Free movement of legal persons Flashcards
When is there a legal person?
Daily Mail-case
Which two kinds of connecting factors are used by private international law?
- incorporation theory: under the incorporation theory, the company laws applicable to a legal
entity are those of the jurisdiction in which the legal entity has been incorporated, irrespective
of where the entity has its real seat. This is the place where the company is registered. This
means that the law that defines the birth, existence, and death of the creature of the law is
the one where the company is registered. For example: if the company is registered in Dublin,
then you are an Irish company. - real set theory: under the real seat theory, the company laws applicable to a legal entity are
those of the jurisdiction in which the entity has its real seat. This is the place of the economic
activity/central administration of the company. This means that the law that defines the birth,
existence, and death of the creature of the law is the one where the legal person economically
active. For example: if the activity takes place in Germany and the company is registered in
Ireland, then you are a German company.
What does EU law say about creatures of the law
Art. 54(1) TFEU
The abovementioned provision basically says that it doesn’t matter what the connecting factor is. So,
there is an equal treatment of connecting factors. For EU law, it only matters that the company exists.
The neutrality that this provision insinuates cannot be upheld, because if they were equal then there
would be situations in which there were conflicts that have no solutions.
Consequences of the Equal Treatment of Connecting Factors
when we speak of a home Member State, we mean the Member State under whose legal order
a company was created. When we speak of a host Member State, we mean the destination of the
movement. This can be either the one of the economic activity, if it is the activity that crosses the
border, or it can be the one forming the legal structure because it is the company’s structure that
crosses the border whilst the economic activity remains in the home Member State
How to solve the case of two legal orders of a MS that claim the competence to regulate the company?
First possibility: The first possibility is that the economic activity moves from the home Member State to the host
Member State. Only the legal configuration remains in the home Member State in that case. What
does this have as a legal consequence? Since the home Member State adheres to the incorporation
theory, the home Member State does not care where the main business activity takes place. What
matters is the place of registration, and this one is unchanged, because the company’s structure
remains in the home Member State. Consequently, by applying its own private international rules, the
home Member States does not have a problem if the main business activity crosses the border
The second possibility is that the legal configuration moves from the home Member State to the host
Member State. Only the economic activity remains in the home Member State in that case. What does
this have as a legal consequence? Since the host Member State adheres to the incorporation theory,
the host Member State does not care where the main business activity takes place. It accepts the new
business structure, such because it only requires a registration. So, when the registration is done. It
becomes a new Dutch company.
What happens if there is no legal order of a MS that claims the competence to regulate the company?
This means that although there could be a cross border situation - which means at a certain moment
of time no legal order claims its competence regulated - at some moment of time, there was a country
that wanted to regulate the company, because it gave birth to it. In this regard, the most reasonable
way of deciding what Member State will get the competence to regulate the company, is to give the
legal order of birth the competent.
How is the violation for freedom of legal persons justified?
Express justification: art. 52 TFEU + proportionality
Implied justification: Gebhard-case + proportionality
When is the violation of freedom of legal person excepted?
Art. 51 TFEU + Commission vs. Belgium-case.
