THE SCOPE OF THE LAW APPLICABLE TO COMPANIES IN THE EU.

Despite the crucial role of corporate mobility in ensuring the proper functioning of the internal market, and although Articles 49 and 54 of the Treaty on the Functioning of the European Union expressly recognize the freedom of establishment for certain – albeit not all – legal persons, the European Union still lacks a coherent, explicit, and comprehensive regime governing the law applicable to such entities. While recent legislative developments – most notably Directive (EU) 2019/2121 – have improved coordination among Member States’ legal systems, they fail to address, at least expressly and holistically, the problem of the law applicable to companies and other bodies. As a result, the matter remains, at least formally, governed by national private international law provisions and techniques, with the undesirable consequences this entails. Member States, in fact, not only rely on different connecting factors to determine the law applicable to companies and other entities but also disagree on which institutions fall within the scope of “company law” and should therefore be governed by choice-of-law rules on companies. All this often results in the non-recognition of companies and other entities incorporated under the law of a Member State and having their registered office, central administration, or principal place of business therein and in the impossibility for such entities to transfer their seat to another Member State, thereby significantly hindering cross-border corporate mobility and, hence, the effective exercise of the freedom of establishment. Nevertheless, the very nature of the European Union legal order, along with the complex interaction between Union and national sources of law, makes it mandatory to use the adverb “formally” when affirming that the regulation of the law applicable to companies is left to national legal systems. Multiple sources of EU law directly affect – and prevail over – national law. First, the Court of Justice of the European Union has assigned to Article 54 of the Treaty on the Functioning of the European Union a meaning that exceeds well beyond its literal function of identifying the legal persons entitled to exercise the freedom of establishment. The provision, in fact, requires Member States to recognize companies that are validly incorporated in another Member State and have their registered office, central administration, or principal place of business within the Union and to permit operations resulting in a modification of the law applicable to the entity. Secondly, the EU legislator has enacted a range of secondary law instruments that, in different ways, exert an influence over domestic conflict-of-law regimes. Indeed, on the one hand, when these instruments harmonize substantive law, they render – at least to some extent – immaterial the lingering divergences among national conflict rules. On the other hand, where they harmonize private international law in fields adjacent to company law, they define and redefine the institutions ascribable to the lex societatis. Building on these premises, this research reconstructs the current legal framework governing the law applicable to companies within the European Union by identifying and analyzing the impact of EU law on national choice-of-law provisions concerning the law applicable to companies and other entities. Hence, first, the present study analyzes how, when, and to what extent European Union law supersedes national private international law rules and mechanisms governing the law applicable to companies. This inquiry demonstrates that, although formally, matters related to the law applicable to companies remain unharmonized, the pervasive influence of EU law considerably limits national regulatory autonomy and mitigates the impact of the consequences arising from the formal differences that still persist in Member States’ private international law regimes. This, in turn, supports the claim that a European private international law regime on the matter, to a large extent, already, de facto, exists. Secondly, the study critically assesses whether the current EU regulatory framework in this field is consistent with, and adequate to serve, the objectives of the European Union established by Treaties. Building on this latter analysis, the present study advocates for the adoption of a regulation on the law applicable to companies and other entities and examines its possible content.