European Company Law
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
Discuss.
Since the Treaty of Rome entered in force in 1958, companies were allowed to be formed across the EU benefit from the basic right of the freedom of establishment. The principle of freedom of establishment set out in Article 49 (ex Article 43 TEC) enables an economic company to operate an activity in one or more Member States. At present, there are two different theories as regards to the recognition of foreign legal entities: the “real seat theory” and the “incorporation theory”. According to the real seat theory, the law of the country where the company has its management and control center is the law, the company has to refer to, whereas in countries, which follow the incorporation theory, companies determine their applicable law by reference to the country they were incorporated. The real seat doctrine is a conflict-of-laws principle that recognizes that only one state should have the authority to regulate a corporation`s internal affairs and that this authority belongs to the state in which the corporation has its real seat, however since 2002 as the European Court of Justice has ruled that it is incompatible with the freedom of establishment guaranteed in Arts 43. And 48 EC for a member state to reject a company formed in a different member state wanting to move its central place of administration to another member states legal capacity. Against the expectations of many German legal protagonists, the ECJ decided that when a company incorporated in member state A exercises its freedom of establishment in member state B, member state B is required to accept the company's legal capacity that it enjoys under the laws of its state of incorporation. Anyhow, this ruling only considers the immigration of companies, not the emigration. There are many cases handling this topic.
From Daily Mail to the
Discuss.
Since the Treaty of Rome entered in force in 1958, companies were allowed to be formed across the EU benefit from the basic right of the freedom of establishment. The principle of freedom of establishment set out in Article 49 (ex Article 43 TEC) enables an economic company to operate an activity in one or more Member States. At present, there are two different theories as regards to the recognition of foreign legal entities: the “real seat theory” and the “incorporation theory”. According to the real seat theory, the law of the country where the company has its management and control center is the law, the company has to refer to, whereas in countries, which follow the incorporation theory, companies determine their applicable law by reference to the country they were incorporated. The real seat doctrine is a conflict-of-laws principle that recognizes that only one state should have the authority to regulate a corporation`s internal affairs and that this authority belongs to the state in which the corporation has its real seat, however since 2002 as the European Court of Justice has ruled that it is incompatible with the freedom of establishment guaranteed in Arts 43. And 48 EC for a member state to reject a company formed in a different member state wanting to move its central place of administration to another member states legal capacity. Against the expectations of many German legal protagonists, the ECJ decided that when a company incorporated in member state A exercises its freedom of establishment in member state B, member state B is required to accept the company's legal capacity that it enjoys under the laws of its state of incorporation. Anyhow, this ruling only considers the immigration of companies, not the emigration. There are many cases handling this topic.
From Daily Mail to the