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Yale Law School
Center for the Study of Corporate Law Symposium
Assessing Corporate Law Reform in a Transatlantic Context
Corporate Restructuring & Mobility
-The EU Legal Context
October 21, 2003
Reid Feldman
Partner
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
a limited liability partnership including professional corporations
Sources
Treaty
Directives and Regulations
European Court of Justice (ECJ) jurisprudence
National legislation
National court jurisprudence
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
1
Treaty of the European Communities
Article 48
Companies or firms formed in accordance with the
law of a Member State and having their registered
office, central administration or principal place of
business within the Community shall, for the purposes
of this chapter, be treated in the same way as natural
persons who are nationals of Member States.
‘Companies or firms’ means companies or firms
constituted under civil or commercial law, including
cooperative societies, and other legal persons governed
by public or private law, save for those which are nonprofit-making.
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
2
Treaty of the European Communities
Article 43
Within the framework of the provisions set out below,
restrictions on the freedom of establishment of nationals of
a Member State in the territory of another Member State
shall be prohibited. Such prohibition shall also apply to
restrictions on the setting-up of agencies, branches or
subsidiaries by nationals of any Member State established in
the territory of any Member State.
Freedom of establishment shall include the right to take up and
pursue activities as self-employed persons and to set up and
manage undertakings, in particular companies or firms within the
meaning of the second paragraph of Article 48, under the
conditions laid down of its own nationals by the law of the
country where such establishment is effected, subject to the
provisions of the chapter relating to capital.
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
3
Directives & Regulations
1st Dir.
68/151
public disclosure of certain information, binding nature of acts by disclosed legal representatives,
causes and consequences of the company being null
2nd Dir.
77/91
joint stock companies
3rd Dir.
4th Dir.
6th Dir.
7th Dir.
8th Dir.
Reg.
78/855
78/660
82/891
83/349
84/253
2137/85
mergers of companies within a Member State
annual accounts
divisions of companies within a Member State
consolidated accounts of groups of companies
statutory auditors
transfer among Member States of headquarters of European Economic Interest Grouping (EEIG)
11th Dir. 89/666
disclosure requirements for branches
12th Dir. 89/667
single-member private limited-liability companies
Dir.
90/434
taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning
companies of different member States
Dir.
90/435
taxation of parents and subsidiaries of different member States
Reg.
Dir.
2157/2001
2001/86
European company (Societas Europea or SE) (enters into force 8 October 2004)
involvement of employees in an SE
Reg.
1606/2002
application of International Accounting Standards (IAS)
Reg.
1435/2003
statute for a European Cooperative Society (ECS)
Dir.
Dir.
2003/72
2003/49
involvement of employees in an ECS
common system of taxation applicable to interest and royalty payments made between associated
companies of different Member States
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
4
Directives & Regulations
Future action?
- Respondents to consultation of EU High Level
Group of Company Law Experts gave high priority
to facilitating cross-border restructuring.
- Directives to be proposed in the short term (20032005):
10th Directive - cross-border mergers
14th Directive - transfer of seat between Member
States
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
5
ECJ Jurisprudence: Centros
Case C-212/97, Centros Ltd. v. Erhvervs- og Selskabsstyrelsen, 9 March 1999
Facts
-
Centros registered in England with £100 capital (not paid in); never conducted business in
the UK; shareholders were two Danes residing in Denmark.
-
The registration of Centros branch in Denmark was refused by Danish authorities on the
ground that the Danish establishment was a principal establishment and should comply
with national rules including as to paid-in capital.
-
Danish position supported before ECJ by France and Netherlands; UK supported Centros.
Decision
-
Incorporation in a Member State whose rules of company law seem least restrictive, and
setting up branches in other Member States, cannot in itself constitute an abuse of the
right of establishment (§ 27).
-
Pursuing activities only in the Member State where branch is established is not sufficient
to prove the existence of abuse or fraudulent conduct (§ 29).
-
National measures can restrict right of establishment only if conditions set out by
jurisprudence are satisfied (non-discrimination, imperative requirements in general
interest, proportionality and minimum intervention) (§ 34).
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
6
ECJ Jurisprudence: Überseering
Case C-208/00, Überseering BV v. Nordic Construction Company Baumanagement GmbH, 5 November 2002
Facts
-
Überseering BV established in 1990 in the Netherlands, acquired land and buildings in
Germany and ordered construction work; all its shares acquired by two German
nationals residing in Germany.
-
Action brought by Überseering on construction contract dismissed because the company
had its actual center of administration in Germany and thus (under German law) had no
legal capacity in Germany.
-
German position supported before ECJ by Spain and Italy; Überseering supported by
Netherlands, UK, EU Commission and EFTA Surveillance Authority.
Decision
-
German position effectively requires re-incorporation in Germany to enforce rights and
is “tantamount to outright negation of freedom of establishment” (§§ 79-81).
-
“It is not inconceivable that overriding requirements relating to the general interest, such
as the protection of the interests of creditors, minority shareholders, employees and even
the taxation authorities, may, in certain circumstances and subject to certain conditions,
justify restrictions on freedom of establishment” (§ 92).
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
7
ECJ Jurisprudence: Inspire Art
Case C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd, 30 September 2003
Facts
-
Inspire Art incorporated in England as a private company limited by shares and
registered a branch in the Netherlands.
-
Dutch authorities ordered Inspire Art to register as a “formally foreign company”
and comply with requirements as to minimum capital (€18,000; directors are
personally liable if capital falls below minimum).
-
Dutch position supported before ECJ by Germany, Italy and Austria; Inspire Art
supported by UK and the EU Commission.
Decision
-
Member States cannot impose requirements in respect of opening branches beyond
those in the 11th Directive (§§ 67-72).
-
Forming a company for the purpose of circumventing Netherlands law regarding
capital is not sufficient to prove the existence of abuse or fraudulent conduct
justifying denial of right of establishment (§§ 136-139).
LeBoeuf, Lamb, Greene & MacRae, l.l.p.
8
LeBoeuf,
L amb,
Greene &
MacRae,
l.l.p.
a limited liability partnership including professional corporations
www.llgm.com