Introduction

Freedom of establishment as enshrined in Articles 49 and 54 TFEU entails the right to set up companies and firms, as may subsidiaries and branches throughout the European Union. Since a number of cases having resulted in preliminary CJEU rulings entrepreneurs in the EU are free to select ‘foreign’ legal business formats to govern their company affairs. Thus, a legal person may be set up according to the laws of EU Member State A, the company's headquarters (and, usually, the main, or as it may occur, even all economic activities) however being established in EU Member State B (e.g. a German business entrepreneur incorporating a UK Ltd., the headquarters of that Ltd. residing in German territory).

Ringe's research concentrates on English company law ‘formats’, notably the UK private limited liability company (Ltd.), being preferred over German company types (‘regulatory competition’) by German start-ups over the past decade and the effects of the ‘response’ thereto by German legislator (‘law making’). Ringe starts his empirical research by observing that pursuant to CJEU judicature English limited companies were indeed very popular with German entrepreneurs in the first few years of the last decade but experienced a sharp decline from early 2006 onwards. In his view this temporal fixation casts justified doubts over the so far nevertheless hardly contested claim that the posterior German company law reform (November 2008) ‘successfully fought off’ the use of foreign company forms. He further notices that Austria shows a parallel development – the rise and fall of popularity of foreign, notably English private limited liability companies – quite remarkably a company law reform in Austria however being absent. Ringe perceives that there must be other, possibly complementary explanations for the paralleled and rather striking developments in both Germany and Austria. His findings are highly intriguing and give rise to a few side comments.

Side Comments

As a more or less preliminary remark: any attempt to trace motives underlying businessmen's preference to make use of a UK Ltd. rather than of a ‘domestic’ limited liability company type might be blurred by ‘non-rational’ and therefore concealed incentives that become known to the outer world on the off-chance only. In the ECJ Segers case, for instance, a Dutch businessman still opted for a UK ‘Ltd.’ to ‘impress’ the outer world (‘fashionable’), as was shown by documents (e.g. the Opinion of AG Darmon) underlying this case.