Companies Crossing Borders within Europe

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(No Transcript)
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Companies Crossing Borders within Europe

• A directive on transfer of the registered office
• Gert-Jan Vossestein
• Leiden University
• g.j.vossestein_at_law.leidenuniv.nl
• Utrecht, 20 September 2007

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Heading for a Proposal

• High Level Group Report on a Modern Regulatory
  Framework for Company Law (2002)
• Action Plan (2003)
• Consultation on the Action Plan (2003)
• Consultation on an outline for a Directive on
  transfer of the RO (2004)
• Consultation on future priorities for the Action
  Plan (2005/2006)
• Commission Legislative and Work Programme 2007
  (October 2006)
• Source the internal market web site
  lthttp//ec.europa.eu/internal_market/index_en.htmgt

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Postponement

• The Commission had envisaged submitting a
  proposal for a directive this year. However, our
  preparatory work has led me to the conclusion
  that we should not rush forward with legislation.
  If we are to propose legislation, we must be sure
  there is a reasonable chance of a result with
  added value for business. The economic case is
  not as obvious or as clear-cut as it may seem and
  Member States currently follow very different
  approaches to which they are strongly attached.
  (emphasis added)

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Postponement (seq.)

• Moreover, the Court of Justice will soon take a
  decision in a case that could provide us with new
  insights on the current legal situation in
  Europe. As you know, the Court has already in the
  past delivered fundamental judgments in the area
  of company mobility. I am therefore convinced
  that we should wait for the outcome of this case
  which is likely to bring more clarity into this
  complicated matter. We expect the judgement to be
  delivered in the autumn of this year. (emphasis
  added)

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NB 1. Definition transfer of the registered
office

• Outline of the planned proposal for a 14th
  Company Law Directive on the cross-border
  transfer of the registered office of limited
  companies
• IP/04/270 (Company law Commission consults on
  the cross border transfer of companies
  registered offices) of 26 February 2004
• Commission Legislative and Work Programme 2007
  (see Annex)

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NB 2. Exit restrictions

• Daily Mail, Marks Spencer etc.
• Daily Mail v Centros, Überseering and Inspire Art
• Sevic
• Further reading G.-J. Vossestein, Exit
  restrictions on Freedom of Establishment after
  Marks Spencer, EBOR (7) 2006, p. 863-878.

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NB 3. Memb. States free choice of connting
factors

• Daily Mail (reconfirmed in Überseering) Member
  States free choice of connecting factors under
  Article 48 EC

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The (econ.) case for a Directive (1)

• Transfer of the registered office is already
  possible SE/cross-border merger
• Directive lower costs

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Cross-border down stream merger (before)
SA A
AG B
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Cross-border down stream merger (after)
AG B
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The (econ.) case for a Directive (2)

• Companies,
• - which do not have to meet a real seat
  requirement, and
• - which have moved their real seat and/or the
  main part of their business ( the Überseering
  case)

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The (econ.) case for a Directive (3)

• Companies,
• - which have to meet a real seat requirement, and
• - which have moved the main part of their
  business (but not the real seat)

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The (econ.) case for a Directive (4)?

• Free choice of company law

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Court of Justice Cartesio

• Case C-210/06, Cartesio, OJ 2006, C165/17
• See annex

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Cartesio the facts
Company Hungary
Company Another Memb State
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Observation 1 - Outcome of Cartesio

• Three part standard test under Article 43 EC
• Applicability of Treaty provisions on freedom of
  establishment?
• Restriction of freedom of establishment?
• Justification?

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Observation 2 - The (econ.) case for a
Directive (5)

• Article 43 EC relates to individual cases the
  Directive is aimed at ensuring, in a general and
  systematic fashion, that restrictions are
  eliminated
• the Directive may be said to remove obstacles to
  freedom of establishment which remain by virtue
  of the fact that the national legislature applies
  a justified derogation from Article 43 EC
• the Directive provides for coordination
  relating to the specific problems cross-border
  mergers pose

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Conclusion

• The (economic) case for a Directive
• Cartesio