4th Congress – The Transfer of Company Headquarters in the EU

posted in: CNUE news

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On the second day of the congress, Friday 6 October, Europe’s notaries presented a series of proposals for a directive on the transfer of company seat in the European Union.

Indeed, the adoption of a fourteenth Company Law Directive on the transfer of a company’s registered office is an idea that has been the subject of contradictory debates in the European institutions over the last 20 years, recalled the CNUE Vice-President Marius Kohler. At present, this process, which allows a company to set up in another EU country without losing its legal personality, depends on the various national laws and principles established by the Court of Justice of the European Union, protecting the freedom of establishment. In addition, companies can make use of existing EU instruments such as the Merger Directive.

However, this situation could change rapidly with the presentation on 29 November of a package of legislative measures by the European Commission which could include provisions on the transfer of company seats. For the notaries of Europe, a future directive will have to provide for appropriate procedural rules and protective measures for workers, minority shareholders and creditors.

This view is in line with the view expressed by MEP Evelyn Regner (S&D, Austrian) who also called for a strengthening of the rights of stakeholders. She called for a directive that does not lead to circumvention of the legal, social and tax provisions of the EU and the Member State of origin. This was also the position of the Deputy Secretary General of the European Trade Union Confederation (ETUC), Peter Scherrer, who demanded “information and consultation rights for employees”, referring to the use of the transfer of seat to limit employees’ co-management rights.

“Establishing a legal framework takes time”, said Susanne Knöfel, Deputy Head of Unit for Company Law at the European Commission, recalling the complexity of this issue. The Commission is currently considering different options and is listening to the reasons given by companies when they move from one Member State to another, while remaining aware of the risk of transfer for reasons other than ‘real economic’ reasons. She indicated that the possibility of introducing measures to combat tax evasion was being examined.

During the congress, the participants were informed of a proposal for a European directive on the cross-border transfer of seat, drawn up by the Spanish notariat. The document is available on the congress website: https://www.notariesofeurope-congress2017.eu/en/media-library/

The proposal lays down as a central principle a two-pronged examination: first by the Member State of origin, which would have to check that the national conditions for a transfer are met, and second by the host Member State, which would then be responsible for verifying compliance with the conditions of its own legislation for the incorporation and registration of the company.

Another fixed requirement is the simultaneous transfer of the registered office and the actual place of business. The idea behind this proposal – supported in particular by Professor Peter Kindler of the Munich Faculty of Law – is that the isolated transfer of the registered office entails risks of abuse such as the conversion of companies into letterbox companies or circumvention of legal protection standards.

The conclusions of Topic II and the working papers are available at the following link: https://www.notariesofeurope-congress2017.eu/en/media-library/

Congress website at www.notariesofeurope-congress2017.eu
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