Governmental and Legal Environment E-Book

Stephan Weber

• Herausgeber: GRIN Verlag
• Kategorie: Geisteswissenschaft
• Sprache: Englisch
• Veröffentlichungsjahr: 2008

Beschreibung

Research Paper (undergraduate) from the year 2007 in the subject Business economics - Law, grade: 1,1, Heilbronn Business School (HBS), language: English, abstract: In this paper the implications of the jurisdiction of the European Court of Justice (ECJ) on German Corporate Law, especially regarding the ECJ-case Daily Mail, Centros, Überseering, and Inspire Art is made. Thereby also the question, wheather the so-called seat theory under German law can be applied is made. In the following the effects of this ECJ jurisdiction on the use of foreign legal forms in Germany, especially regarding the use of a British Limited is highlighted. Following on that the question how the German legislator try to react on the EU competition of legal forms is answered. In the end the advantages and disadvantages of this newly created competition of legal forms within the EU is discussed.

Leseprobe

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Inhalt

I. Question 1

A. Task

B. Introduction

C. Initial Situation: Seat theory vs incorporation theory

D. Cases

E. Implications of ECJ on German Corporate law

F. Is there still room for an application of the so called seat theory in Germany?

II. Question 2

A. Task

B. Introduction

C.  Effects of ECJ on the use of foreign legal forms

D. How did the German legislator try to react by reforming the GmbH

III. Question 3

A. Task

B. Advantages and disadvantages of the competition legal forms within EU

C. Conclusion

IV. Appendix

A. Bibliographies

I.Question 1

A. Task

What are the implications of the jurisdiction of the European Court of Justice (ECJ) on German Corporate Law, especially regarding the ECJ-case Daily Mail, Centros, Überseering, and Inspire Art? Please explain in detail whether there is still room for an application of the so-called seat theory (Sitztheorie) under the German law.

B. Introduction

With four decisions Daily Mail, Centros[1], Überseering[2]and Inspire Art[3], the ECJ has changed the national corporate law, and has shown that European law is regulated from Luxemburg. With his decisions, the ECJ had intervened in national law and tried to establish a European corporate law. In order to understand, the implications of the ECJ jurisdiction on the German Corporate Law, and especially the so-called German seat, one has to understand the basics of European legislation and jurisdiction in corporate law.

C. Initial Situation: Seat theory vs incorporation theory 

In German corporate law is based on the seat-theory. But more and more foreign corporations can be found in the domestic legal system.These are corporations, which were founded abroad. So their registered seat is abroad, but their administrative seat is however frequently in the inland[4].Reasons for that constellation are often theevasion of founding regulations, in particular the evasion of minimum capital regulations. The national private law of a country, particularly its corporate law, has to answer the question, which corporate law has to be applied on the foreign corporation.

This question is answered differently by the member states of the EU, whereby a distinction between incorporation and seat theory is made[5].

Countries, which act upon the incorporation theory, accept foreign corporations and apply on those corporations the corporate law of the respective foundation state. If the EC state however follows the seat theory, the applicable regulations are according to the administration seat of a company.

In Germany the seat theory has been used so far. In the case that a foreign corporation had located its administrative seat in Germany, the applicable law was the German law. Due to the fact, foreign incorporated companies did not meet the required criteria of Germany, which resulted in the formation of a company, like f.e.  the registering in the German Commercial Code and so the foundation was denied. 

The consequence was the denial of the “Rechts-und Parteifähigkeit” of the corporations. But the decision of the ECJ has changed the situation.

D. Cases

In the cases, regarding the freedom of establishment within Europe, four judgements are relevant. In these cases the question, which national corporation law can or has to be applied is answered. Thereby a distinction between states which follow the incorporation theory and states which follow the seat theory has to be made. Moreover a distinction of between cases of corporations that origin from EC countries and want to move their administration seat into a foreign EC country and corporations which want to move out of a country which believes in the seat theory has to be made. Before 1999, EC Member States were divided on the issue of the relevant connecting factor in company law matters. The United Kingdom, the Netherlands and the Nordic states followed the so-called incorporation theory, according to which the applicable law is determined by the place of incorporation. In practice, this approach enables founders to choose the company law system which they think is best tailored to their needs. It also allows the real seat of a company to be moved to another jurisdiction without triggering a change of the applicable law.  Contrastingly, Germany, Austria, France, Belgium, Luxemburg, Portugal and Greece adhered to the so-called real seat theory. Under this approach, the applicable law is defined by the place of the company's central administration. This means that founders have no choice but to establish the company according to the law of the state in which they want to place its central administration.

Daily Mail

In the case Daily Mail, a British corporation, wanted to keep its constitutional seat in the UK, who follows the incorporation theory, but wanted to move its administration seat into the Netherlands. Therefore the UK ministry of finance had to approve it, but it was denied. The ECJ decided, according to article 43 and article 48 EG, that a corporation is not allowed to keep its constitutional seat whereas the management of the company will be moved into a foreign country. Because of the reason of arising problems, concerning the different national corporation laws, which are not solved by the regulation for freedom of establishment.

Centros