EU company law: foundations and aims

EU company law was consolidated in Directive (EU) 2017/1132, yet national company codes remain and are periodically adjusted to EU directives and regulations. Ongoing work on modern company law and corporate governance aims to improve the business environment for companies, investors, and workers across the EU.

The legal basis lies in Articles 49, 50(1)-(2)(g), and 54(2) TFEU. Harmonisation supports freedom of establishment and the freedom to conduct business (Article 16 of the Charter, linked to Article 17 on property rights).

Corporate governance aims to create a friendly, uniform business environment: freedom of establishment, protection of shareholders and stakeholders, boosting competitiveness, and encouraging cross-border cooperation.

The internal market counts ~24 million companies; ~80% are limited liability. About 98–99% of capital companies are SMEs that must operate across the EU under uniform legal frameworks, benefiting from free movement of people, services, and capital.

Rules should ease company formation across the EU, protect investors and creditors, raise competitiveness, and foster cross-border cooperation. The internal market enables EU-wide companies, and harmonisation gives them coherent rules to operate.