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Thursday, May 25, 2006

More on intra-EU regulatory arbitrage

"Since a European High Court ruling in 2002, EU companies are free to incorporate anywhere in the region," reports the Financial Times. "Some 30,000 small German companies have since registered as limited companies in the UK, mainly attracted by the lower cost."

The trend is now spreading, it reports, to medium-sized German companies that anticipate expanding and listing publicly. For such firms the attraction of UK incorporation (unlike incorporating as a Societas Europaea or SE) is that it would enable them to avoid Germany's co-determination law, which applies only to German company forms (Aktiengesellschaften)--though that interpretation may be challenged in court.

Gerrit Wiesmann, "Germans eye UK listings as a way out of worker law," Financial Times, U.S. edition, 24 May 2006, 16.

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