Making the Case for a Rome V Regulation on the Law Applicable to Companies

There is significant legal variation and uncertainty in the conflict of laws rules applicable to companies in the EU. While the case law of the Court of Justice on the freedom of establishment has clarified some questions, it is evident that case law cannot provide for an adequate level of legal certainty. The main recommendation of this article is that private international company law in the EU should be harmonized. The article discusses the main challenges that a future regulation to this effect—called here ‘Rome V Regulation on the Law Applicable to Companies’—would have to overcome. Some of those are of a political nature: for instance, countries may fear that it may become easier for companies to evade domestic company law (eg, rules of employee co-determination), and there are specific considerations that concern companies established in third countries. Another challenge is that a future regulation on the law applicable to companies has to be consistent with existing EU conflict of laws rules as regards, for example, insolvency and tort law, while also complying with the freedom of establishment of the Treaty. It is the aim of this article to discuss these questions in detail, notably the general considerations for harmonisation in this field, a potential harmonization based on the ‘incorporation theory’, how it may be possible to overcome some contentious issues such as the definition of the lex societatis or the relationship between the lex societatis and other areas of law, and the prospects for future international harmonization

The Private International Law of Companies in Europe

Can firms freely choose their place for corporation and thus the applicable law? And is it possible that a firm can subsequently reincorporate in another country, with the effect of a change of the law applicable to this country? In the European Union, the answer to these questions has to consider the impact of the freedom of establishment and the corresponding case law of the Court of Justice. Beyond some general principles, there is, however, considerable diversity between the laws of Member States. Thus, this book aims to provide an up-to-date analysis of this important area of law for all Member States. It is based on a comprehensive study, produced for the European Commission, on the private international law of companies in the European Union

Cross-Border Mergers and Reincorporations in the EU: An Essay on the Uncertain Features of Companies´ Mobility

Cross-border mergers were made feasible in 2005 through the enactment of a specific Directive. In the wake of this directive, companies have been given a relatively neat regulatory framework for merging with other entities incorporated in the EU. Cross-border mergers can also be vehicles for mere reincorporations, when a company establishes a new entity in the target country and merges into it, with the practical result of converting into a company type of the targeted jurisdiction. In a cross-border merger, however, several hidden obstacles might emerge, due to the different regulatory frameworks involved and the discrepancies that may arise regarding the required documents or the procedural timing according to the law of the countries involved. Such discrepancies are, to a certain extent, unavoidable as they also hinge upon nation-specific scholarly and judiciary formants. In practical terms, differences as to regulatory frameworks and language-specific discrepancies risk reducing legal certainty and increasing transaction costs. Therefore, cross-border mergers seem to be a suitable vehicle for re-incorporations of big companies, while small enterprises are likely to find this mechanism burdensome or timeconsuming

Determinants of corporate governance codes

Corporate governance codes are an increasingly prominent feature of the regulatory landscape in many countries, yet remarkably little is known about the determinants of corporate governance reform. Potential determinants include: (1) the diffusion of an international benchmark model of good governance; (2) a country’s legal system; (3) the desire to attract foreign investors; and (4) the influence of interest groups. I construct a proxy for the investor-friendliness of 52 corporate governance codes of different jurisdictions and collect data on the code issuers. I find strong evidence that the drafters of codes emulate international benchmark models and that jurisdictions belonging to different legal traditions use different regulatory strategies, some evidence that portfolio equity inflows are associated with the investor-friendliness of codes, and no evidence that interest groups succeed in affecting rules. The article suggests a method for the modeling of legal evolution, convergence, and the political economy of corporate governance codes