Two Types of Regulatory Competition: Competitive Federalism Versus Reflexive Harmonisation. A Law and Economics Perspective on Centros

1999 ◽  
Vol 2 ◽  
pp. 231-260 ◽  
Author(s):  
Simon Deakin
Keyword(s):  
Law And Economics ◽  
Capital Requirements ◽  
Company Law ◽  
Regulatory Competition ◽  
The European Union ◽  
Legal Rules ◽  
Minimum Capital ◽  
The Uk ◽  
The Right ◽  
Competitive Federalism

There is a growing debate about the desirability of allowing greater scope for regulatory competition inside the European Union. The argument for doing so is that competition between the Member States in the production of legal rules will lead to greater economic efficiency than can be achieved through the harmonisation of standards. The Court’s ruling in Centros appears to mark a significant move in the direction of inter-state competition in company law. In deciding that a company founded by Danish citizens in the UK, thereby avoiding Danish minimum capital requirements, could not be denied the right to register an overseas branch in Denmark for the purposes of trading there, the Court has rekindled a long-running debate about the siège réel doctrine.

Two Types of Regulatory Competition: Competitive Federalism Versus Reflexive Harmonisation. A Law and Economics Perspective on Centros

1999 ◽  
Vol 2 ◽  
pp. 231-260 ◽  
Author(s):  
Simon Deakin
Keyword(s):  
Law And Economics ◽  
Capital Requirements ◽  
Company Law ◽  
Regulatory Competition ◽  
The European Union ◽  
Legal Rules ◽  
Minimum Capital ◽  
The Uk ◽  
The Right ◽  
Competitive Federalism

There is a growing debate about the desirability of allowing greater scope for regulatory competition inside the European Union. The argument for doing so is that competition between the Member States in the production of legal rules will lead to greater economic efficiency than can be achieved through the harmonisation of standards. The Court’s ruling inCentrosappears to mark a significant move in the direction of inter-state competition in company law. In deciding that a company founded by Danish citizens in the UK, thereby avoiding Danish minimum capital requirements, could not be denied the right to register an overseas branch in Denmark for the purposes of trading there, the Court has rekindled a long-running debate about thesiège réeldoctrine.

scholarly journals The Illusion of Motion: Corporate (Im)Mobility and the Failed Promise of Centros

2019 ◽  
Vol 20 (3) ◽  
pp. 425-465 ◽  
Author(s):  
Carsten Gerner-Beuerle ◽  
Federico Mucciarelli ◽  
Edmund Schuster ◽  
Mathias Siems
Keyword(s):  
Economic Incentives ◽  
Capital Requirements ◽  
Company Law ◽  
The Body ◽  
Regulatory Competition ◽  
Corporate Structure ◽  
Regulatory Arbitrage ◽  
Minimum Capital ◽  
European Court ◽  
Real Seat

Abstract 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.

scholarly journals Does the intensity of prudential regulation affect banks? Evidence from the 2007-2009 crises.

2012 ◽  
Vol 1 (3) ◽  
pp. 14-26 ◽  
Author(s):  
Isabel Argimon ◽  
Gerard Arqué Castells ◽  
Francesc Rodríguez Tous
Keyword(s):  
Capital Requirements ◽  
Capital Regulation ◽  
Risk Sensitivity ◽  
The European Union ◽  
Regulatory Capital ◽  
European Banks ◽  
Observed Behaviour ◽  
The Right ◽  
Yearly Data ◽  
Do So

The main objective of this research is to gather empirical evidence on the effects of more or less stringency and more or less risk sensitivity in regulatory capital requirements on the observed behaviour of European banks during the initial years of the financial crisis. To do so, we use the indices built in Argimón and Ruiz (2010), which capture such characteristics of capital regulation. We test their incidence using changes in yearly data for individual banks for 25 countries of the European Union covering the period 2007-2009. Our results show that more stringency and risk sensitivity in capital regulation resulted in higher capital increases, with limited effect on risk taking. However, for well capitalized banks, higher risk sensitivity resulted in higher capital and higher risk, thus requiring striking the right balance, so as to lead to increased stability.

20. Economic rights: workers, establishment and services

2020 ◽  
pp. 470-506
Author(s):  
Marios Costa ◽  
Steve Peers
Keyword(s):  
European Union ◽  
Regulatory Competition ◽  
Free Movement ◽  
Eu Law ◽  
The European Union ◽  
Member States ◽  
Economic Rights ◽  
The Right

This chapter examines the provisions of European Union (EU) law concerning economic rights provided by Articles 45, 49 and 56 of the Treaty on the Functioning of the European Union (TFEU), concerning workers, establishment and services respectively. It discusses the Court of Justice’s (CJ) interpretation and its impact on Member States’ ability to regulate the right to trade within their own territory, as well as regulatory competition between Member States. The chapter discusses the harmonization of qualifications (including the Qualifications Directive), the free movement of lawyers and the Services Directive.

scholarly journals The Rise and Fall of Regulatory Competition in Corporate Insolvency Law in the European Union

2019 ◽  
Vol 20 (3) ◽  
pp. 547-566 ◽  
Author(s):  
Horst Eidenmüller
Keyword(s):  
European Union ◽  
Regulatory Competition ◽  
The European Union ◽  
Insolvency Law ◽  
Insolvency Regulation ◽  
Corporate Restructurings ◽  
Dominant Market Position ◽  
Market Leader ◽  
Corporate Insolvency ◽  
The Uk

Abstract In this article, I discuss the rise and fall of regulatory competition in corporate insolvency law in the European Union. The rise is closely associated with the European Insolvency Regulation (EIR, 2002), and it is well documented. The UK has emerged as the ‘market leader’, especially for corporate restructurings. The fall is about to happen, triggered by a combination of factors: the recasting of the EIR (2017), the European Restructuring Directive (ERD, 2019) and Brexit (2019). The UK will lose its dominant market position. I present evidence to support this hypothesis.

scholarly journals The Illusion of Importance: Reconsidering the UK'S Takeover Defence Prohibition

2007 ◽  
Vol 56 (2) ◽  
pp. 267-307 ◽  
Author(s):  
David Kershaw
Keyword(s):  
Balance Of Power ◽  
Company Law ◽  
Rule Set ◽  
Defensive Action ◽  
The Uk ◽  
The Right ◽  
Takeover Defence ◽  
Limited Scope

AbstractThis article considers the significance of the UK Takeover Code's non-frustration prohibition. It asks to what extent the prohibition actually prevents post-bid, director-controlled defences that would not have been, in any event, either formally prohibited by UK company law without share-holder approval or practically ineffective as a result of the basic UK company law rule set. It finds that there would be minimal scope for director-deployed defences in the absence of the non-frustration prohibition, and that, in the context of UK company law, such defences have limited scope to be deployed for entrenchment purposes. Furthermore, this minimal scope for board defensive action would, in order to be compliant with a director's duties, require a pre-bid, shareholder-approved alteration to the UK's default constitutional balance of power between the board and the shareholder body to allow corporate powers to be used for defensive effect. In light of this conclusion the article looks for a rationale to justify denying shareholders the right to make this limited and potentially beneficial defensive election. It concludes that no persuasive rationale is available and that the prohibition is unnecessary and without justification.

scholarly journals Prest v Petrodel Resources Limited: The Veil Finally Pierced?

2020 ◽  
pp. 15-26
Author(s):  
Mohammad El-Gendi
Keyword(s):  
European Union ◽  
United Kingdom ◽  
Company Law ◽  
The European Union ◽  
The United Kingdom ◽  
Economic Climate ◽  
Piercing The Corporate Veil ◽  
The Veil ◽  
The Uk ◽  
The Eu

With the United Kingdom preparing to exit the European Union, the UK needs to create a clear case for why the UK should be the preferred place of business. Unclear, arbitrary and unprincipled laws and rulings may cause businesses to move to the EU post-Brexit. As such, it is necessary to reassess certain key case and areas of law in order to address their suitability for the new economic climate. The chosen area is company law, specifically piercing the corporate veil, which has someway yet to be ready to demonstrate the best case for UK business.

The right to revoke withdrawal notices from international organizations: The case of Brexit and the European Union

2020 ◽  
pp. 1023263X2095837
Author(s):  
Gino Naldi ◽  
Konstantinos Magliveras
Keyword(s):  
European Union ◽  
International Law ◽  
International Organizations ◽  
British Society ◽  
The European Union ◽  
Critical Question ◽  
The Law ◽  
Article 50 ◽  
The Uk ◽  
The Right

Following the 2016 referendum, the UK notified its intention to withdraw from the European Union pursuant to Article 50 TEU. Given the political and legal consequences of a much-questioned referendum and the strong opinion of many parts of British society that the UK’s membership should not be terminated, the question arose whether such a notification could be revoked unilaterally. In the absence of any mention in Article 50, expert opinion was divided. International law – that is, the law of treaties and the law of international organizations – does not appear to provide a definite answer, while state practice is rather scarce. The constituent instruments of international and regional organizations containing withdrawal clauses are also silent, except for African organizations and development/investment organizations, which invariably allow Member States to rescind withdrawal notices. As regards the EU Treaties, before the Lisbon Treaty they did not contain a withdrawal clause. In the preliminary ruling given in Wightman v. Secretary of State for Exiting the European Union, which concerned whether an EU Member has the sovereign power under Article 50 to revoke unilaterally a withdrawal notice, the Court of Justice helped to clarify a critical question of EU Law but also of international law.

scholarly journals Interpreting retained EU private law post-Brexit: Can commonwealth comparisons help us determine the future relevance of CJEU case law?

2019 ◽  
Vol 48 (1-2) ◽  
pp. 15-38
Author(s):  
Paula Giliker
Keyword(s):  
European Union ◽  
Case Law ◽  
Private Law ◽  
Eu Law ◽  
The European Union ◽  
Privy Council ◽  
Legal Perspective ◽  
The Future ◽  
The Uk ◽  
The Right

In June 2016, the United Kingdom voted in a referendum to leave the European Union (EU). The consequences of Brexit are wide-ranging, but, from a legal perspective, it will entail the repeal of the European Communities Act 1972. The UK government does not intend to repeal EU law which is in existence on exit day, but, in terms of the interpretation of retained law, decisions of the Court of Justice of the European Union (CJEU) will no longer be binding after Brexit. Nevertheless, s. 6(2) of the EU (Withdrawal) Act 2018 does allow the UK courts to continue to pay regard to EU law and decisions of the CJEU ‘so far as it is relevant to any matter before the court’. This article will consider the meaning of the phrase ‘ may have regard to anything…so far as it is relevant’. In empowering the courts to consider post-Brexit CJEU authority subject to the undefined criterion of relevancy, how is this power likely to be exercised? A comparison will be drawn with the treatment of Privy Council and the UK case law in Commonwealth courts following the abolition of the right of appeal to the Privy Council, with particular reference to the example of Australia. It will be argued that guidance may be obtained from the common law legal family which can help us predict the future relevance and persuasiveness of CJEU case law in the interpretation of retained EU private law.

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