No Freedom of Emigration for Companies?
Copenhagen Business School, Department of Law; University of Oxford - Faculty of Law; University of Oxford - Oxford-Man Institute of Quantitative Finance
European Business Law Review, Vol. 16, No. 3, 2005
The freedom of establishment for companies (Articles 43 and 48 EC Treaty) includes the right to choose the company's seat in any Member State of the EC. However, in recent years, the European Court of Justice (ECJ) seems to have interpreted those articles as being relevant only to the recognition of foreign companies, whereas the right to leave the company's country of incorporation has not come within the scope of this freedom. The purpose of this paper is to question this distinction between "departure" and "arrival".
It is argued that the ECJ's point of view is inconsistent in itself, creates logical problems and is incoherent in light of its interpretation of other fundamental freedoms. Arguably, the Court has created a "trap" for itself by insisting on the differentiation between "exit" and "entry" and by putting much effort into maintaining this differentiation over the last years. The article ends with an appeal to reassess the application of the freedom of establishment to companies and to find the courage to overcome the artificial differentiation.
Number of Pages in PDF File: 33
Keywords: corporate mobility, freedom of establishment, Centros, exit/entry distinction
JEL Classification: K22, G34, H73Accepted Paper Series
Date posted: January 21, 2008
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