European company law

Abstract

Company law is undergoing fundamental change in Europe. All European countries have undertaken extensive 
reform of their company legislation. Domestic reform has traditionally been driven by corporate failures or 
scandals. Initiatives to make corporate governance more effective are a feature of recent European law reform, 
as are measures to simplify and ease burdens on smaller and medium-sized businesses (SMEs). An increasing 
EU harmonisation is taking place through the Company Law Directives, and the free movement of companies is 
also facilitated by the case law of the European Court of Justice on the directives and the right to free movement 
and establishment in the EC Treaty. European company law, over the last five years, has developed thoroughly: 
with accounting now under IAS/IFRS, with prospectus, takeover, market abuse, transparency and cross-border 
merger directives, with the implementation of the European company and the European cooperative society into 
national laws and with the ECJ case law making cross-border mobility an overall reality. Consequently, European 
company law is fundamentally new. a comparative law discussion and policy aspects, namely law and 
economics. The whole organism of (limited liability) company law is thus covered. The overall description of 
European company law includes the organization, accounting, finance and capital market law, as well as the 
cornerstones of EC corporate tax and insolvency law.  
This article also includes a survey of the various company law instruments (both pre- and post-Action Plan) 
which together make up EC company law, and discusses the objectives of EC company law policy. Among the 
specific elements covered are the following: 
the freedom of establishment for companies; 
free movement of capital; 
transfer of a company’s seat; 
cross-border conversions; 
cross-border merger operations; 
recognition of companies; 
the breakthrough rule on takeover bids; 
the mandatory bid; 
shareholder rights; 
minimum capital requirements; 
Community legal forms of enterprise.