CYIL vol. 12 (2021)

CYIL 12 (2021) IMPACTS OF THE CJEU CASE LAW ON REGULATORY COMPETITION … organisational parts or foreign companies, and stated that the Member States cannot impose any additional obligations beyond the framework of that directive. This means that the CJEU preferred the principle of freedom of establishment and prohibited the Dutch approach as incompatible with the freedom of establishment and prohibition of discrimination on the basis of nationality. This conclusion applies also to situations when all activities are in fact carried out just through an organisational part and the main company is founded in another state obviously for the reason of not being obliged to fulfil stricter conditions for foundation of a company in the destination state. The argument stating that this approach involves circumvention of national law in these cases is not eligible for justification of limitation of the superior Union-wide concepts of freedom of establishment. In this case the matter concerned again an assessment of the so-called incoming situation, i.e. evaluation of compatibility of national legislation of the destination state to which the company wants to transfer its secondary seat (in this case its organisational part). This is the last part of the Court trilogy focused on the topic of the incorporation principle, which was unambiguously preferred by the CJEU in the Centros, Überseering and Inspire Art decisions to the seat principle, and it seemed that on the basis of the judicatory interpretation of freedom of establishment the incorporation principle would win in the entire EU and that the states building upon the seat principle would have to accept it as well. Case C-411/03 – SEVIC 29 Unlike the previous cases, this case did not concern a cross-border transfer of the company seat as such, but the consequences of a cross-border merger of the Germany-based company “SEVIC Systems AG” and the Luxembourg-based company “Security Vision SA”, which was to lead to complete absorption of the Luxembourg-based company by the Germany-based corporation. Therefore, in its final consequence the merger led in fact also to a change in the seat of Security Vision SA. The competent German Registry Court refused to register this merger in the Commercial Register with justification that German law permits mergers to German companies only. This rule became the subject matter of the preliminary ruling procedure which was subsequently referred to the CJEU. It is essential to emphasise that at the time of decision making by the Court the rules for cross-border mergers specified in the so-called Tenth Directive 30 were not effective yet, even though it was formally adopted several weeks before the delivery of the final judgement, nevertheless with regard to the unfinished transposition deadline it was not possible to claim its vertical direct effectiveness. Concerning the preliminary ruling procedure referred to the CJEU, the Court stated that the different conditions for mergers applied to national companies and to foreign entities can only be admitted if that legislation follows a legitimate objective, is justified by urgent reasons in the public interest and is proportional. Germen legislation did not undergo that test because there was not presented a sufficiently urgent reason in public interest, why foreign entities in general should not have a possibility of merging with intranational German companies. That is why the Court arrived at a conclusion that the German rule was in contradiction with Articles 49 present, this original directive is already invalid because it was repealed and superseded by Directive 2009/101/ EC of 16 September 2009, and the latter was subsequently amended by Directive 2012/17/EU of the European Parliament and of the Council of 13 June 2012. 29 Judgement of the CJEU of 13 December 2005. SEVIC Systems AG . Case C-411/03. 30 Tenth Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross- border mergers of limited liability companies.

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