CYIL vol. 12 (2021)

CYIL 12 (2021) IMPACTS OF THE CJEU CASE LAW ON REGULATORY COMPETITION … Cross-border activities of companies are always connected with the issue of the so- called personal statute of a company, i.e. determination of the legal order to which the company is subject and according to which the issues decisive for incorporation, legal nature, competence, acting, external relations, change, legal personality and cessation of the company are to be governed. 9 These issues are dealt with at a general level by conflict-of-law rules of private international law and naturally, they cannot be avoided in case of cross-border movement of companies within the framework of the EU either. The applicable legal order by which a company is governed is known as the personal statute of the company (lex personalis). The EU Member States use two basic doctrines for its determination, nevertheless they usually combine the two doctrines in a partially way, i.e. neither of them exists in a genuine form. 10 Firstly, it is the so-called incorporation principle according to which the decisive legal order is the one of the state according to which the company was incorporated. The incorporation theory makes it possible for validly incorporated companies to transfer their seat to another state without losing their legal personality. The other approach is based on the so-called seat principle which determines the personal statute according to the actual seat of the company, which term means the place in which its main, central administration is performed. The seat principle does not make it possible to maintain the company’s identity on the cross-border transfer of its seat, but it conversely requires the original company to be cancelled in its home state and that a new company should then be newly founded in the destination state in accordance with the local legal order again. A cross-border transfer of the seat of a company must therefore generally cope with the limits of the legal order of the original state on the one hand, and with legal norms of the destination state on the other hand. It is only in the case of a cross-border transfer of the seat between two states which both recognise the incorporation principle when a transfer of the seat does not cause any complications. It is then possible to consider the approach used by article 54 of the Treaty on the Functioning of the European Union as application of the so-called combination principle (theory), because it is necessary to fulfil, on a cumulative basis, both the condition of founding according to applicable law (as required by the incorporation principle) and the condition of real presence of the company in the territory of the EU (as generally requested by the seat principle). While primary freedom of establishment is granted by the CJEU to natural persons without any problems, the situation is more complicated in case of companies. And it is just the dispute between the Member States supporting the incorporation theory and the countries supporting the seat principle that led to a number of court decisions which were essential for further development of national legislation in individual states.

2. Freedom of establishment of companies in the EU and effects of the CJEU case law

A fundamental role in interpretation of the freedom of establishment was therefore played by the CJEU which determined, in individual cases, limits of compatibility of national legislations of individual Member States with the principle of freedom of establishment and 9 For more details see e.g. KUČERA, Z., PAUKNEROVÁ, M., RŮŽIČKA, K. International trade law. Plzeň: Vydavatelství a nakladatelství Aleš Čeněk, 2008, p. 56. 10 PAUKNEROVÁ, M. Conflict-of-law regulation of business companies. Právní rozhledy . 2005, no. 7, p. 245.


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