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The illusion of motion: corporate (im)mobility and the failed promise of centros

Gerner-Beuerle, Carsten, Mucciarelli, Federico, Schuster, Edmund ORCID: 0000-0002-9355-535X and Siems, Mathias (2019) The illusion of motion: corporate (im)mobility and the failed promise of centros. European Business Organization Law Review, 20 (3). 425 - 465. ISSN 1741-6205

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Identification Number: 10.1007/s40804-019-00157-9


The European Court of Justice’s landmark decision in Centros was heralded as creating the preconditions for a vibrant market for incorporations in the EU. In practice, however, today’s corporate landscape in Europe differs little from that of the late 1990s. Very few large companies have made use of their ability to subject themselves to the company law of a Member State in which they are not also headquartered, and there are few signs suggesting that a ‘European Delaware’ will emerge in the near future. To the extent that Member States have engaged in competitive law-making, this has largely been confined to minimum capital requirements and rules affecting the ease of the incorporation process—areas concerning primarily micro-companies. We argue that the modest effect of Centros is not only a function of limited economic incentives to engage in regulatory competition and regulatory arbitrage, but also of the fact that the applicability of large sections of relevant laws governing corporate behaviour is determined by real seat-like connecting factors which render regulatory arbitrage more difficult. We analyse the boundaries between the lex societatis and neighbouring legal areas, notably insolvency and tort law, and find that the body of rules regulating a company’s outward-facing activities, as opposed to its internal affairs, is largely removed from regulatory arbitrage. It therefore seems likely that the potential benefits of selecting the applicable company law, while remaining subject to a cocktail of other, equally relevant rules, are sufficiently small to be regularly outweighed by the costs of a complex and non-standard corporate structure that is necessary to exercise free movement rights.

Item Type: Article
Official URL:
Additional Information: © 2019 The Authors
Divisions: Law
Subjects: J Political Science > JZ International relations
H Social Sciences > HD Industries. Land use. Labor
K Law > K Law (General)
Date Deposited: 31 Oct 2019 11:15
Last Modified: 20 Oct 2021 03:28

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