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

Abstract

The Court of Justice of the European Union has recently clarified that the EU freedom of establishment also covers companies’ right to re-register throughout the EU. Hence, companies can, at least in theory, re-incorporate from a member state to another. Despite this recent case law, however, only some member states allow cross-border re-incorporations by way of relocation of registered office, while many other either do not regulate this transaction or outright ban the relocation of registered office. In this uncertain scenario, cross-border mergers can be vehicles for reincorporations, by establishing a new entity in the ‘target’ state and then merging into it. Cross-border mergers’ proceeding protects the interests of minority shareholders and creditors; additionally, there are clear rules for cancelling the company from the original register and re-registering in the register of the target state. On the other hand, this proceeding could be burdensome and time-consuming, as no ‘fast-track procedure’ is available when a cross-border merger only aims at relocating the company’s registered office. Eventually, 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. Therefore, cross-border mergers seem to be a suitable vehicle only for re-incorporations of big companies.