Company Law in the Single European Market: Trends and Challenges

The CJEU’s treatment of choice of corporate law favours a liberal model of the internal market by granting autonomy to dominant actors in companies. In contrast, the general scheme of the TFEU suggests that the authors of the treaties were not in agreement concerning this particular economic model. Further, secondary legislation favours the introduction or retention of protective mechanisms for the benefit of minority shareholders, creditors and employees. This is not merely a matter of historical interest. The tensions in the regulation of companies that were evident at the time of the adoption of the Treaty of Rome remain relevant today. Indeed, the failings of the legislative process stem from disagreement among the Member States concerning the goods to be furthered by corporate law.

There is therefore a pressing need to create a clear framework for the mobility and governance of companies. There remain a number of gaps in the law that the judiciary is unable to fill. Further, and perhaps more importantly, notwithstanding the EU’s gradual acceptance of judicial lawmaking, it remains true that the legitimacy of the lawmaking process requires input from the legislator. It is submitted, therefore, that the adoption of legislation should not be a purely technical exercise but one that is the product of thorough political engagement in which the Commission, the Member States and the Parliament consider the diversity of approaches to company law and do justice to different approaches. In this context, Communitarisation should not be viewed as an end in itself, but as an instrument for better transnational law-making.