EU company law, artificial corporate entities and social policy

The subject of this report spans a broad field of intertwined disciplines. The emphasis is on the phenomenon of (artificial) corporate entities operating in a cross-border context of free provision of services. The starting point is an analysis of the EU-parts of the regulatory frame for the internal market, followed by a general review of adjacent EU-social policies. Company law, in the strict sense, seems hardly to be affected by the developments related to fraud and regulatory arbitrage. The terms ‘genuine’ or ‘non-genuine’ undertaking do not figure in the EU acquis and are only sparsely used in the legislation of Member States. The information, necessary to determine whether a company is a genuine undertaking, of national registries is incomplete and superficial, and commercial databases are inconsistent and easy to manipulate. As far as national instruments are used to tackle fraudulent practices with corporate legal entities in the context of cross-border services, these instruments stem neither from regulations enshrined in company law nor from the (implemented) safety-of-services related legislation. Limited efforts are made to tackle these practices based on secondary legislation in adjacent policy areas (i.e. labour inspectorate, social security offices). These compliance offices lack the competence to act effectively and thoroughly against non-genuine entities.