‘On a proper interpretation of the case law of the European Court of Justice, there can be no doubt that the real seat theory is dead throughout the EU.’
1.Introduction
The application of the real seat theory has become a widely discussed topic, progressively changing with the judgements of cases by the ECJ concerning freedom of establishment in Europe. It has been accepted that the courts objective of extending the freedom of establishment leads to the support of the incorporation theory, while conflicting with principles of the real seat theory. However, this alone does not imply that the real seat theory is "dead." The development of the application of the real seat theory can foremost be presented by comparing the ECJ 's judgements in moving-in and moving-out scenarios, case-by-case, in the scope of application of articles 49, 541 TFEU2.
2.Opposing Theories
The "Real seat theory,"3 is one of two theories, regulating legal rules relevant to companies in the EU. It states thatcompaniesaresubjecttothelawofthecountryoftheirrealseat.4 Focusingonsocialandeconomicrealty as companies should act under the law of the region in which they execute their predominant business transactions. Opposing this principle is the "Incorporation theory."5 The law governing a company, its general legal capacity and also internal affairs is of the place of incorporation. For coherent argumentation it is important to note that none of these doctrines exist in pure forms.
The consequences of the application of the different doctrines primarily become significant and can pose problems when the real seat and place of incorporation don 't coincide. Especially regarding the migration of companies across boarders. The incorporation theory allows companies to conduct business activities in other MS without sacrificing the legal status in the country of incorporation and additionally more widely choose what laws they want to abide. In the real seat theory, companies would not be recognized claiming to belong to jurisdictions that aren 't the ones of the real seat. Opportunities for foreign companies to begin business activities in real seat
The application of the real seat theory has become a widely discussed topic, progressively changing with the judgements of cases by the ECJ concerning freedom of establishment in Europe. It has been accepted that the courts objective of extending the freedom of establishment leads to the support of the incorporation theory, while conflicting with principles of the real seat theory. However, this alone does not imply that the real seat theory is "dead." The development of the application of the real seat theory can foremost be presented by comparing the ECJ 's judgements in moving-in and moving-out scenarios, case-by-case, in the scope of application of articles 49, 541 TFEU2.
2.Opposing Theories
The "Real seat theory,"3 is one of two theories, regulating legal rules relevant to companies in the EU. It states thatcompaniesaresubjecttothelawofthecountryoftheirrealseat.4 Focusingonsocialandeconomicrealty as companies should act under the law of the region in which they execute their predominant business transactions. Opposing this principle is the "Incorporation theory."5 The law governing a company, its general legal capacity and also internal affairs is of the place of incorporation. For coherent argumentation it is important to note that none of these doctrines exist in pure forms.
The consequences of the application of the different doctrines primarily become significant and can pose problems when the real seat and place of incorporation don 't coincide. Especially regarding the migration of companies across boarders. The incorporation theory allows companies to conduct business activities in other MS without sacrificing the legal status in the country of incorporation and additionally more widely choose what laws they want to abide. In the real seat theory, companies would not be recognized claiming to belong to jurisdictions that aren 't the ones of the real seat. Opportunities for foreign companies to begin business activities in real seat