The Impact of Free Movement of Capital on Private Law

Abstract

INTRODUCTION Although the free movement of capital is a relatively young fundamental freedom compared to the other existing freedoms laid down in the Treaty on the Functioning of the European Union (TFEU), it has already proven to have had a remarkable impact on national company law. With regard to the relevance of the open corporation in the EU, this is no surprise: the vast majority of European company law harmonisation measures have been dedicated to this type of company: almost all of the, up to now, 14 company law Directives address the open corporation (some of them even exclusively the public open corporation), for whose functioning the free tradability of shares at a regulated stock market is the essential precondition. Additionally, it is the open corporation that was established as an optional model rule for the internal market, the Societas Europea (SE). The SE has proven to be the most successful European company, whereas the European Economic Interest Grouping (EEIG) never gained particular importance, and the project of the Societas Europea Privata (SPE) Statute (an optional model for a closed company on an EU level) has even been abandoned by the Commission. There is no doubt that capital market freedom is of fundamental importance for those companies whose shares are traded on the stock market. As the ‘big players’ of the economy, the companies that operate on a European and international level are typically organised in that form; it seems to be a logical consequence that the focus of the EU law-making effort has been directed primarily towards the open corporation. The development of capital market freedom through the European Court of Justice (‘Court of Justice’) is well in line with this secondary law approach (ie because the free movement of capital is of special interest to those companies that are able to raise capital on capital markets). In contrast to this, the freedom of establishment applies to the company in general, irrespective of the particular form in which it is organised. Article 49 TFEU thus protects (in accordance with Article 54 II TFEU) all companies or firms constituted under civil or commercial law, including cooperative societies and other legal persons governed by public or private law.