Corporate Law Competition in the EU Revisited: Italian Corporations Moving North and the Missing German SPACs

For nearly half a century, US scholars have debated the Corporate Law Competition between American states. In the EU, the conventional wisdom holds that no such competition exists. My article, published in the University of Chicago Business Law Review, challenges that consensus. It argues that a Corporate Law Competition among EU member states is finally emerging—and analyses how it works.

The theoretical starting point is the US debate. States compete for incorporations by offering corporate law as a product. Delaware dominates. Scholars disagree on whether this produces a race to the top or to the bottom, but they agree that there is a competition. In Europe, the picture has been different. The real seat doctrine long prevented corporate mobility. The European Court of Justice changed that in a series of landmark decisions—Centros, Überseering, and Inspire Art—which established that the Freedom of Establishment protects cross-border incorporations. Yet scholars continued to observe that no meaningful Corporate Law Competition followed. Various impediments—language barriers, concentrated ownership structures, unfamiliarity with foreign legal frameworks, conflicts of interest of local legal counsel—were thought to prevent it.

My article argues that this consensus no longer holds. Two recent case studies demonstrate that the dynamics are shifting.

The first case study concerns the increasing reincorporation of Italian corporations to the Netherlands. Iconic companies—Exor, Ferrari, Campari, Mediaset, Brembo—have moved their legal seat to Amsterdam. Their primary motivation is the Dutch Loyalty Share scheme, which allows controlling shareholders to accumulate additional voting rights over time. Italian corporate law historically offered only a limited loyalty share regime, capped at a 2:1 voting ratio, which was significantly less flexible than the Dutch model. The reincorporations are driven by shareholders seeking increased control benefits and stability for inorganic growth strategies. Tax considerations play a subordinate role.

The second case study examines German SPACs. Every SPAC that listed in Germany during the 2020–2021 boom incorporated in Luxembourg rather than under German law. The reason is straightforward: German corporate law is too inflexible to replicate the market-standard SPAC structure developed in the US. Mandatory capital maintenance rules, restrictions on share redemptions, and rigid corporate governance requirements make it practically impossible to structure a SPAC under German law. Luxembourg law offers the flexibility that sponsors and investors expect.

Building on these findings, my article constructs the mechanics of the emerging competition. On the demand side, the decision makers are shareholders—not boards, as in the US. This is because European corporations typically have concentrated ownership. On the supply side, both Germany and Italy have reacted with defensive legislative reforms. Italy enacted the Legge capitali in 2024, liberalising its loyalty share regime. Germany proposed legislative reforms to reduce the competitive disadvantages of German corporate law for SPACs. Neither country, however, has attempted to become a host jurisdiction itself. Their approach remains purely defensive: stemming the outflow rather than attracting inflows.

The article also demonstrates how the traditional impediments to Corporate Law Competition have been overcome. Legal cultures have converged through decades of EU harmonisation. Language barriers have decreased. Cross-border law firm mergers have mitigated the conflict of interest that local lawyers face when advising on reincorporations. The negative market perception of foreign legal forms has largely disappeared—the Societas Europaea and the Dutch NV are both highly reputable vehicles.

On the critical policy question—whether this competition produces a race to the top or to the bottom—my article argues against the race-to-the-bottom hypothesis. Two features of the European landscape provide safeguards. First, minority shareholder protection in most EU jurisdictions is far more developed than in the US, including comprehensive group law regimes in Germany and Italy. Second, shareholders have mandatory withdrawal rights in any cross-border conversion or merger. In practice, very few exercise them—suggesting that the reincorporations are not perceived as harmful by minority shareholders.

This does not imply that a full-blown regulatory competition akin to the US will emerge in the near future. But the dynamics of how EU member states' corporate laws interact are beginning to shift. Corporations and their advisors now have access to a broader array of corporate law products than they did 25 years ago. This introduces a new layer of market-based stimulus to the European corporate law landscape—one that supplements the EU's traditional top-down harmonisation strategy.

These findings open a trove of questions for further research: the resulting policy implications, potential additional cases evidencing the emerging competition, the underlying economics, the role of corporate lawyers in facilitating the competition, and its broader impact on stakeholders.

The author’s work can be accessed here.

Ben W. Fuhrmann is an attorney at Kirkland & Ellis.