Karsten Engsig Sørensen (Aarhus University – Aarhus BSS, Department of Law) has posted Harnessing EU Company Law for Preventing the Abuse of Companies on SSRN. Here is the abstract:
While corporate entities provide significant economic and societal benefits, they can also be used to facilitate tax avoidance, regulatory circumvention, money laundering, social dumping, and other abusive practices. In recent years this has been done to an extent where it harms the operation of the internal market. Traditionally, the European Union addressed such concerns through sector-specific legislation in areas such as taxation, social security, anti-money laundering, and labour law, whereas EU company law largely remained focused on facilitating establishment and cross-border business activity. The article argues that this position has changed fundamentally following the amendments to the Company Law Directive adopted in 2019 and 2025, which introduced several mechanisms aimed at preventing fraud and abusive corporate practices. The article analyses the reasons behind this regulatory shift, including increased political attention to abusive corporate structures, the development of the general principle prohibiting abuse of EU law, and the implications of the Court of Justice of the European Union’s case law on corporate mobility. It evaluates new measures concerning company formation, business registers, director disqualification, and cross-border conversions, mergers, divisions, and branches. The article concludes that EU company law is evolving from a framework primarily concerned with market integration into one that also serves as a horizontal tool for combating corporate abuse. Nevertheless, significant limitations remain, and company law is likely to function as a complement rather than a substitute for sector-specific anti-abuse regulation.
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