companies can select the insolvency law they prefer. Although such a model would allow distressed firms to select the most efficient insolvency law, it would also displace Member States’ power to protect local constituencies. The choice model therefore produces negative externalities and raises legitimacy concerns. The opposite solution is full harmonisation of insolvency law at EU level, including distributional rules. Full harmonisation would have the advantage of internalising all externalities produced by cross-border insolvencies. However, the EU legislative process, which is still based on negotiations between states, is not apt to decide on distributive insolvency rules; additionally, if harmonisation includes such rules, it will indirectly modify national social security strategies and equilibria. This debate shows that the choice regarding power allocation over bankruptcies in the EU depends on the progress of European integration and is mainly a matter of political legitimacy, not only of efficiency.

This article compares the legal frameworks for corporate reincorporations of all EU Member States, relying on a Study prepared by the authors for the European Commission and accompanied by detailed national reports. It is shown that, despite recent decisions of the Court of Justice that liberalise inbound and outbound reincorporations, several Member States still prohibit these transactions or make them 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. We argue that, as a consequence, harmonisation of the reincorporation process is necessary, and that it is desirable to reach a high minimum standard of creditor and minority shareholder protection and define clear rules for the cancellation of companies from the domestic register.

The Italian Supreme Court (Corte di Cassazione) has issued an important decision on companies’ freedom of establishment in the European Union (EU) and on jurisdiction over insolvency proceedings. It was a typical forum-shopping case in insolvency situations, in which a company decides to shift its registered office abroad before a court from its original country declares the insolvency. The Cassazione did not apply EC-Regulation 1346/2000 on crossborder insolvency, but declared the company as liquidated because of the transfer of the registered office. This solution leaves many questions unclear, both under EC-freedom of establishment and under jurisdiction rules for cross-border insolvency.

In the U.S. corporations can be incorporated in any of the 50 states and can "reincorporate" afterwards in any other state. In the E.U. such freedoms are a recent achievement: In the last decade, first the European Court of Justice has liberalized initial incorporations and only in 2005 the cross-­border directive has open the doors to freedom of midstream reincorporation from one member state to another. Midstream reincorporations, however, in the E.U. have a much different impact than on the other side of the Atlantic. In the U.S., indeed, the competence of the state where a company is incorporated is limited: On the one hand, it is restricted by federal laws and, on the other hand, it regulates only the “internal affairs” of corporate activities. By contrast, in the European Union, the agency problems between shareholders and board are bundled with the agency problems between shareholders and creditors, all being part of "corporate law" and in the exclusive competence of the member state of incorporation. Consequently, in the U.S. reincorporations are a relatively easy task, since they shift only rules that address the shareholders-­board relation, while creditors and other stakeholders are not affected. By contrast, in the E.U., any change of the applicable corporate law risks to jeopardize also creditors. Adjusting creditors will discount this risk from the credit rate or will protect themselves through specific covenant, but not­ sophisticated creditors will bear entirely the risk of opportunistic reincorporations. For this reason, many E.U. member states provide mechanisms for creditors’ protection in case of reincorporation, often by requiring the debtor to give a security or to pay the debts that are not yet due. These mechanisms are necessary to avoid negative externalities in "multi-­stakeholder" corporate laws, yet they make reincorporations more expensive and will impede a certain number of efficient transactions.

Following the ECJ’s recent case law on EC freedom of establishment (the Centros, Überseering and Inspire Art cases), regulatory competition for corporate law within the European Union takes place at an early stage of the incorporation of new companies. In contrast, as regards the ‘moving out’ of companies from the country of incorporation, the ECJ once considered a tax law restriction against the transfer abroad of a company’s administrative seat as compatible with EC freedom of establishment (the Daily Mail case). For years, this decision has been regarded as applicable to all restrictions imposed by countries of incorporation, even the forced liquidation of the ‘emigrating’ company. This paper addresses the question whether EC freedom of establishment really allows Member States to place any limit on the ‘emigration’ of nationally registered companies. It argues that EC freedom of establishment covers the transfer of the administrative seat as well as the transfer of the registered office and, therefore, that the country of incorporation cannot liquidate ‘emigrating’ companies. In addition, it addresses the question whether a new Directive is needed to allow the transfer of a com- pany’s registered office and the identity-preserving company law changes. It argues that such a Directive is necessary to avoid legal uncertainty and to protect the interests of employees, creditors and minority shareholders, among others, who could be detrimentally affected by the ‘emigration’ of national companies.