Issuer Choice in Europe
Cambridge Law Journal, Vol. 67, pp. 521-59, 2008
Posted: 7 Nov 2008
Date Written: November 6, 2008
The European Union has a tradition of national securities laws significantly differing from each other. Regulatory idiosyncrasies largely remain today despite recent efforts aiming at more comprehensive harmonisation. In addition, in important respects, the current conflict of laws rules contained in European Community securities laws bundle the choice of applicable securities laws with the issuer's registered office, while leaving some regulatory aspects to the law of the market where the issuer's securities are admitted to trading. Hence, to the extent that EU companies can choose their state of incorporation and trading location, they can also choose the applicable securities law among those in place in the 27 EU countries.
This article scrutinises the policy implications of the conflict of laws rules EC securities regulation has chosen in two scenarios: the present one, in which obstacles to companies mobility across the EU still make regulatory arbitrage in practice unavailable, and a prospective one in which these obstacles are removed.
We consider the bundling of securities laws with the issuer's law of incorporation for conflict of laws purposes overall detrimental if corporate law arbitrage is unavailable. On the other hand, we argue that the impact of such rules is overall beneficial if companies can easily engage in company law arbitrage.
Keywords: securities laws, securities regulation, harmonization, conflict of laws, corporate law, corporate governance, regulatory competition, legal arbitrage, issuer choice, Financial Services Action Plan
JEL Classification: G18, G34, G38, K22
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