Silence Is Golden: The European Company Statute as a Catalyst for Company Law Arbitrage

Abstract:     
Following the skimming process that led to its final approval in October 2001, the European Company Statute provides only a patchy set of uniform rules applying to the new legal form, the Societas Europaea or SE. The Statute covers a limited range of issues, most of them only partially and often leaving options open to Member States or to companies themselves. Matters not covered by the Statute are governed by the law on public limited-liability companies of the Member State in which the SE has its registered office and central administration. The purpose of this paper is to show that the very lack of a uniform regime on issues affecting a company's position (as prey or predator) in the market for corporate control may prove to be a key factor for the success of this new legal form. First, it is highlighted how the European Company may turn out to be an attractive vehicle for company-law shopping within the EU. Then, it is showed that the absence of rules on shares, and to a lesser degree on legal capital and financing enhances the appeal of the European Company Statute as a vehicle for company law shopping. Finally, the picture is broadened to discuss the very desirability of regulatory arbitrage (and competition) with specific regard to rules concerning deviations from the one-share-one-vote principle.

Keywords: European Company, Societas Europaea, Regulatory Arbitrage, EC Company Law, Dual Class Shares

JEL Classifications: G32, G34, G38, K22

Working Paper Series