Corporate Law Competition in the EU Revisited

Ask a European corporate lawyer whether member states compete for incorporations and the answer will usually be „no“. More than twenty-five years after Centros, Überseering and Inspire Art, the settled view is that the European Court of Justice opened a door that almost nobody walked through. The UK Limited had its moment, Brexit closed it, and continental legislatures responded defensively rather than competitively. In a new article in the University of Chicago Business Law Review, I argue that this common consensus no longer holds. 

The Evidence: Italian Corporations Moving North and the Missing German SPACs 

The first case is Italian. Exor, Ferrari, Campari, Mediaset and Brembo have all reincorporated in the Netherlands, typically by cross-border conversion or merger, often followed by an Amsterdam listing and sometimes a Milan delisting. By 2023, fifteen companies worth more than €1 billion had left Italy for the Netherlands. This represents roughly 22% of the Borsa Italiana's market capitalisation and 27% of the FTSE MIB. Whatever else one makes of this evidence, it is not economically negligible, and it is not confined to small closely held firms. That alone breaks with the standard account of European mobility. 

The second case is German, and it turns on an absence. Six SPACs listed on the Deutsche Börse in 2021 and 2022. Not a single one was a German company. All were Luxembourg SEs. German stock corporation law makes the market-standard SPAC essentially unbuildable: capital contributions cannot sit in escrow, creditor protection rules block redemption rights, liquidation takes a year, and a €1.00 minimum contribution per share raises the sponsor's cost of entry. Luxembourg, by contrast, imposes none of this, permits a contribution-in-kind de-SPAC without a target shareholder vote, lets sponsors vote their shares, and requires only a simple majority. 

Demand: What Drives the Choice of Jurisdiction?

The more important question is what companies are seeking. The textbook answer — more efficient, value-enhancing rules — is not borne out by the evidence. Tax does not explain the moves either: most Italian movers kept their tax residence at home, and effective tax rates show no significant shift around reincorporation, while a pre-combination SPAC has almost no taxable income to shelter. 

What the Dutch reincorporations bought was a loyalty share scheme, and with it disproportionate voting power. Around 90% of the firms making the move had a controlling shareholder, and Italian movers used loyalty structures more aggressively than Dutch firms do, often with loyalty voting rights ratios being lifted to 10:1 after ten years. What the SPAC sponsors bought was technical feasibility plus legal certainty and market credibility, in a jurisdiction where comparable deals had already closed. 

This brings me to my central claim. In Delaware the de facto decision-maker is the board, because ownership is dispersed. In Europe, it is the controller or the sponsor. Roughly 50% of Milan-listed companies have a shareholder above 50%, against about 4% in the US. A jurisdiction competes by offering benefits to whoever actually decides, and that is rarely the board in Europe. 

Some familiar impediments have also faded. English is now the lingua franca of cross-border transactions; harmonisation and programs like Erasmus have narrowed the knowledge gap; internationalised law firms and networks have blunted the local counsel conflict, because advising on Dutch or Luxembourg law no longer means losing a client relationship; and neither the SE nor the N.V. carries the reputational stigma the Limited eventually acquired in some European jurisdictions. 

Supply: Legislative Responses Under Competitive Pressure 

Legislatures have taken note of these developments. Italy answered Fiat's 2014 departure with its own loyalty shares, then lifted the ceiling to 10:1 in the 2024 Legge capitali. Germany created the Börsenmantelaktiengesellschaft in 2024, citing competitive disadvantage for its financial market. Both responses are defensive: neither state sought to offer more flexibility than the jurisdiction it was losing companies to, and neither is seeking to become the European Delaware. This is nonetheless supply-side behaviour, and it is a market-based stimulus operating alongside the EU's traditional top-down harmonisation. 

The Policy Question 

Does this emerging competition produce a race to the bottom? I argue not — at least not yet. European minority protection is more substantive than the US baseline, with German Konzernrecht and Articles 2497 ff. of the Italian Civil Code doing work that fiduciary duties alone do in Delaware. Cross-border conversions and mergers carry mandatory withdrawal rights, disclosure is substantial, and in practice shareholders largely decline to exit: only 1.3% withdrew in Brembo's move. The empirical work on Italian loyalty shares finds no significant value or profitability effect. SPAC investors, meanwhile, get a prospectus and redemption rights before they invest at all. 

The Road Ahead 

These two case studies are a beginning, not an endpoint. The underlying economics require further investigation, as do the role corporate lawyers play in facilitating or suppressing mobility, and the implications for employees and other stakeholders beyond the shareholder. A central question is how member states can harness this emerging competition to improve their corporate law while preserving effective protection for minority shareholders, and whether today’s defensive reforms may develop into more proactive efforts to offer attractive legal frameworks. European corporate law stands at a crossroads as it enters a new phase — one that presents both opportunities and challenges. The task now is to shape that competition wisely. Scholarship has an important role to play in that endeavour.

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Ben William Fuhrmann is a corporate associate in the London office of Kirkland & Ellis International LLP.

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