6 Colum. J. Eur. L. 181 (2000)
Karsten Engsig Sørensen. Professor, Ph.D., LL.M. Department of Law, Aarhus School of Business, Denmark
Mette Neville. Professor, Ph.D., Department of Law, Aarhus School of Business, Denmark.
AN ANALYSIS OF THE PROPOSED 14TH EC COMPANY LAW DIRECTIVE ON THE TRANSFER OF THE REGISTERED OFFICE OF A COMPANY FROM ONE MEMBER STATE TO ANOTHER WITH A CHANGE OF APPLICABLE LAW
For many years, efforts have been made to establish a single market without internal frontiers or barriers in the European Union (EU). In spite of this, it has not been possible to this day to secure corporations the freedom to migrate across the borders of the EU Member States. This is in stark contrast to the situation in the United States (US).
In the US, it is generally possible to choose between the corporate laws of the different states when intending to incorporate a corporation. When the decision has been made to incorporate a corporation in one state, there is nothing to prevent the corporation from subsequently conducting its activities in a state other than the state of incorporation. Consequently, there is rarely a motive for incorporating the corporation in another state,’ but if this is desired, such reincorporation may be effected with little cost or difficulty.
However, the conflict of laws rules applied to corporations in several EU Member States prevent the free choice of deciding where to incorporate, because the rules usually require that the corporation has to be incorporated in the state in which which this concept is used in the USA, and below the phenomenon is referred to as corporate change of nationality. it has its real seat. The same conflict of laws rules also prevent a corporation from subsequently moving its activities (and thus its real seat) to another Member State.
A corporation may of course reincorporate by transferring its activities to a newly formed corporation in another Member State, but such a transaction will be very costly and difficult in the EU. Even though the corporate rules governing both private and public limited companies have been extensively harmonized, this harmonization still has not provided a real possibility for corporate cross-border migration. In certain areas, the rules have been harmonized to establish minimum standards that ensure relatively uniform rules in the EU Member States. This approximation of laws does not in itself ensure that corporations can make cross- border movements, and therefore a number of proposals have been directed at this particular aspect of corporate law-for example the proposal for a Directive on cross-border merger, a Regulation on a European Company, etc.
The proposal for a Fourteenth European Community (EC) Company Law Directive on the transfer of the registered office of a company from one Member State to another with a change of applicable law is another attempt to ensure the right of free movement of corporations. The proposed Directive will make it possible for corporations in the EU to effect an identity-preserving nationality change, whereby a corporation that is incorporated in one Member State (the state of departure) may be incorporated in another Member State (the state of arrival) without having to be dissolved in the state of departure and then reincorporated in the state of arrival. The aim thus is to ensure the possibility of cross-border migration. Such a migration is not equivalent to “reincorporation” in the sense in To make it possible to assess the impact of the proposed Directive, it is necessary briefly to explain the current rules in the EU. Section II contains a short description of the problems in connection with the existing corporate conflict of laws rules, and section III is concerned with the existing rules of the Member States governing a corporate change of nationality. Sections IV-VII contain a discussion of the background to and the content of the proposed Directive.