Cross-Border Reincorporations in the European Union: The Case for Comprehensive Harmonisation

Abstract

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.

Keywords: reincorporations, freedom of establishment, corporate mobility, comparative company law, Court of Justice of the European Union

JEL Classification: G38, K15, K22, K34