Topic 4: International Dimension of Companies

True (A)

The applicable law governing the formation and operation of a company.

<p>pure legal fiction</p> Signup and view all the answers

<p>Incorporated under the laws of its home state (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Sovereignty limits recognition of foreign entities.</p> Signup and view all the answers

<p>Natural Persons = Individuals liable for their own actions Legal Persons = Entities created by law with distinct rights Incorporation Theory = Legal personality based on home state laws Real Seat Theory = Governing law based on the central administration location</p> Signup and view all the answers

<p>Article 54 (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Companies may choose the most favorable legal regime within the EU.</p> Signup and view all the answers

<p>Vale</p> Signup and view all the answers

<p>Daily Mail = Legal personality governed by national law Vale = Prohibits discriminatory treatment Centros = Companies can freely choose legal regimes Überseering = Recognition of companies across Member States</p> Signup and view all the answers

<p>Discriminatory treatment under EU law (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Germany must recognize the legal personality of companies incorporated in other Member States.</p> Signup and view all the answers

<p>tax</p> Signup and view all the answers

<p>cross-border (C)</p> Signup and view all the answers

The legal framework governing a company's formation, internal organization, and operations, essentially its rules of the game.

A legal construct recognized by law as having rights and obligations separate from its creators, just like a person.

A combination of resources (people, money, equipment) working together to achieve business goals.

The theory that a company's legal personality is determined by the laws of the country where it was incorporated.

The theory that a company's governing law is determined by the location of its central administration or main business.

The ability of a company to operate beyond its country of origin, potentially encountering legal challenges due to national sovereignty.

The concept of separating a company's assets and liabilities from those of its founders, achieved through legal personality.

The importance of legal personality lies in its ability to protect individual assets by allocating risk to the company, promoting entrepreneurship, and facilitating complex international operations.

The right to establish companies formed in one EU Member State within other EU Member States, enjoying the same rights as natural persons. It emphasizes the importance of harmonizing company law across the Union to facilitate cross-border economic activity and ensure equal treatment for companies and individuals.

Article 54 TFEU ensures that companies incorporated within the EU, irrespective of their specific location within the Union, have the same rights as individuals in terms of setting up businesses in any other Member State. Companies, however, retain their original legal personality and can operate in other Member States under their original legal framework. The provision aims to harmonize company law across the EU, encouraging cross-border economic activity and ensuring fair treatment for all companies, regardless of their origin.

This case involved a UK company, Daily Mail, seeking to transfer its central administration to the Netherlands. While it wished to retain its UK legal personality, the UK imposed a requirement for Treasury consent, which was denied. The court ultimately denied Daily Mail's attempt, emphasizing that national laws govern a company's legal personality. The court further asserted that EU law does not guarantee the right to transfer a company's central administration while retaining its original legal personality. This decision emphasized the tension between national sovereignty and the principles of the Single Market, reaffirming that a company's legal personality remains a matter of national law unless explicitly harmonized by EU legislation.

This case involved an Italian company seeking to reincorporate in Hungary. The goal was to maintain its legal status as a successor to the Italian entity, but Hungary refused this request. The court ruled in favor of the Italian company, arguing that Hungary's refusal amounted to discriminatory treatment, as Hungarian companies were permitted such reincorporation. The court emphasized that EU law prohibits discrimination against companies based on nationality and that Member States must apply the same rules to foreign and domestic companies under comparable circumstances.

Two Danish nationals established a UK company with no actual operations there. They used this company to establish a branch in Denmark to circumvent the capital requirements of Danish law. Denmark denied the registration of the branch, arguing that the purpose of the company was not genuine. The court, however, ruled in favor of the UK company, stating that denial of registration violated EU freedom of establishment. The court affirmed that companies can choose the most favorable legal regime within the EU. This case emphasized the Single Market's flexibility and opened debates about regulatory arbitrage, which allows companies to operate in jurisdictions with more favorable regulations.

This case involved a company incorporated in one Member State facing denial of standing in German courts. Germany based this denial on its 'real seat' theory, which argues that a company's legal personality is determined by the location of its real, operational headquarters, not its formal place of registration. The court, however, ruled in favor of the company, asserting that Germany must recognize the legal personality of companies incorporated in other Member States. It ruled that denying recognition infringes on freedom of establishment. This decision marked a shift in the application of the 'real seat' theory within the EU, strengthening the mutual recognition principle among Member States.

EU law demands mutual recognition of companies' legal personality, promoting cross-border business within the Single Market. National laws governing incorporation and establishment must adhere to EU principles to avoid discrimination or unjustified restrictions. Future legislative harmonization is likely to address remaining disparities, such as differences in corporate tax regimes and minimum capital requirements.

The principle that allows companies to operate within the EU based on their initial legal personality, regardless of their location. It means companies can move their central administration, branch offices, or headquarters freely within the EU without losing their home legal personality.

The right for companies to freely establish themselves in any EU Member State, similar to the freedom of movement for individuals. It eliminates barriers and restrictions that would limit business activity across the EU.