Company ‘emigration’ and EC freedom of establishment: Daily Mail revisited

After the recent ECJ’s case-law on EC freedom of establishment (cases Centros, Überseering and Inspire Art), regulatory competition for corporate laws takes place within the EU at the early stage of the incorporation of new companies. On the contrary, as regarding the “moving-out” of companies from the country of incorporation, the ECJ considered once (case Daily Mail) a tax law restriction against the transfer abroad of the administrative seat as compatible with EC freedom of establishment. For years, this decision has been considered as applicable to whatever restriction placed by countries of incorporation, even to the forced liquidation of the “emigrating” company. This paper will address the issue as to whether EC freedom of establishment really allows Member States to place whatever limit on the “emigration” of nationally registered companies. I will argue that EC freedom of establishment covers the transfer of the administrative seat as well as the transfer of the registered office and, therefore, that the country of incorporation can not liquidate “emigrating” companies. In addition, I will address the question as to whether a new Directive is needed allowing the transfer of companies’ registered office and identity preserving company law changes. I will argue that such a Directive is necessary to avoid legal uncertainty and to protect interests of employees, creditors and minority shareholders, among others, which could be detrimentally affected by the “emigration” of national companies.