Company mobility under the freedom of establishment

Prof. Dr. Günter H. Roth

Company mobility under the freedom of establishment

1. Establishment of companies in another Member State of the Union:

2. Establishment of branches or subsidiaries:

3. Cross-border merger of companies:

4. Transfer of an existing company to another Member State: ./.

Art. 49(2) TFEU

Art. 49(1) p. 2 TFEU

Directive of 2005

Company mobility: the legal regime

1. Determination of thelegal regime applicableto the company,choice of legal formunder this regime:

2. Especially with subsidiaries:determination of theirlegal regime

ECJCentros, Inspire Art

Company mobility: the legal regime

3. Accordingly, for transfer of a company:change of legal form and thereforeof the legal regime?

ECJ Überseering, Cartesio

4. Creation of a uniform European company form to facilitate mobility:

Societas Europaea, for SMEs: SPE

However: these company forms must also be subject to a national legal regime.

Company seat

1. Headquarters, real seat = principal place of business, central administration

2. Registered office = statutory seat, determines incorporation (entry in register) and the applicable law (=company statute)

Company seat

2 basic concepts in the EU:

1.The statutory seat and the relevant legal regime can be freely chosen (‘incorporation doctrine‘)

2.The statutory seat must be chosen in the country of the actual seat (‘real seat doctrine‘)

Freedom of establishment as interpreted by the ECJ

• The promoters are free to choose their statutory seat regardless of the actual seat

• The member states are free to accept a statutory seat regardless of the actual seat

2 philosophies about company law

1. Contractual approach: Statutory models to choose from

2. Regulatory approach: no opting out

Transfer of seat

So far, ECJ case law has allowed: 1. transfer of the administrative seat to another Member State if allowed under the law of the Member State in which the company was set up (Überseering 2002)

2. transfer of the statutory seat to another Member State, if allowed under the law of that state (Cartesio 2008)

Need for regulation

1. Transfer of the statutory seat in connection with the administrative seat

2. Change of legal form = conversion from the legal form of state of origin to a company form of the host state without dissolution or re-incorporation

Need for regulation

3. The Transfer of Seat Directive must enable such a change of legal regime independent of the national law of the countries involved.

4. The Directive must lay down rules which protect the interests of the state of origin and of the host state, or leave it to the Member States to adopt such rules.

Interests to be protected

1. Interests of the state of origin

1.1. Protection of old creditors

1.2. Protection of dissenting minority shareholders

1.3. Worker co-determination

Interests to be protected

2. Interests of the host state

2.1. Protection of capital according to the law governing incorporation

2.2. Qualified formal requirements

Thank you for your attention!