CYIL vol. 12 (2021)

CYIL 12 (2021) IMPACTS OF THE CJEU CASE LAW ON REGULATORY COMPETITION … a similar company in Denmark, a minimum limit of registered capital in an amount of DKK 200.000,– . As it has already been mentioned, Centros Ltd. did not carry on any activity in the United Kingdom, but shortly after incorporation it applied for registration of its branch office in Denmark. This application was not satisfied by Danish authorities with an explanation that the matter did not concern a branch office in fact, but the principal place of business (main establishment), and also that an obvious reason for this procedure was circumvention of Danish legal regulations relating to the paying up of minimum registered capital. 22 Denmark also argued that in fact this was a misuse by Centros Ltd. of freedom of establishment, which state authorities are obliged to prevent with a reference to the fact that even the CJEU confirmed, in the past, the right of the EU Member State to adopt measures to prevent individuals from referring to European law in misusing or fraudulent ways 23 . It is clear that in the Daily Mail case concerning this topic, the CJEU was dealing with an issue of compatibility of legislation in the destination state, and therefore the matter concerned the so-called incoming situation. The CJEU arrived at a conclusion, within the framework of the preliminary ruling procedure, that the principle of freedom of establishment contained in the TFEU absolutely excludes the possibility when registration of a branch in another Member State is rejected by that state. 24 This conclusion applies even in the situation when it was clear that the parent company was founded in a fully formal way, does not perform any activity and that the aim of this legal construction was to circumvent stricter legal regulations in the Member State of the branch office. It implies from the above- mentioned judgement, among other things, that destination Member States of the EU cannot adopt any national conflicting rules of law that would limit the exercising of the freedom of establishment of incoming companies in their consequence. At the end it is appropriate to emphasise that the Court’s approach to secondary freedom of establishment of companies in relation to “incoming” and “outgoing” situations was rather different, and therefore whilst it is forbidden for a destination EU Member State to prevent implementation of secondary freedom of establishment in any manner, the original state can exercise its legal limitations. Case C-208/00 – Überseering 25 In the case known as Überseering, the CJEU had to cope with the issue of compatibility of the seat principle with the freedom of establishment. As it has already been explained in introductory parts of this Chapter, in the EU Member States it is possible to differentiate between two applied legal doctrines dealing with the issue of the personal statute of a company, which have an influence on the maintaining of legal personality during the transfer of the seat of a company to another state. It is connected with the theory of incorporation according to which a company is subject to the legal order of the state in which it was incorporated, regardless of the fact where the actual seat of that company is situated (where its main administration is performed) 26 . The states supporting this theory enable companies to transfer their actual seat even to other countries. Another applied principle is then the so-called seat theory. According to this doctrine, the actual seat must be identical 22 Judgement: Centros . Case C-212/97. Par. 7. 23 Judgement: Centros . Case C-212/97. Par. 23. 24 Judgement: Centros . Case C-212/97. Par. 39. 25 Judgement of the Court of Justice of 5 November 2002. Überseering BV v. Nordic Construction Company

Baumanagement GmbH (NCC). Case C-208/00. 26 Judgement: Überseering . Case C-208/00. Par. 4.

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