The public consultation relates to the outline of
the planned proposal for a 14th Company Law Directive on the cross-border
transfer of the registered office of limited companies.
A need felt by the market
- Two public consultation exercises in 1997 and 2002 highlighted a pressing need on the part of market operators for
legislation at EU level allowing companies governed by Article 48 of the
EC Treaty to transfer their registered office from one Member State to
another without first having to be wound up in their home Member State.
For such a transfer, a company has to acquire legal personality in the
host Member State and lose it in the home Member State in order to avoid
any complications arising from its being registered in two countries.
The advantage to be gained by a company from transferring its registered
office on these terms from one Member State to another stems from the
twofold need for the company:
- (a) to be able to adapt its location or organisational structure both
to market changes and to changes in its position on those markets by
choosing the national law which, in its view, best meets its requirements;
- (b) to be relieved of the obligation, when carrying out such
adaptation, to go through liquidation proceedings.
- In its final report of 4 November 2002 (1),
, the High-Level Group of Company Law Experts recommended that the
Commission should urgently consider adopting a proposal for a Directive on
the transfer of the registered office. It also suggested that certain
aspects of the transfer of the de facto head office should be clarified.
The Commission, in its Action Plan of 21 May 2003 (2),
undertook to adopt a proposal for a Directive in the near future,
considering this to be one of its top priorities.
- At the present stage in the development of Community law and of the
case law of the Court of Justice in particular, the Commission departments
consider it advisable to prepare separate legislation governing transfer
of the registered office, on the terms and with the consequences described
above, and governing transfer of the de facto head office. For the time
being, they propose to limit intervention by the legislator to matters
pertaining to the transfer of the registered office.
First, the need on the part of the markets - as expressed above - is for a
company that has already been formed in one Member State to be able to
choose as the applicable law a national legal system which suits its
operating requirements better than that of its home Member State. The
transfer of the de facto head office, on the other hand, meets quite a
different need namely, to modify the way the company is organised without
changing the applicable law and its legal personality.
Secondly, whereas transfer of the registered office is at present not
possible unless secondary Community legislation is adopted, the most
common cases of transfer of the de facto head office can be resolved (in
favour of freedom of establishment) by settled, consistent case law handed
down in the meantime by the Court of Justice (3).
Future developments in the market and the case law will enable the
Commission departments, when the time comes, to assess whether a
complementary directive needs to be prepared.
- 4. Accordingly, the Commission departments are planning at this stage
to produce a proposal for a Directive on the cross border transfer of the
registered office of a limited company, understood as an EU company, the
salient features of which are the fact that it has legal personality and
separate assets that alone serve to cover its debts, provided that
national legislation requires safeguards such as those laid down by
Council Directive 68/151/EEC (4)
for the protection of the interests of members and others.
- Allowing a company to transfer its registered office to another Member
State, and to change its legal personality may enable it to increase its
productivity and exercise its freedom of establishment. Such a transfer has so
far not been the subject of any harmonisation or coordination at Community
level. The highly diverse laws of the Member States on the matter sometimes
prohibit it and in most cases render it impossible in practice unless the
company is wound up.
- The Court of Justice has consistently held (Cases 79/85 Segers,
C-212/97 Centros and C-167/01 Inspire Art), that, save where an abuse is
found to have been committed in individual cases, a company may be formed
in a particular Member State for the sole purpose of enjoying the benefit
of more favourable legislation even if that company conducts its
activities entirely or mainly in another Member State. There is a case for
this principle of choice of applicable law to be recognised in appropriate
Community legislation so as to allow a company already formed in one
Member State, save in individual cases of abuse, to transfer its
registered office to another Member State and acquire legal personality
there in order to benefit from that country’s law, which better meets its
- The Court of Justice has held that, in the present state of Community
law, not all the problems related to the manner of transferring the seat
of a company incorporated under national law from one Member State to
another have been resolved by the rules concerning the right of
establishment and such problems must therefore be dealt with by future
legislation or conventions (Case 81/87 Daily Mail  ECR 5483,
paragraph 23). Appropriate Community legislation to coordinate the
transfer, and its terms and consequences, is therefore needed. A
coordination directive under Article 44(1) and (2) of the Treaty may help
to resolve the problems and hence promote freedom of establishment (5).
- Freedom of establishment within the EU is characterised by the
- Pursuant to Article 43 of the Treaty, for nationals of a Member State,
- the right to move on a permanent basis to another Member State with a
view to taking up and pursuing activities there as self-employed persons
under the conditions laid down by the Member State of establishment for
its own nationals;
- the right to set up agencies, branches or subsidiaries in another
Member State with a view to taking up and pursuing activities there as
self-employed persons but without moving to that Member State.
- Pursuant to Article 48 of the Treaty, companies formed in accordance
with the law of a Member Stateand having their registered office, central
administration or principal place of business within the Community are,
for the purpose of enjoying freedom of establishment, to be treated in the
same way as natural persons who are nationals of Member States of the
Union. By virtue of such treatment, companies would in principle be
entitled, with a view to taking up and pursuing activities as self
- to move to the host Member State (6)
in accordance with the conditions laid down in the law of that Member
State for its own nationals; or
- to set up agencies, branches or subsidiaries in the host Member State
without moving there (7).
- Exercise by a company of its freedom to move to the host Member State
by transferring its registered office comes up, however, against another
legal reality to which the Court of Justice has repeatedly drawn attention
(cf. Daily Mail, paragraph 19, and Überseering, paragraph 81). Unlike
natural persons, companies - apart from the European Company - are
creatures of national law. They exist only as legal persons governed by
- To allow companies to exercise their right of establishment by
transferring their registered office, (i) thereby acquiring legal
personality under the law of the host Member State in order to be governed
by that law which better meets their requirements and (ii) without having
to be wound up, while offering appropriate safeguards legislation needs to
be adopted coordinating national law so that:
- first, a company formed in a Member State may decide, within the legal
system of its home Member State and subject to the operation’s successful
conclusion, (i) to transfer its registered office to another Member State
in order to acquire legal personality there in place of the legal
personality of its home Member State and (ii) to modify its memorandum and
articles of association as required; it may do so without losing its
original legal personality before acquiring legal personality in the
Member State to which it wishes to move;
- and, secondly, the company concerned may be registered in the new
Member State as a legal person under national law without further
incorporation formalities being necessary provided it meets the
substantive and formal requirements for companies to be recognised under
Coordination Directive relating to transfers of
- A coordination Directive under Article 44(1) and (2)(g) of the Treaty
aimed at facilitating the cross-border transfer of companies' registered
offices could be drafted, within the limits laid down by the Court of
Justice, along the following lines:
- The object of the Directive would be the cross-border transfer, by way
of freedom of establishment, of the registered office of a limited company
already formed under the law of a Member State. Special provisions should
be laid down for companies carrying on regulated activities.
- Each Member State should recognise the right of a company governed by
its national law to opt, by decision of the general meeting taken in
accordance with the formalities and procedures for altering the memorandum
and articles of association, to transfer its registered office to another
Member State in order to acquire a new legal personality in place of its
original one. This decision, together with the launching of the
registration procedure in the new Member State, could not by itself entail
the removal of the company from the register or the loss of its legal
personality in the home Member State so long as the company has not, by
virtue of registration in the host Member State, acquired legal
- The general meeting’s decision to transfer the registered office
should be publicised appropriately in advance, as must its consequences.
It should also include (subject to the condition precedent for
registration in the host Member State) the alterations to the memorandum
and articles of association that are necessary in order to comply with the
substantive and formal requirements for registration in the host Member
State. The company should therefore transform itself into a form of
company recognised by the host Member State. Depending on the law of the
host Member State, a substantive requirement for obtaining legal
personality and for registering could be that the company’s registered
office and de facto head office be one and the same. In that event, the
decision to transfer the registered office should also cover the transfer
of the de facto head office. It should not be, however, for the home
Member State to ascertain whether the alterations (subject to the
above-mentioned condition precedent) to the memorandum and articles of
association actually satisfy the essential requirements for the company to
acquire legal personality under the host country’s law and to be
- The host Member State could not refuse to register a company which, on
the basis of the decisions taken by its general meeting and in particular
of the alterations to its memorandum and articles of association,
satisfies the essential substantive and formal requirements for the
registration of national companies. In particular, it could not require an
act of incorporation to be drawn up for a new company since the decision
to transfer the registered office (and the de facto head office, if
necessary) and the appropriate amendments to the memorandum and articles
of association adopted by the general meeting replace such an act to the
satisfaction of the law.
- The Directive should coordinate (i) supervision by the home Member
State of the validity of the decisions taken by the general meeting and
(ii) supervision by the host Member State of the substantive, formal and
national procedural requirements for the company to be given legal
personality under its law and to be registered. The home Member State
should attest to the validity of the decision to transfer the registered
office and to alter the memorandum and articles of association. The host
Member State should verify the content of the amended memorandum and
articles of association - which replace the deed of incorporation where
such exists - and any other substantive requirements).
- Registration in the host Member State should result in the company
losing its legal personality and being removed from the register in its
home Member State; the transfer should be recorded both in the register of
the home country and in that of the host country.
- Transfer of the registered office should at no time result in the
company being wound up; save as otherwise provided in the Directive, it
should not affect the company's legal relationships, whether active or
passive, with third parties.
- The home Member State could ensure special protection of the rights of
certain categories of person, notably minority shareholders and creditors,
in accordance with the principle of proportionality laid down by the Court
of Justice. Similar protection is already provided for in the context of
mergers of limited companies by the third company law Directive (8)
and as regards the transfer of registered office in the Statute for a
European Company (9).
In the case of cross border mergers, it is also provided for in the
proposal for a Directive adopted by the Commission on 18 November 2003 (10).
- The transfer should be tax-neutral in accordance with the principles
adopted for cross-border mergers by Directive 90/434/EEC (11).
The transfer should produce the same effects as a cross-border merger.
Directive 90/434 should therefore have to be amended accordingly.
- Employee participation rights should be governed by the legislation of
the host Member State. Where they are more firmly enshrined in the home
Member State, they should be maintained or negotiated. The home Member
State could adopt its own rules governing these negotiations where it
deems this to be necessary.
of the Hight Level Group of Company Law Experts on a Modern Regulatory
Framework for Company Law in Europe, Brussels, 4 November 2002
communication to the Council and the European Parliament on modernising
company law and enhancing corporate governance in the European Union - A
plan to move forward (COM(2003)284
C-212/97 Centros and
C-167/01 Inspire Art.
L 65, 14.3.1968, p. 8, as amended by Directive 2003/58/EC (OJ
L 221, 4.9.2003, p. 13).
method is to achieve agreement by way of the negotiations between Member
States provided for in Article 293 of the EC Treaty. These are provided
for, however, only “so far as is necessary”, i.e. to the extent that the
Community legal instruments intended to facilitate freedom of
establishment are not likely to attain that objective.
right, which flows from Article 43, was expressly confirmed by the General
Programme for the abolition of restrictions on freedom of establishment -
Title I (OJ No 2, 15.1.1962, p. 36).
C-212/97 Centros, C-208/00 Überseering and
C-167/01 Inspire Art.
78/855/EEC (OJ L 295, 20.10.1978, p. 36).
(EC) 2157/2001 (OJ L 294, 10.11.2001, p. 1).
L 225 du 20.8.1990, p.1
In preparation for the drafting of this proposal for a Directive, the
Directorate General for the Internal Market is submitting the outline of
its planned proposal to public consultation by publishing this document
and the attached electronic questionnaire.
All interested parties are invited to complete the questionnaire and
submit it electronically by 15 April 2004.
A report on the results of the consultation exercise will be published
on the Internal Market website.
The consultation is closed (15.4.2004) -