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From C 212 to L 212 – Centros Revisited

Published online by Cambridge University Press:  17 February 2009

Søren Friis Hansen
Søren Friis Hansen
Affiliation:
Ph.D., Associate professor, Law Department, Copenhagen Business School.
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Extract

The Centros decision ranks as one of the most controversial decisions of the ECJ to date. The decision has raised a number of important issues, which have been vigorously debated in several countries of the EU. The most controversial question raised by the Centros judgement is whether the so-called siége réel Theory, or Sitztheorie, which until now has been applied by the majority of the EU Member States for determining the nationality of companies, can still be applied to companies which originate from other Member States. If the siège réel theory can no longer be applied by a Member State to deny the recognition of certain foreign companies as separate legal entities, this fact would mean an important change of perspective for the European Company Law.

Type
Articles
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European Business Organization Law Review (EBOR) , Volume 2 , Issue 1 , March 2001 , pp. 141 - 157
Copyright
Copyright © T.M.C. Asser Press and the Authors 2001

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References

1 Judgement by the ECJ of 9 March 1999 in Case C-212/97 [1999] ECR I-1459.

2 See for an account of incorporation theory and the real seat theory, Drury, , “The Regulation and Recognition of Foreign Corporations: Responses to the ‘Delaware Syndrome’”, Cambridge Law Journal 57 (1998) 165.CrossRefGoogle Scholar

3 Cf. among others Lutter, , Europäische Handelsgesellschaft und Angleichung des nationalen Gesellschaftsrechts (Frankfurt: Metzner 1968) at p. 8Google Scholar; Ebke, , “Unternehmensrecht und Binnenmarkt – E pluribus unum?”, 62 RabelsZ (1998) 195, at p. 207Google Scholar, Schwartz, , Europäishes Gesellschaftsrecht (Baden-Baden: Nomos 2000) at p. 7Google Scholar; and Carney, , “The Political Economy of Competition among Rules”, Journal of Legal Studies 26 (1997) 329.Google Scholar

4 E.g. Hopt, , “Europäisches Gesellschaftsrecht – Krise und neue Anläufe”, ZIP (1998) 96Google Scholar; Hommelhoff, in: Müller-Graf, (Hrsg.), Gemeinsames Privatrecht in der Europäischen Gemeinschaft, 2nd ed. (Baden-Baden: Nomos 1999) 361, at pp. 364–365Google Scholar; Ebke, supra n. 3, at p. 197; Behrens, , “Krisensymptome in der Gesellschaftsrechtsangleichung”, in: Festschrift Mestmäcker (Baden-Baden: Nomos 1996) 831Google Scholar; Wouters, , “European Company Law: Quo Vadis?”, CMLR (2000) 257, at p. 275Google Scholar; and from a Nordic point of view, Søren Friis, Hansen, “Perspektiver for den videre udvikling af EU-selskabsretten”, Juridisk Institut, Julebog (2000) 299, at p. 305.Google Scholar

5 Advocate General La Pergola, in Centros, supra n. 1, at pp. I-1479 et seq.; see also Hopt, , “Company Law in the European Union: Harmonisation and/or Subsidiarity?”, International and Comparative Corporate Law Journal 1 (1999) 41, at pp. 50–51Google Scholar, with references; Uwe, Blaurock, “Steps toward a Uniform Corporate Law in the European Union”, Cornell International Law Journal 31 (1998) 378, at pp. 380–381Google Scholar, who argues (at p. 393) that harmonisation of the rules for regulating the conflict of corporate laws in line with the Incorporation Theory is necessary within the EU; see also Deakin, , “Two Types of Regulatory Competition: Competitive Federalism versus Reflexive Harmonization. A Law and Economics Perspective on Centros”, 2 Cambridge Yearbook of European Legal Studies (1999) 231CrossRefGoogle Scholar. According to Deakin (at p.231): “the Court's ruling in Centros appears to mark a significant move in the direction of inter-state competition in company law”.

6 See e.g. Hofstöotter, , “Niederlassungsfreiheit für Gesellschaften, Welcome to Delaware”, European Law Reporter (1999) 154Google Scholar; Freitag, , “Der Wettebewerb der Rechtsordnungen im internationalen Gesellschaftsrecht”, EuZW (1999) 270Google Scholar; Deckert, , “Zu Harmonisierungsbedarf und Harmonisierungsgrenzen im Europäischen Gesellschaftsrecht”, 64 RabelsZ (2000) 492Google Scholar; see further for a discussion on the effects of Centros on the future harmonisation of European company law, Carruthers, and Villiers, , “Company Law in Europe – Condoning the Continental Drift?”, European Business Law Review (2000) 91.Google Scholar

7 Case C-208/00, Überseering BV v. Nordic Construction Company Bau Management GmbH (pending), which originates from the German Federal Supreme Court (Bundesgerichtshof, BGH). See further on the reference from the BGH; see Edwards, , “Case-law of the European Court of Justice on Freedom of Establishment after Centros”, 1 EBOR (2000) 154Google Scholar; Meilicke, , “Sitztheorie versus Niederlassungsfreiheit”, GmbHR (2000) 693Google Scholar; Zimmer, , “Internationales Gesellschaftsrecht und Niederlassungsfreiheit: Das Rätsel vor der Lösung?”, Betriebs Berater (2000) 1361.Google Scholar

8 The unofficial draft has been published in ZIP (1997) 1721 et seq. and in ZGR (1999) 157. See the detailed discussion of the draft by Drury, , “Migrating Companies”, 24 European Law Review (1999) 354Google Scholar; Rajak, , “Proposal for a Fourteenth European and Council Directive”, European Business Law Review (2000) 43Google Scholar; Engsig, Sørensen and Neville, , “Corporate Migration in the European Union”, 6 Columbia Journal of European Law (2000) 181Google Scholar; Hoffmann, , “Neue Möglichkeiten zur identitätswahrenden Sitzverlegung in Europa?”, ZHR (2000) 43.Google Scholar

9 Cf. para. 34 of the Centros judgement.

10 Cf. Lov no. 461, of May 31st 2000. This Act can be found at <www.retsinformation.dk>

11 The judgement of the Danish Supreme Court in the Centros Case is published in Tidsskrift for skatter og afgifter, TfS (2000) 244H, and in Ugeskrift for Retsvœsen, UfR (2000) 1079H. A German translation of the judgement of the Danish Supreme Court is published in ZIP (7/2000) A 16 No. 34.

12 See Gomard, and Ebeling, , International Encyclopedia of Laws – Corporations and Partnerships (Koen, Geens (ed.)), Blanplain (general ed.)) (The Hague: Kluwer Law Interntional 1998) Denmark, at pp. 28–29Google Scholar; Paul Krüger, Andersen and Karsten Engsig, Sørensen, “Free Movement of Companies from a Nordic Perspective”, 6 Maastricht Journal of European and Comparative Law (1999) 49Google Scholar. For details on the Nordic cooperation on company law, see Søren Friis, Hansen, “Nordisk samarbejde på selskabsrettens område”, in: Rätten (om)kring Øresund (Boel, Flodgren & Ruth, Nielsen (eds.)) (DJØF 2000) pp. 67–85Google Scholar <www.djoef.dk>

13 Betænkning no. 362/1964 and Betænkning no. 540/1969.

14 All current Danish Company Law legislation can be found at the internet on the web-site of the Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen) <www.eogs.dk>

15 See Søren Friis, Hansen, Anpartssehkaber efter loven af 1996 (GAD Jura 1998) 26–27Google Scholar <www.gadjura.dk>

16 See e.g. Sedemund, / Hausmann, , BB (1999) 810Google Scholar; Di, Marco, ZGR (1999) 4–5Google Scholar; Kindler, , in: MünchKomm zum BGB, 13.ed. (1999) IntGesR Rd.Nr. 382 (at p.130).Google Scholar

17 Mäsch, , Juristen Zeitung (2000) 201–202Google Scholar; Höffling, , “Die Sitztheorie, Centros und der österreichische OGH”, EuZW (2000) 145Google Scholar. See for a detailed account of the decisions by the Austrian Supreme Court, Kristin, Nemeth, “The Austrian Supreme Court (Oberster Gerichtshof), Case 6 Ob 123/99b, Judgement of July 15th 1999”, CMLR (2000) 1277Google Scholar. The Austrian Supreme Court decided not to refer a question to the ECJ, since the facts of the Austrian case were quite similar to facts of the Centros case. In relation to this decision Nemeth states (at p. 1281) that “…the OGH misjudged the situation completely”.

18 See Krüger, Andersen and Engsig, Sørensen, supra n. 12, at p. 56Google Scholar; Allan, Philip, Studier i den internationale selskabsrets teori (DJØF 1961)at pp. 171 et seq.Google Scholar; Peter Arnt, Nielsen, International privat- og procesret (DJØF 1997) at pp. 631–632Google Scholar; Mette, Neville, “Aktieseskabers tilknytning”, Juristen (1997) 150Google Scholar; Karsten Engsig, Sørensen, “Udenlandske selskabers omgåelse af nationale kapitalkrav”, in: Selskabers kapital (Lars Bo, Langsted (ed.)) (DJØF 1999) pp. 158–159Google Scholar; Gomard, , Aktieselskaber & anpartsselskaber, 4th ed. (DJØF 2000) at p. 13Google Scholar, Werlauff, , Selskabsret, 3rd ed. (GAD Jura 1997) at p. 96Google Scholar; Søren Friis, Hansen and Jens Valdemar, Krenchel, Lærebog i Selskabsret I (GAD Jura 1999) at p. 97.Google Scholar

19 Published in Ugeskrift for Retsœsen, UfR (1998) 1071Ø.

20 According to Nemeth, supra n. 17.

21 Werlauff, , “Ausländische Gesellschaft, inländische Aktivität”, ZIP (1999) 867Google Scholar; id., “Hovedsædekriteriet i ny skikkelse”, UfR (2000 B) 466Google Scholar; Søren Friis, Hansen, “Nekrolog over hovedsædeteorien”, Juridisk Institut Julebog (1999) 143Google Scholar; id., “Perspektiver for den videre udvikling af EU-selskabsretten”, Juridisk Institut Julebog (2000) 299, at pp. 306 et seq.Google Scholar; id., “C-212 og L 212 – Konsekvenserne for dansk og europæisk selskabsret”, Nordisk Tidsskrift for Selskabsret (2000:1) 45Google Scholar; Søren Friis, Hansen and Jens Valdemar, Krenchel, Lœrebog i Selskabsret I (Gad Jura 1999) at pp. 107-113.Google Scholar

22 See Karsten Engsig, Sørensen, “Centros Ltd-afgørelsen og dens konsekvenser”, Nordisk Tidsskrift for Selskabsret(1999) 103Google Scholar; Engsig Sørensen and Neville, supra n. 8, at p. 190; see further Karsten Engsig, Sørensen, “Prospects for European Company Law after the Judgement of The European Court of Justice in Centros Ltd.”, 2 Cambridge Yearbook of European Legal Studies (1999) 221Google Scholar, who argues, that “Daily Mail is still good law”. However, on p. 222 he holds the door open for an interpretation of Centros, according to which the siège Réel theory can only be applied by a Member State in relation to its own, domestic companies with activities abroad. De facto, this interpretation would mean the abolition of the siège réel theory whose main purpose has been to prevent foreign companies from operating within the domestic territory.

23 In fact the new Danish Act on Private Limited Companies of 1996 has not yet come into force on the Faroe Islands, where the 1973 Act still applies.

24 See Eskil, Trolle, “Minimumskapitalkravene til aktie- og anpartsselskaber”, UfR (1996 B) 45Google Scholar; Hansen, Søren Friis, Anpartsselskaber efter loven af 1996 (GAD Jura 1998) at pp. 18–20.Google Scholar

25 Cf. The Danish Act on Private Limited Companies, ApSL § 1. The Act (Lovbekendtgørelse no. 325 of 7 May 2000) is available on the address <www.eogs.dk>. See further on the minimum capital requirements for Danish Private Limited Companies, Søren Friis Hansen, ibid., at pp. 18-20.

26 Cf. the information on private limited companies presented in Boucourechliev, “Propositions pour une société fermée européenne”, in: a report prepared by CREDA (Étude du centre de recherche sur le droit des affaires de la Chambre de commerce et d'industri de Paris) (Paris 1997) pp. 219-251.

27 ASL §§ 147 and 151, ApSL § 68. In Danish: Erhvervs- og Selskabsstyrelsen. In the Centros Judgement, the terms “The Trade and Companies Board”, or “the Board” were used by the ECJ.

28 See on the “genuine link” criterion Peter Arnt, Nielsen, International privat- og procesret (DJØF 1997) at p. 653Google Scholar; Werlauff, , Koncernretten (GAD Jura 1996) at pp. 80–81.Google Scholar

29 See Kienninger, , “Niederlassungsfreiheit als Rechtswahlfreiheit”, ZGR (1999) 727Google Scholar; Borges, , “Die Sitztheorie in der Centros-Ära: Vermeintliche Probleme und unvermeitliche Änderungen”, RIW (2000) 177.Google Scholar

30 Cf. Skat Udland, SU 1995.324Ø.

31 In Danish etableringskœde, cf. Søren Friis Hansen and Jens Valdemar Krenchel, supra n. 20, at p. 104.

32 See Loouenstijn-Clearie, Anne, “Centros Ltd. – A Complete U-turn in the Right of Establishment for Companies?”, 49 International and Comparative Law Quarterly (2000) 621.CrossRefGoogle Scholar

33 Cf. momslovens § 62, as introduced by law no. 375 of 18 May 1994 and kildeskattelovens § 56 as changed by law no. 1093 of 21 December 1994.

34 Cf. ML § 62a as introduced by law no. 237 of 2 April 1997 and kildeskattelovens § 56A as introduced by law no. 103 of 21 December 1994.

33 See Gomard, , “Kapitalen i aktie- og anpartsselskaber”, in: Lars Bo, Langsted (ed.), Selskabers kapital (DJØF 1999) at pp. 4–5.Google Scholar

36 Supra n. 11.

37 L 212 (Lov no. 461 of 31 May 2000) is available on the internet <www.retsinformation.dk>

38 Cf. the Danish Act on the Taxation of Companies (Selskabsskatteloven, abbreviated “SEL”) § 1, stk.6.

39 See Bekendtgørelse no. 508 of 7 June 2000.

40 Cf. § 2 of Bekendtgørelse no. 508 of 7 June 2000.

41 The word “imperative” is specifically omitted from the Danish text.

42 Behrens, , “International Company Law in View of the Centros Decision of the ECJ”, 1 EBOR (2000) 125 (IP Rax (1999) 327)Google Scholar; Peter, Troberg in: Groeben, /Thiesing, /Ehlermann, (Hrsg.), Kommentar zum EU-/EG-Vertrag, 5th ed. (1997) p. 1/1326Google Scholar, and Case 1/93 Halliburton Services, [1993] ECR1-1137.

43 See, however, , Jesper Lau, Hansen, “Full Circle: Is There a Difference Between the freedom of Establishment and the Freedom to Provide Services?”, European Business Law Review (2000) 83, at p. 87Google Scholar. Referring to the Gebhard case, where the EC originally set up the requirement that national measures which hinder the right of establishment must be justified, Lau Hansen concludes: “Indeed, the Court sets as the very first condition that the measure must be applied in a ‘non-discriminatory manner’. This is, however, a misunderstanding. The differential treatment apparent in the national measure is its capability to ‘hinder or make less attractive the exercise of fundamental freedoms’. This is what causes the national measure to be a restriction in the form of discrimination”.

44 These statements are found in the remarks, which were put forward in connection with the original proposal of L 212. The Danish text reads as follows: “Nystartede selskaber m.v. med beskedne formuer udgør en sœrlig kreditrisiko, ikke mindst i forhold til kreditorer, der som f.eks. skatte- og afgiftsmyndighederne på kort sigt er uden indflydelse på karakteren og omfanget af et eventuelt mellemvœrende med virksomhederne. Desuden vil sådanne virksomheder potentielt lettere end andre kunne anvendes til svigagtige formål”… “Desuden kan der ikke ses bort fra, at de, der har til hensigt at benytte en virksomhed med begrœnset ansvar til unddragelse af skatter og afgifter, eksempelvis som et ‘skraldespandsselskab’ i forbindelse med momskarruselsvindel, vil finde det mere attraktivt at anvende filialer af ‘billige’ udenlandske selskaber fremfor ‘dyre’ danske selskaber”.

45 Lov om erhvervsdrivende virksomheder, Lovbekendtgørelse no. 546 of 20 June 1996.

46 See Jytte Heje, Mikkelsen, Erhvervsdrivende virksomheder (GAD Jura 1995) at pp. 51–53Google Scholar; Mette, Neville, “Andre selskaber med begrænset ansvar” in: Nis Jul, Clausen (ed.), Nye tendenser i skandinavisk selskabsret (DJØF 1995) at pp. 171–177.Google Scholar

47 See e.g. Paul, Davies, “Legal Capital in private Companies in Great Britain”, Die Aktiengesellschaft (1998) pp. 346–354.Google Scholar

48 See Henrik, Dam and Søren Friis, Hansen, “Sikkerhedsstillelse med garanti for problemer”, Ugeskrift for retsvœsen, UfR (2000 B) 355Google Scholar; Søren Friis, Hansen, “C-212 og L 212 – Konsekvenserne for dansk og europaeisk selskabsret”, supra n. 21.Google Scholar

49 Cf. Engsig, Sørensen, “Prospects for European Company Law after the Judgement of the European Court of Justice in Centros Ltd.”, supra n. 22, at p. 213.Google Scholar

50 See the comparisons between the regulations of private limited companies in the Member States that are included in the Commission's Report: Boucourechliev, , “Propositions pour une société fermée européenne” (1997) pp. 222–251.Google Scholar

51 See further Schön, , “Freie Wahl zwischen Zweigniederlassung und Tochtergesellschaft - ein Grundsatz des Europäschen Unternehmensrechts”, EWS (2000) 281Google Scholar; id., “The Shareholder in European Corporate Law”, 1 EBOR (2000) 3, at pp. 11 et seq.Google Scholar

52 Cf. Henrik, Dam and Søren Friis, Hansen, supra n. 46Google Scholar; Werlauff, , “Hovedsædekriteriet i ny skikkelse”, Ugeskrift for retsvœsen, UfR (2000 B) 468.Google Scholar

53 Cases C-10 – C-22/97 Ministero delle Finanze v. IN.CO.GE'90, [1998] ECR I-6307; Nielsen, Ruth, EU-ret, 2nd ed. (GAD Jura 1999) at pp. 110–111Google Scholar; Hjalte, Rasmussen, EU-ret i kontekst, 3rd ed., (GAD Jura 1998) at p. 264.Google Scholar

54 Cf. Søren Friis Hansen, “C-212 og L 212 – Konsekvenserne for dansk og europæisk selskabsret”, supra n. 21.