Cartesio is a Hungarian limited partnership whose application for registration of the transfer of its seat to Italy was rejected by the Hungarian Court of Registration. Cartesio intended only to transfer its de facto head office to Italy, while continuing to operate under Hungarian company law.

EC-law implications

Because of the refusal to enter transferral of the de facto head office in the Hungarian Company Register the question was referred to the ECJ, to determine whether Articles 43 and 48 EC Treaty preclude a member state from imposing an outright ban on a company incorporated under its legislation transferring its de facto head office to another member state without having to be wound up in Hungary first, and to have the seat transfer entered in the Hungarian Company Register. It should be underlined that the Cartesio case is to a considerable extent similar to the ECJ’s Daily Mail Decision, since it also raises the question of the transfer abroad of the de facto head office.

Decision of the Court

The Court did not overrule its ‘Daily Mail’ decision, which allows member states to restrict the transfer of the central administration of a company abroad. On the contrary, the ECJ reaffirmed its Daily Mail doctrine. he court stated: ‘As Community law now stands, Articles 43 EC and 48 EC are to be interpreted as not precluding legislation of a Member State under which a company incorporated under the law of that Member State may not transfer its seat to another Member State whilst retaining its status as a company governed by the law of the Member State of incorporation.’

Slightly surprising was the obiter dictum statement that freedom of establishment also covers the possibility of a company converting itself into a company governed by the law of another member state – which is de facto the transfer of the registered office (para 111–113). This announcement contrasts with a statement in the same judgment, some paragraphs previously, in which the Court says: ‘It should be pointed out, moreover, that the Court also reached that conclusion on the basis of the wording of Article 48 of the EEC Treaty ... the question whether – and, if so, how – the registered office (siège statutaire) or real seat (siège réel) of a company incorporated under national law may be transferred from one Member State to another as problems which are not resolved by the rules concerning the right of establishment, but which must be dealt with by future legislation or conventions’ (para 108). As a result, the consequences of this obiter dictum for board-level participation rules have not been finally clarified. However, there are good reasons for saying that the obiter dictum applies only if national law completely forbids any kind of transfer of seat to another member state. As long as one form of transfer is allowed under national law, Art. 43 and 48 EC do not apply.