Sparking Regulatory Competition in European Company Law - The Impact of the Centros Line of Case-Law and its Concept of 'Abuse of Law'

Abstract:     
This paper analyzes the ECJ's approach towards abusive behavior in company law and assesses the impact that the leading cases since 1999 have had both on business behavior in the EU and on the national law-makers who have responded to the opening of the markets. It is shown that the Court has provoked a sizable entrepreneurial migration from various EU countries towards the UK. This in turn has led to regulatory competition, in that other Member States in continental Europe have been forced to adapt their company law to make it more attractive for businesses. It is argued that at least so far, the (limited) competition between Member States has been beneficial and has reduced both registration time and costs. Questions remain as to the relevance of any comparison with the United States and the future developments for corporate re-incorporations.

Keywords: Centros, abuse of law, company law, regulatory competition, entrepreneurs, reincorporation

JEL Classifications: F15, G32, G34, G38, H73, K22, L22

Accepted Paper Series