Corporate Mobility under Private International Law and European Community Law: Debunking Some Myths (original) (raw)
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Corporate Mobility in Private International Law and European Community Law: Debunking Some Myths
Yearbook of European Law, 2009
This theory originated from nations that were keen to adopt a liberal approach to trade. 5 Under this theory, the existence and dissolution of a company are determined by the State of incorporation. Furthermore, the internal affairs of the company (e.g. matters of legal status, standing, rules on corporate governance, relationship between company, directors and shareholders, dissolution, liquidation etc) are regulated by the law of the State of incorporation. 6 This is irrespective of any activities, minimal or substantial, pursued in other States. Therefore, once a company has satisfied the formation requirements in its State of incorporation, then it is recognised everywhere. 7 In other words, when the incorporation theory is used for determining governing law, the same theory tends to be used for the issue of recognition. 8
2009
On 16 December 2008, the ECJ, in delivering its ruling in the Cartesio case 1 , concerning a limited partnership incorporated in Hungary and seeking to transfer its seat to Italy while maintaining its legal status under Hungarian law, uphold – contrary to the Advocate General (AG) recommendation a position expressed twenty years earlier in the Daily Mail case 2 . Notably, in Daily Mail the ECJ had stated that, at the current state of EC law, Article 48 of the Treaty could not be interpreted as conferring companies incorporated in a Member State the right to move their head office or registered office to another Member State (so called right of primary establishment) while retaining the legal status conferred by the law of the State of incorporation. After Daily Mail, the ECJ had been delivering other landmark company law rulings concerning companies’ freedom of establishment within the European Community – in particular, the Centros 3 , the Uberseering 4 , the Inspire Art 5 , the SE...
Transfer of Corporate Seat in EU: Recent Developments
ATHENS JOURNAL OF LAW
Transfer of corporate seat has been important legal topic in EU law ever since 1980's. While it was clear from the wording of the very first EEC treaties, that companies should benefit from a freedom to establish themselves in another Member State, the extent of this freedom was, more or less, unclear. Some useful guidance with regard to the issue when and under what circumstances a company can transfer its corporate seat and its activities to another Member State, have been given by the ECJ. Every new Court's decision regarding transfer of corporate seat (such as ECJ decisions in case Centros, Inspire Art, Überseering, Daily Mail, Cartesio) had huge echo among corporate lawyers and business and were analysed in the smallest details. The most recent ECJ decision in Polbud case again showed that transfer of corporate seat is topic that still raises number of legal questions. In that sense, paper will analyse relevant EU legislation applicable to corporate mobility. It will particularly focus on new proposal of the Directive 2017/1132 on cross-border conversion, mergers and divisions and possible impacts of that Directive to corporate mobility. Special attention will be given to the ECJ ruling in Polbud case in which ECJ had to decide on delicate question as to whether or not companies should be allowed to "change nationality".
Company’s Cross-border Transfer of Seat in the EU after Cartesio
Jean Monnet Working Papers, 2009
This paper analyses the present state of affairs of companies' cross-border mobility in the EU after the ECJ's judgment in Cartesio. This judgment is subject to an in-depth critical examination in light of the preceding case-law of the Court on companies' freedom of establishment. Departing from Cartesio the paper enters into the debate about the adoption of new harmonization measures designed to remove the existing barriers on companies' cross border mobility in the internal market that result from the divergent and deep rooted Member States' companies' private international law rules. The paper critically assesses the non-EU legislatives initiatives regarding the adoption of the long awaited 14 th company law directive on the crossborder transfer of registered office. It argues that such a harmonization measure should now be finally adopted allowing companies to transfer their registered office alone from one Member State to another. That legal instrument must, in any event, respect the boundaries of the 'abuse of law' put forward by the Court in Cadbury Schweppes in the context of the exercise of the community right of establishment by companies in the EU.
Revista General de Derecho Europeo, 2022
ABSTRACT: The construction of the European Union Single Market requires the elimination of all the barrier to the freedom of establishment of companies as well as the adoption of uniform, or at least harmonized rules for their mobility. Arts. 49 and 54 of the TFUE provide and guarantee the possibility the companies to be constituted according to the law of a Member State and to carry out their economic activities in another EU Member State. One of the main obstacles for the corporate mobility, are the differences between the national legislations regarding the legal status of the companies and the connecting factors to determine the “proper law”. Whenever the company participates in international operations, different problems of private international law character may arise. Thus, becomes necessary to identify the specific national law (lex societatis) to govern the company, so this State will have the jurisdiction to set out legal rules as well as jurisdiction to resolve legal conflicts. The differences between the national legal systems criterions to determine de lex societatis have been gradually eliminated by the ECJ case law by confirming the application of the incorporation theory as a leading principle of the company mobility in the EU. The evolution of the ECJ case law in the field of free movement of companies, form Centros to Polbud, have strongly influenced the EU legal rules encouraging the adoption of Directive 2019/2121. The Directive provides a common set of rules aiming at to standardize the three forms of corporate conversions - change of legal form, division and merger - as well as to promote the legal mobility of corporations within the European Union.
Right of Establishment and Corporate Mobility – an Outline of Issues
Zbornik Pravnog Fakulteta U Zagrebu, 2012
The paper outlines the basic issues arising from the rules on the right of establishment in the European Union and discusses to what extent those rules enable companies to change their seat. The seat of the company is crucial for determining the substantive law which applies to the company. The substantive law may be either the law of the registered seat or the law of the real seat of the company. Confl ict of laws rules in various countries are different as to the determination of the substantive law, depending on whether that law applies real seat or registered seat theory. Any company and its members are interested that the applicable substantive law is favourable to the company, its members and its business. The open question is, however, to what extent they are free to choose that law, by choosing the place of incorporation and/or by moving the seat of the company from one country to the other.
2018
This article focuses on mobility of companies in the European Union in the light of the Court of Justice’s judgment in the C-106/16 Polbud – Wykonawstwo sp. z o.o. case.1 The Court of Justice has once again interpreted the treaty provisions relating to the EU freedom of establishment in the context of cross-border conversion of companies. The in-depth analysis of the case from the substantive law perspective as well as from the conflict-of-law perspective has raised some doubts with regard to the background of the judgment. Therefore, the article assesses whether the cross-border transfer of a seat took place in the Polbud case or the cross-border conversion, or possibly a new company has come into existence. Most of the analysis is aimed at exposing the risks related to the companies’ mobility under the rules adopted in the Polbud judgment, in particular in the absence of respective European and national regulation.
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The Transfer of Seat of Companies within the European Single Market
Law Review, 2020
The company law in Europe continues showing a difference of opinions in relation to the transfer of a company seat from one system to other, affecting the well functioning of the Single Market and the principle of freedom of establishment provided by the Treaty, no matter the way those organisations want to move, the Court of Justice being the only one offering, in time, clarifications and decisive solutions, many of them limiting the member states’s action in restraining the freedom of establishment of companies. As a consequence, the caselaw on transfer of seat of companies from one member state to another, rather timid at the beginning, but approaching a more bold attitude recently, become more favourable towards the acceptance of the freedom of establishment in most cases of transfer, the national company law, especially the provisions on conflict of law, facing a new challenge in the harmonisation of the provisions related to incorporation, functioning, merger/division/conversion or the creation of secondary establishments. Moreover, the development of the market, leaning towards a speedy digitalisation, forces both the institutions and the members states to take measures to solve the problem of transfer of seat of companies in a more integrated market and one of the steps made in this way was the adoption of the Company Law Package, by which the European Union addressed two crucial issues: the use of digital tools by the companies and the cross-border conversions, mergers and divisions. The article follows the main developments of the treaty provisions and caselaw in relation to freedom of establishment and transfer seat of companies, especially the pivotal decisions of the Court of Justice which made possible for the new attitude in the field and analyses the possible structural implications of the new provisions on cross-board conversions.
Societas Europaea And Business Transnational Mobility
2015
This paper analyses a subject which, for around 35 years, was largely academic, as it could even be seen from its Latin name: the Societas Europaea. Now it is no longer academic, but will it be a real opportunity for the business community? We think it may be, depending on the requirements and willingness to pay a price in the form of a considerable degree of legal uncertainty. The original concept of the S.E. was a truly European company governed by a single set of rules, irrespective of where its seat was located, and having the freedom to move from one EU Member State to another without being bothered by the traditional obstacles faced by companies subject to national law. The question we ask ourselves, and try to find an answer as objectively as possible is whether the promise of unrestrained mobility that the S.E. makes can truly be attained or if it remains just that – a promise?