How does corporate mobility affect lawmaking?: a comparative analysis

This paper examines the impact of increased corporate mobility on corporate lawmaking in the European Union (EU). More specifically, what is the answer to a simple question: has the increased mobility which arose from the implementation of the Societas Europaea (SE) and the path-breaking decisions of the European Court of Justice spread regulatory competition and caused the emergence of a Delaware-like member state in Europe? Two types of corporate mobility are distinguished: (1) the incorporation mobility of start-up firms, and (2) the reincorporation mobility of established firms. As to incorporation mobility, the Centros triad of cases makes it possible for start-up firms to incorporate in a foreign jurisdiction and many entrepreneurs have taken advantage of this new freedom. However, recent data from Germany and the Netherlands indicate declining numbers of such foreign incorporations over time. Moreover, Centros-based incorporation mobility is a rather insignificant phenomenon, economically speaking, since the only incentive is minimized cost of incorporation. National lawmakers have responded by amending their statutes to lower these costs. But, because out of pocket cost minimization at the organization stage is only of secondary importance in "choice-of-business-form" decisions, no competitive pressures arise that would engage national legislatures in far-reaching reform of corporate governance more generally. As to reincorporation mobility, which concerns the migration of the statutory seat of a firm incorporated in one member state to another, the SE has opened the door, but not wide enough to serve as a catalyst for company law arbitrage. Reincorporation mobility is still far from available in the EU. As a result, competitive pressures do not yet motivate changes in the fundamental governance provisions of national corporate law regimes.