ECJ jurisprudence on the transfer of de facto company head offices
In recent years the European Court of Justice has, in a series of decisions, established some principles of law in the context of freedom of establishment (Art. 43, 48 EC Treaty) and the transfer of a company’s de facto head office to other member states that have had a profound impact on national regulation of legal conflicts (incorporation theory and seat theory). The leading cases in this context are the following: Daily Mail, Centros, Überseering, Inspire Art and Cartesio. The main outcome of these decisions is the possibility for companies to transfer their de facto head office to the member state of their choice.
The state to which the company moves its head office is not allowed to limit this transfer. Exceptionally there are some restrictions of the possibility of transferring the de facto head office, but they have to be in line with the strict requirements of freedom of establishment (Art. 43, 48 EC Treaty). On the other hand, the state in which the company was founded still has the power to lay down certain conditions on the emigration of a company (Daily Mail doctrine).
As a result of these decisions there has been growing interest in setting up so-called pseudo-foreign companies, which are companies registered in one member state but with their head office in another member state (letterbox companies).
This practice could have a major impact on the rules on workers’ participation. More particularly, this is a new loophole enabling circumvention of mandatory board-level participation rules. For example, it is now possible to operate a company without any rules on board-level participation in countries where national law usually foresees board-level participation for domestic companies. Some famous examples are Air Berlin and H&M.
Contact
Sigurt Vitols
Associate Researcher ETUI and Researcher at the Social Science Research Center Berlin (WZB).
svitols@etui.org
Aline Hoffmann
Coordinator EWPCC / Head of unit Europeanisation industrial
Tel. +32 (0)2 224 05 19
AHoffmann@etui.org
Sara Lafuente Hernandez
Research Officer ETUI
Tel. 0032 (0)2 2240590
slafuentehernandez@etui.org
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