Brussels, 26th February 2004
Company law: Commission consults on the cross border transfer of companies' registered offices
The European Commission has launched an Internet consultation on the outline of the planned proposal for a Directive on the right of limited companies to transfer their registered office from one Member State to another. Two previous public consultation exercises, as well as the case law of the Court of Justice, have highlighted a need for clear EU framework legislation on this issue, so that companies can exercise their rights in the Internal Market. Those interested are invited to respond by 15 April 2004 to a quick and user-friendly questionnaire, using the Commission's Interactive Policy Making system and available through the Commission's dedicated consultation site "Your Voice in Europe" at:
Internal Market Commissioner Frits Bolkestein said "I encourage all businesses, associations and lawyers with an interest in company law to respond to this consultation. We need to make it as easy as possible for companies to transfer their registered office while making sure that third parties, including creditors, are protected. This consultation exercise will give us the chance to listen to the views of those affected before coming up with a detailed proposal."
The planned Directive would enable companies to transfer their registered office from the Member State where they are registered (the "home" Member State) to another Member State (the "host" Member State), under an appropriate procedure providing legal certainty. A company transferring its registered office would be registered in the host Member State and would acquire a legal identity there, while at the same time being removed from the register in its home Member State and giving up its legal identity there.
If necessary, companies would have to adapt their structures and assets in order to meet the substantive and formal conditions required for registration in the host Member State. However, they would not be obliged to go through liquidation proceedings in their home Member State or to create a new company in the host Member State.
The Commission will address the question of employee participation in the decision making bodies of the company whose registered office is transferred. This matter should be easier to resolve than in the case of cross-border mergers on which the Commission put forward a new proposal for a Directive in November 2003 (see IP/03/1564, MEMO/03/233), after a previous proposal was blocked for many years - since the transfer of registered office concerns only one company.
According to the outline proposal on which the Commission is now consulting, employee participation in companies transferring their registered office would be governed by the national law of the host Member State.
However, where such participation is already provided for by law or by agreement in a more extensive form in the home country it would have to be maintained, unless new arrangements could be negotiated and agreed between the company and its employees. Each home Member State would be free to adopt its own measures governing these negotiations.
How to respond
By using its Interactive Policy Making (IPM) consultation tool for this exercise and by providing a specific set of questions, the Commission is making it as easy and time efficient as it possibly can for users to respond. IPM (see IP/01/519) aims to improve governance by using the Internet for collecting and analysing reactions.
This consultation is open until 15 April 2004. The results will be taken into account in the preparation of the proposal for a Directive, which is likely to be presented in September 2004.
Business associations, chambers of commerce, Bar associations and Law Societies, and other interested parties are invited to reply to the questionnaire and to inform their members about the consultation. All replies will contribute to improving company law in all Member States.
Stakeholders will find a presentation and links to the questionnaire on the Commission's "Your Voice in Europe" Internet site at:
Your Voice in Europe is a recently relaunched one-stop shop giving access to Commission consultations and their results across all policy areas.
The results of the consultation will be published on the same site in June 2004. The statistical reports on the responses will be available by July 2004. More detailed qualitative analyses of the results will be available at a later date.
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 to transfer their registered office from one Member State to another without first having to be wound up in their home Member State. The advantage to be gained by a company from transferring its registered office stems from the twofold need for the company:
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 even if that company conducts its activities entirely or mainly in another Member State.
In its final report of 4 November 2002 (see IP/02/1600), the High-Level Group of Company Law Experts appointed by the Commission recommended that the Commission should urgently consider adopting a proposal for a Directive on the transfer of companies' registered offices.
The Commission, in its Action Plan on modernising company law and enhancing corporate governance of 21 May 2003 (see IP/03/716 and MEMO/03/112), undertook to adopt such a proposal for a Directive in the near future.