The Free Movement of Companies within the European Union: Legal Aspects

The European Union aims to achieve an effective single market through the cross-border mobility of goods, persons, services and capital. The freedom of establishment is granted by Articles 49 and 54 of the Treaty on the Functioning of the European Union, stating that any restrictions by a Member State on this freedom shall be prohibited. The case law of the European Court of Justice has challenged the interpretation of Articles 49 and 54, showing that there continues to be obstacles to the free movement of companies within the EU. The relevant case law has also contributed by showing when a restriction by a Member State may be permitted. This paper compares the EU system of corporate law to the approach of the U.S, with regulatory competition creating a race among states to see who can provide the most advantageous corporate laws in order to attract more companies. The Societas Europaea is seen to be a useful tool for companies that want to incorporate in another jurisdiction within the EU, thus facilitating cross-border mobility.