Company Law Definitivo PDF

BUSINESS AND COMPANY LAW GENERAL PRINCIPLES OF EU LAW 3 THE SOURCES 3 COMPANY LAW BASICS 5 EU COMPANY LAW, AN EXCEPTION? 6...

BUSINESS AND COMPANY LAW GENERAL PRINCIPLES OF EU LAW 3 THE SOURCES 3 COMPANY LAW BASICS 5 EU COMPANY LAW, AN EXCEPTION? 6 COMPANY CLASSIFICATIONS 7 TYPICAL COMPANIES 10 PARTNERSHIP IN GENERAL 11 PRIVATE COMPANIES 15 PUBLIC OR STOCK COMPANIES 16 RECENT HISTORY OF EUROPEAN COMPANY LAW 18 EUROPEAN UNIFICATION STRATEGY 21 EUROPEAN UNION FREEDOMS AND COMPANIES 24 CROSS BORDER MOBILITY 24 JURISPRUDENCE OF THE ECJ 26 THE 1ST AND THE 11TH COMPANY LAW DIRECTIVES 29 1ST COMPANY LAW DIRECTIVE Dir.2017/1132/EU 30 11TH COMPANY LAW DIRECTIVE 42 NEW DIRECTIVE 2023/0089 46 2ND COMPANY LAW DIRECTIVE 46 KINDS OF CAPITAL 48 12TH COMPANY LAW DIRECTIVE (89/667/EEC) 54 FORMATION AND FINANCING OF A COMPANY 73 PUBLIC LIMITED LIABILITY COMPANIES 73 PRIVATE LIMITED LIABILITY COMPANIES 75 3RD COMPANY LAW DIRECTIVE — MERGERS 76 GENERAL RULES ON MERGERS — PROCEDURE 77 LEGAL CONSEQUENCES OF A MERGER 81 6TH COMPANY LAW DIRECTIVE — DIVISIONS 81 CROSS-BORDER OPERATIONS 83 CROSS BORDER MOBILITY: MANAGEMENT AND CONTROL 84 1 di 109                                  BUSINESS AND COMPANY LAW EUROPEAN BUSINESS ORGANISATIONS 91 EUROPEAN ECONOMIC INTEREST GROUP 91 MAIN FEATURES OF THE EEIGs: 92 Main features of the EU Company Forms: 96 COMPANY LAW IN A BIJIURAL JURISDICTION — CANADA 97 2 di 109         BUSINESS AND COMPANY LAW GENERAL PRINCIPLES OF EU LAW 1. European Coal and Steel Community (1951) with the aim of bringing the two European forces toghether, France and Germany, and avoid any further con ict with an organization based in Luxembourg; 2. European (Economic) Community (1958); 3. European Atomic Energy Community (1958), still the idea was to have a framework to e sure nuclear weapons and avoid escalations; 4. Single European Act (1986) that brought more integration into the process and enlarged it; 5. Maastricht Treaty - EU (1992), the treaty that actually generated the European Union; 6. Nice Treaty (2000); 7. Lisbon Treaty (2007). 3 treaties were therefore made, TEU, TFEU, Charter of FR. The latter is not really important for company Law except for art16 which is about the freedom to conduct a business. —> Art.16 Charter on freedom of establishment is one of the pillars of toady EU Company Law. The TFEU is possibly the most relevant for us cause it tells what is a company and its freedoms and rights. The goals to be achieved trough the European process was mostly the creation of an internal common market; in particular we needed: 1. Common market (law review); 2. Single market; 3. Internal market, that needed to be di erentiated from the Eu external market and the way to make it work was granting the 4 fundamental freedoms. To ensure the creation of the internal market the barriers had to be abolished and so a unique legal framework is more than necessary, even tought some legislations seemed to be contrary to the creation of a single market. Any law at national level as the potential to limit the freedom granted by the European Union. European Union company law tries to abolish the di erences among member states by harmonising the legislation with the role of facilitating the cross borders operations within the European Union. Approssimation was used as the core tool to facilitate the creation and development of the internal market. THE SOURCES There is a big distinction among primary and secondary sources of law in the European legal system, in particular: PRIMARY SOURCES 1. from Treaties: - Art. 49 (43): Right of Establishment, after Lisbon company are legally considered as persons, so it repealed Art.293. Now something even stronger = in European Union companies are at the same level that natural persons whilst in USA distinction persons and citizens. “Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be prohibited. Such prohibition shall also apply to restrictions on the setting-up of 3 di 109   ff ff fl  BUSINESS AND COMPANY LAW agencies, branches or subsidiaries by nationals of any Member State established in the territory of any Member State. Freedom of establishment shall include the right to take up and pursue activities as self- employed persons and to set up and manage undertakings, in particular companies or rms within the meaning of the second paragraph of Article 54, under the conditions laid down for its own nationals by the law of the country where such establishment is e ected, subject to the provisions of the Chapter relating to capital.” - Art. 54 (48): De nition of Company, The EU was trying to create a European legal entity, and before that happened companies were de ned as those incorporated into their MS. If an Italian company is incorporated in italy also for the purposes of the treaty you have the right of establishment in all the Eu, but it is a matter of discussions wheter a company is incorporated in every single MS. Every member uses its own criteria, but there are two major theories : real sit theory , if headquarters are placed in Germany the company is german (what matters is the place where you have headquarters) is based on factual element + incorporation theory , also if headquarters are in other ms you are still a German company, what matters is the place indicated as register o ce in the bylaws - not were the activity is carried out. This provision recognised both doctrines allowed under European Union law and this creates problems of coordination. “Companies or rms formed in accordance with the law of a Member State and having their registered o ce, central administration or principal place of business within the Union shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States. ‘Companies or rms’ means companies or rms constituted under civil or commercial law, including cooperative societies, and other legal persons governed by public or private law, save for those which are non-pro t-making.” - Art. 50(2) (44(2)): Coordination/equivalent safeguards, legal basis for all directives as the European Union can enact legislation with the goal of coordinating the rules for the protection of shareholders and third parties like creditors in company law. “In order to attain freedom of establishment as regards a particular activity, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall act by means of directives.” - Art. 114 (95) Approximation, deals with the approximation of legislation and allowed lower majorities to approove legislation. “Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.” - Art. 352 (308) Other Necessary Actions, for any other matter unanimous agreed upon the Council can enact legislation; this is important for company law because in order to create a new legal entity you need an unanimous agreement. “If action by the Union should prove necessary, within the framework of the policies de ned in 4 di 109 fi  fi  fi fi fi ffi fi fi fi ff ffi  BUSINESS AND COMPANY LAW the Treaties, to attain one of the objectives set out in the Treaties, and the Treaties have not provided the necessary powers, the Council, acting unanimously on a proposal from the Commission and after obtaining the consent of the European Parliament, shall adopt the appropriate measures. Where the measures in question are adopted by the Council in accordance with a special legislative procedure, it shall also act unanimously on a proposal from the Commission and after obtaining the consent of the European Parliament.” 2. from Conventions: - Art. 293 (now repealed): At the beginning the provision of art. 293 was there to ensure freedom of movement in case of cross boarders situations; established in a independent convention that needed to be concluded between member states, meaning that companies didnt have right to establishment as natural person because they could not transfer themself from one country to another one. Things changed after 1993. SECONDARY SOURCES 1. Regulations have a direct e ect. The legal basis of these regulations is art. 352 (the nal text is still not working very well). there’s a strict link between regulation and art 352 but so far this discussion did not achieve any practical result and the conclusion if you need a direct e ect you need the unanimity vote of the Ms. Regulations are extremely rare nowadays because of the di culty to adopt them. 2. Directives , where the most important one is the 2016 directive which is a codi cation of almost all previously company law directives. Codi cation means a collection, a statement of the existing legislation and by de nition it shouldn’t bring any changes. To bring all directives to a single legal interest does not allow to change the content of the legislation and the procedure is faster; in the end the comments on the codi cation suggested that many things did in fact change. This means that we need to have a look at the original text of the directive which is still relevant and the codi cation directive shouldn’t have changed anything but actually changed during time. Directives are the preferred ones to company law because they can use the super majority vote without unanimity. They have a direct e ect on the natural legal person of MSs as they need to be transposed to have an e ect, they tent to give to MSs lots of options on implementations. 3. Recommendations are not binding by the instruments of the EU. They became a focal point for a kind of option of harmonization of the MSs, the de nition of an independent director. The incentive of the commission is to get promoted just if we have our les approved, but every 5 years there is the need to change the works to avoid risks of con ict. 4. Decisions 5. Court of Justice (CJEU) Decisions (mainly preliminary rulings) 6. Other sources like model laws or model company acts. COMPANY LAW BASICS At its most basic, “company law” or “corporate law” is the body of legal norms that establish the nature and structure of various forms of business entities. This would include forms like a public company, a private company, a general partnership, a limited partnership, a joint venture, or a cooperative. 5 di 109 fi  fi fi  fi fl ff ff ffi fi fi ff ff fi fi  BUSINESS AND COMPANY LAW Although a particular business organisation may carry out its activities across national borders, it is governed by the national law of one country. The idea is that it deals with the di erent forms of legal entities engaged in business activities (the latter are hard to de ne, there are two approaches: the rst is where the owner gets an individual pro t while the other puts emphasis on the fact that the activity produces wealth in general. When you go to a restaurant the activity destroys wealth cause after paid you are poorer, so it produces well on the perspective of the restaurant, but is it su cient to have pro t in general or do we need the fact that the owner gets the pro t?) EU COMPANY LAW, AN EXCEPTION? “[I]t should be borne in mind that, unlike natural persons, companies are creatures of the law and, in the present state of [EU] law, creatures of national law. They exist only by virtue of the varying national legislation which determines their incorporation and functioning.” EU company forms are the exception; in general there are di erent legal forms, but the ones that are actually getting harmonised through EU Law are private limited lability companies and public ones; all other are not really touched upon. In the end these legal entities are there to achieve the goal of making a pro t and evolve with this goal. An important point is that is we don't consider European companies the ones that are governed by a law that derives from a MS; this was said in a decision of the CoJ in the Daily Mail case, where it was stated that companies are creatures of national law. This means that a company exists only if a member state recognises that it exists; a company doesn’t exist as a natural being (this would actually also apply to persons according to the theory of Kelsen). Can a company exist without a state?According to the case above, no. A national legislation must recognise the existence. Also for the legal entities we can say that the play between EU Law and national Law is intricate because the criteria at the basis says that a company comes into existence when the company is registered in a public business register. EU therefore may try to create a European register but it is much easier to have a coordination between national registers; this means that any legal entity needs to be registered. In the end therefore your very existence depends on this. So can we say that EU Company Law is an excpetion? Yes, because the EU has created, and continues to create, business organisation forms that are primarily governed by EU law, particularly with respect to their form and function. Most Member States’ national corporate law forms tend to have fundamentally similar legal features. EU harmonisation has been quite successful in bringing such legal characteristics closer throughout the Member States. Currently also other strategies like uni cation and regulatory competition are explored. So the Eu has the goal to have a more integrated legislation on Company Law, starting always from the point that national systems share many common features, and, in order to achieve its aim, the Union has tried di erent strategies: 1. Harmonisation: directives that try to approximate national laws, majority of the rules derive from this agenda; 2. Uni cation: the European company, cooperative, etc. started with the goal of creating an additional legal from with European nature but this was not so successful. 6 di 109  fi fi fi  ffi fi fi fi ff ff fi ff fi  BUSINESS AND COMPANY LAW 3. Regulatory competition: derives from the debate in the US concerning the ability of being able to create a company in the di erent states. This allowed companies to choose the state in which they preferred to create the legal entity leading to competition between the laws. At the beginning New Jersey was the most successful state, but now it’s Delaware (D. e ect). This approach works only if there is recognition of full freedom establishment; the strategy tyhat tried to avoid regulatory competition only brought to a race to the bottom which was problematic; after the Santos case this idea spread also to the EU, therefore saying that if we are not able to move forward with the harmonisation of company Law, the good alternative would be to allow the free movement of companies (which was forbidden before). The case concerned a company created with an initial capital of 1€, but there was the need to show the seriousness of the company to avoid fraud. This strategy was successful in the lowering of the minimum capital requirement. COMPANY CONDUCTION Business activity can be conducted in di erent ways leading to di erent legal forms, either: 1. By a sole proprietor: a natural person who carries all the risk associated with the business activity but also that the business creditor needs to get informed on the personal debts of the entrepreneur and with no distinction between personal and business assets. The natural person (and only a natural person) owns all of the assets, and bears all of the entrepreneurial risk or risk of loss, associated with the business activity. There is no distinction between his or her personal assets and those of his business activity. All assets are available to his or her creditors. 2. By a business organisation (or company) - Led by two or more natural or legal persons; - It can be incorporated or unincorporated and the incorporation can be: - by registration or - by notarial instrument. COMPANY CLASSIFICATIONS We classify companies along di erent dimensions: - Limited v. unlimited liability (for owners), so a separation between the assets; - Private v. public; - Open v. closed; - Single owner; where they are owned by one person only, this is a new concept cause the basis theres not contract. - Groups, in most cases companies indeed belong to a group; normally legislations do not deal with this, they tried to enact directives about it but they failed so theres no harmonisation. LIMITED AND UNLIMITED LIABILITY OF THE OWNERS Incorporation does not automatically limit the liability of owners in all Member States. In the UK, for examples, a company’s owners can have limited liability or unlimited liability, depending on the way it has been registered. the liability is that of the owners, of the shareholders. In the rst case, the owners do not risk their own assets whereas in the second instance shareholders risk their assets. How much do they risk? There is a level of separation between the assets of the company and that of the owners even in companies with unlimited liability. The rule is that the creditors should rst attack the assets of the 7 di 109   fi ff ff ff ff fi ff  BUSINESS AND COMPANY LAW company and later, if not su ciently satis ed, that of the owners. This creates a distinction between assets devoted to the business activity and those held for personal goals (personal and business assets). This distinction becomes more relevant for limited liability companies since the shareholders risk to lose only the assets with which they contributed to the company; liability of the shareholders is limited to the amount of contribution given to the company. Yet, it is possible, under speci c circumstances, to attach the personal assets of shareholders of a limited liability company when the entity is created for fraudulent purposes (corporate veil piercing doctrine). PUBLIC AND PRIVATE COMPANIES In Member States that have a formal distinction, a public company is formed in such a way as to allow it to have certain of its ownership instruments (e.g., shares) to be o ered to the public, even if those interests are never actually o ered to the public. Whereas, a private company is formed in such a way that it cannot never have its ownership instruments to be o ered to the public. “The original idea behind the private company is that formation takes place by intuitu personae and that a rather exible statute re ects its personal character, enabling its members to regulate the company’s internal a airs.” Normally, a company is a public limited liability one if it belongs to one of the legal forms mentioned before (società anonima, società per azioni) while for example société a responsabilité limitée are private limited liability companies. The main di erence is not on the fact that one is anonymous, as the traditional French doctrine held, but rather on the reference to the concept of share (meant as security, as an action); the share of public limited liability companies allows two things that others are not allowed to do: the rst is to o er the shares to the market to investors (public o ering in the primary market, the place where the companies o er shares to the public) and also the exchange of shares in the secondary market (selling shares between co-shareholders of between investors). The shares in private limited liability companies instead are not designed to be traded. So, the main point to distinguish them is that public companies are conceived to allow public o ers in the primary (initial sale) and secondary market (transaction between investors) whereas private companies are not designed with that purpose even if they are trying more and more to carry out this. The original idea behind the private company is that formation takes place by intuitu personae and that a rather exible statute re ects its personal character, enabling its members to regulate the company’s internal a airs. For example, Germany’s statute for its private company (GmbH) consists of fewer than 90 sections, while its statute for its public company (AG) has more than 400. Similar di erences exist for the French private company (SARL) and public company (SA) statues. The UK, on the other hand, has a single statute for both, but many of its provisions do not apply to private companies. OPEN AND CLOSED COMPANIES - Limited number of owners - Transfer of ownership interest is normally limited by the law or an agreement - Easiest to create if original form is a private company The abstract ability to o er shares on the market doesn’t mean that this is actually done. The vast majority of public limited liability companies remain a company with a closed shareholders base (few shareholders). The di erence between open and closed depends on the speci c national legislation and, depending on the threshold, the company is open 8 di 109  ff ff  ff fi ff fl fl ff ff ffi ff ff ff fi fl fl ff ff fi ff fi ff  BUSINESS AND COMPANY LAW or closely held. Open company usually has a larger public of investors that buy shares; if there are just a few, the company is closed. A closed company may also be public since being public just means that they can go public, not that they necessarily act as such. Private LLCs are normally closed companies, as they were originally conceived as a legal entity that does not allow shares to be o ered to the public. This distinction is progressively losing force and they recently started going, to some extent, public. In some countries, there are speci c limitations on the number of members a company may have. In Italy there is no speci c limitation. In closed companies the transfer of ownership interest is normally limited by the law or an agreement and they are easiest to create if the original form is a private company. OTHER TYPES OF COMPANIES - Single owner companies; - Groups of companies (parent and subsidiaries) - Sometimes act as a single economic entity. Traditionally companies were considered contracts in continental Europe (because of the in uence of Roman law). Groups actually means that there is a company owning one or more companies and they can act as a single economic entity. Some countries have speci c legislation on groups, in particular for the protection of minority shareholders. The latter are those states in uenced by the German tradition and Brazil. In the Anglo- American tradition this idea is rejected and they do not have legislation on groups. The director of each company has to act as if he was independent. In Europe there are some rules devoted to groups of companies; there was the project for a legislation on the eld, but it was turned down because of a veto from the UK. - Personal and shared companies: Personal companies, like partnerships, are companies in which the element of each member is important (intuitu personae); the expertises is much more relevant than the amount of money contributed to the entity. On the other hand, shared companies rely more on the relevant contributions and are called impersonal companies: a person is interchangeable with another for the same amount of money and its expertise is not relevant. Private limited liability companies are, in some countries, associated to personal companies, whereas in others are more associated to shared companies (in France the SARL is more a personal company while in Italy and Germany is more similar to a public limited liability company therefore a shared one). In the end, the main distinction refers to the extent of importance of the intuitu personae. “The word ‘company’ means as association of persons who combine for the purpose of a joint activity, commercial or otherwise.. In continental legal systems, this the case, apart from legal forms such as associations. Each country, however, does allow certain speci c forms under which joint economic activities may be carried out, and these are generally divided into partnerships and companies. The essential, but not universal, distinction between these two generic forms in that partnerships are based on individual agreements between the partners, whereas companies are organizations that exist independently of its members and depend on capital resources.” 9 di 109  fl  fi ff fl fi fi fi fi  BUSINESS AND COMPANY LAW We also tend to divide companies between: CIVIL AND COMMERCIAL LAW There is a distinction between civil and commercial company law, mostly in civil law systems as common law doesn’t di erntiate between the two elds, also derived from the fact that there are two di erent codes, that were rarely merged in a unique one later as in Italy or in the Netherlands. A civil company is a kind that does not undertake commercial activities, it is used typically just to enjoy ownership of assets (joint owenreship), while the other has the goal of the production of goods and services with the nal idea to produce proftits that can be divided among shareholders. So civil companies are not engaged in commercial activities, such as an agricultural activity. In many countries a distinction between civil and commercial law is made; thus, some companies exist because they are created according to the civil code while others because created according to the commercial code. This distinction corresponds to the distinction between civil law and common law tradition. Historically, the rst economic activity that was relevant was commerce and merchants were at the center of the economic activities since they asked to produce speci c goods. Now the focus is instead on the production and things have changed. The activities associated with buying and selling are therefore commercial, while civil law are excluded and do not involve an economic purpose. LEGAL PERSONALITY Companies are also classi ed for their legal personality that can be either full, modi ed or nonexistent. Many problems could arise from the legal position of a company, such as the assets partitioning for example, and so it is meant as the highest level of assets segretation because it is regarded as equal to a natural person; in this sense companies are considered a ction. The full legal personality is not given properly to all companies, but only to those that are more relevant and have limited liability, società a responsabilità limitate, or public limited / nameless companies, società per azioni. Legal personality is not given to personal companies, the most basic form of commercial association, also known as partnerships. It much depends on the jurisdiction. Anyyway this distinction is quite arbitrary as well; companies enjoying full legal personalities are generally the public or private LLC; for partnership this is trickier: in some member states there are cases in which the same company enjoys and does not enjoy legal personality, they are recognised as such depending on the country. In the UK, a general partnership has no legal personality at all. The idea is that if there is a separation of the assets between the shareholders, to some extent (even without a full limited liability), maybe there is no full legal personality, but for sure something that is di erent from having no legal personality at all (in Italy this is called “subjectivity”, subject of rights). Usually, public or private LLCs enjoy full legal personality. TYPICAL COMPANIES 1. GENERAL PARTNERSHIP: The basis of companies starts from the easiest which is General Partnership, that is not even considered a company in the UK. A partnership is a structure created in the Middle Age in which there is no separation of assets, not much capital is required but what matters is the personal input by members. 10 di 109  ff fi  fi ff fi ff fi fi fi fi  BUSINESS AND COMPANY LAW 2. LIMITED PARTNERSHIP: Then there is Limited Partnership with two di erent types of partners: 1. executive partner, the rst is equal to the partners in general partnership so managing the companu; 2. the second type of partner are those that just contributes nancially to the company. 3. PRIVATE LIMITED LIABILITY COMPANY: Much more common and are the private equity companies, historically carring out small businesses, the feature is that by de nition they are not allowed to go public, not allowed to have many shareholders even if it is changing in the last years ( in Luxembourg there is the limit of 1000 shareholders) This special form was invented in Germany. 4. PUBLIC OR STOCK COMPANIES: Invented in the Netherlands in the 17th entury with the new feature of having an activity similar to a partnership, butwith much money needed. They therefore invented the shares of a company, a piece of paper that can be sold to the investors that are interested in participating in business activities, represents a portion of the company that can then be sold in a large number to collect a lot of money to engage in bigger ventures. Once there are many investors they can trade the shares among eachothers, now known as stock exchange: shareholders can enter and exit from the company really quickly meaning that it created a big separation from the directors of a company, that are those that really maanage all the aspects of a company, and the investors. 5. HYBRID: there can also be combinations of a private and a public limited company with the distinction of the two classes of shareholders: one that is reeally managing the company as a general partnership, and another part that’s just investing the money like in a public limited company. NEW TREND Many MS are proposing a new legal entity which is addressed to Startups or SMEs awith the idea to facilitate the incorporation of any legal entity to improve the general economy. The approaches toward this new legal entity depend very much on the member state, some introduced other legal forms that are more related to the private limited liability companies, while others created legal forms related to the public companies in a simpli ed way (such as in France societe anonime). These new legal forms are characterised by having a low or nonexistent capital requirements, where in general they are required very few, they are typically standardized and were proposed as a reaction to the ECJ’s decisions allegedly, to improve competitiveness among Member States. PARTNERSHIP IN GENERAL A general partnership is characterized by a personal relationship based on agreement, the members know eachother, the a ectio societatis, and trust eachother because once there is a partnership normally each partner may manage the company indipendently but mostly because everyone is bound and responsible for any decision and obbligation undertaken by the other members, which typically have an unlimited liability. There are very few mandatory rules, the parteners may decide to deviate from all the rules that are normally provided by the law, apart from the rule of the limited liability. For example, they can be three partners and , instead of giving to each of the partner the right to represent the company, the right to act on behalf of the company, they just give 11 di 109  fi  fi fi ff fi ff  BUSINESS AND COMPANY LAW this right to one of them, or they require that the company is bound only by the signature of the three partners together, joint signature agreement. These are all exible agreements that can lead to a transformation into something more similar to public/private company as for civil partnerships. Thus, in the absence of speci c rules, in personal companies each person possesses a vote (while other companies may look at the amount of contribution given by each party or other companies accord votes according to the number of shares of each). As to the power to bind the partnership, the rule says that each partner has the right to manage the partnership and to bind it vis-à-vis third parties without limitations. This is a consequence of the fact that partnerships possess unlimited liability. CIVIL PARTNERSHIP The continental tradition of civil partnerships (seen in France, Belgium, Luxembourg, Germany, and Spain) generally does not grant these entities separate legal personality, unless explicitly recognized by national law. Governed by the civil code rather than the commercial code, civil partnerships are private contractual agreements typically established for personal or domestic purposes rather than commercial ones. Unlike full corporate entities, they do not assume limited liability status, and the partners often retain personal responsibility for debts and obligations. These partnerships also provide legal recognition and protection for cohabiting couples, addressing issues such as inheritance, tax bene ts, and joint property ownership. GENERAL PARTERSHIP - General partnership - Equal voting rights; - One partner can bind all / duties to other partners; - Unlimited liability; - Default rules; - Pro t and loss distribution (typically proportionate, but some di erences); Country General Partnership Forms Belgium vennootschap onder rma (VOF) / société en nom collectif (SNC) France société en nom collectif (SNC) Germany Offene Handelsgesellschaft (OHG) Luxembourg société en nom collectif (SNC) Netherlands vennootschap onder rma (VOF) Poland spólka jawna (sp.j.) Spain sociedad regular colectiva (SC) United general partnership (GP) Kingdom Italy società semplice (S.s.) - Voluntary and involuntary withdrawal; - Dissolution and liquidation. 12 di 109  fi  fi fl fi fi fi ff  BUSINESS AND COMPANY LAW They are the commercial form of civil partnerships. In general partnerships, voting rights are typically equal, based on the capital invested, re ecting the importance of equality among partners. While the default rule for pro t distribution is equal sharing, this can be modi ed by agreement. Each partner can bind the partnership, meaning the actions of one can obligate all, and partners share unlimited liability for the debts of the partnership. Rules regarding the entry or exit of partners often require unanimous consent, reinforcing the principle of mutual trust. Additionally, the dissolution and liquidation processes are governed by default rules, unless otherwise agreed. There is no harmonization of partnership law across jurisdictions, although a new directive is expected, with national laws currently governing similar principles across countries. In such a partnership there is a pro t and loss distribution, which is typically proportionate; therefore, money is divided on an automatic basis; no speci c decision is required for the distribution. There are rules on voluntary and involuntary withdrawal; since they are based on intuitu personae, if some members of the company are not to be trusted, they can be excluded. The right to exclude and the right to withdraw are based on the very nature of these partnerships. In some countries there is no distinction between the civil and the commercial code, in others instead there is this distinction. All partnerships devote attention to the intuitu personae, and what really matters are not the contributions made in monetary terms, but rather what the members bring into the partnership. One of the key principles is that all members are unlimitedly liable for the obligations undertaken by the partners themself; they do not enjoy limited liability and therefore they enjoy a higher exibility in drafting their agreements, since if anything goes wrong they will be liable. There is not a distinction on the di erent corporate bodies, no distinction of roles, the default rule is that all members are directors and they bind the company. The unlimited liability results in higher exibility, so the rules tend to be default rules rather than mandatory rules. The decision making process in partnership is quite common, depending on the legislation of the MS, to give the vote to persons individually, not depending on the shares and the contributions. Italy is an exception to these rules, since it depends on the share. The power to represent a partnership is given to all directors, all of whom bind the company. Some countries, mostly those of German tradition, go more for a joint representation of legal representatives but the general rule for partnership is having a single power is given to all members. Of course, these are default rules so each can decide. The distribution of dividends is more or less automatic, and each member is allowed to receive their share of pro ts; this is opposed to private and public limited liability companies where, by default, money is not automatically distributed and decisions are needed (there is a sort of block-in of money). There are special rules on the withdrawal and exclusion of members, since personal relationships are important, so when a partner is not trusted anymore, he can be excluded or there is the possibility to leave. 13 di 109  fi  fl fi ff fl fi fi fl fi  BUSINESS AND COMPANY LAW LIMITED PARTENRSHIP They have two di erent types of partners: 1. GENERAL PARTNERS: have management rights and unlimited liability; t h e y enjoy more or less the same rights the general partners enjoy in a general partnership, meaning that they have a broad managerial role in the company (they also act as directors). They face unlimited liability. 2. LIMITED PARTNERS: they are the key features of limited partenrships; t h e y originated in the Middle Ages, from the merchants companies that were created to carry out business, buying assets in overseas and then selling them in the home country; the idea was that of having a general partner really engaged in the managerial role. The general partners were the ones actually involved in the company, and they were usually nobles, while the limited partners were the ones actually carrying out the operations. The limited parteners mostly provide capital meaning that they cannot manage the company, but this comes with the advantage of having a limited liability becoming a rst way for investors to limit their liability in a business venture. Normally these partners tend to being involved in the management even if they shouldn’t, resulting in them loosing their limited liability. Typically limited partners do not represent the company and do not carry out activities vis a vis third parties. Since they enjoy limited liability, all legislation for limited partnerships provides for limitation of managerial rights for them; the general rule is that they don’t take managerial decisions (taken only by general partners), but it is possible to some extent to allow the limited partners to have a say, at least, on some of the most important decisions. Nonetheless, excessive management participation may lead to loss of limited liability (e.g use of name, active with third parties). Nowadays these kind of partnerships are used for small shops and for tax reasons as they might be useful beacuse they are considered as transparent legal entities and therefore are not taxed at all level of distribution but only once at the end. Country Limited Partnership Forms gewone commanditaire vennootschap (Comm. V) / société en commandite simple Belgium (SCS) France société en commandite simple (SCS) Germany Kommanditgesellschaft (KG) Luxembourg société en commandite simple (SCS) commanditaire vennootschap (CV) / commanditaire vennootschap Netherlands rechtspersoonlijkheid (CVR) Poland spólka komandytowa (sp.k) Spain sociedad en comandita (SEC) United limited partnership (LP) Kingdom Italy società in accomandita semplice (S.a.s.) 14 di 109   ff fi  BUSINESS AND COMPANY LAW PRIVATE COMPANIES - Good for SMEs; - Incorporated / legal personality; - Low or no minimum capital requirement; - Limited number of owners /members; - Restrictions on transfer of ownership interests: no access to capital market!! - Limited liability. The most common legal entities, invented by the Germans, provides a limited number of shareholders for small activities and they typically enjoy full legal personality. The idea was to provide a new legal form for all businesses that did not need to take advantage of the capital market. The di erence between a private and a public LLCs is that the latter are better suited to make public o erings (even if the vast majority of public companies do not have their shares listed on a secondary market). For the former, instead, this possibility was excluded because of the way the shares of these private limited liability companies were conceived and designed by the law. In public companies a piece of paper could easily be exchanged whereas in private ones there was an immaterial share not easy to transfer. This is changing and there is a new tendency in many Members where private limited liability companies are becoming a tool to take advantage of the nancial market (this is particularly true in the Netherlands). Private companies enjoy a full legal personality and this is also due to the fact that there is a limited liability of the members. As they cannot sell their share to the public, there is typically an initalial contribution that is the amount needed to create the company, which in Italy has been lowered to 1 euro (before 10k). In the Eu MS 1 euro is su cient to create a company everywhere, in particular low capital companies are used to externalise bank activites bacuse the trust is very low. There is a low or no minimum capital requirement (amount of money needed as contribution to create the company), which corresponds to 1 euro or unit of the currency in the relevant Member. There is no harmonization in this respect because it exists only for public limited liability companies. This can be used just to trick the tort creditors, not the contractual ones; the lowering of the minimum capital requirement is linked to the issue of lowering the responsibility of the tort creditors. All persons that are not contractual creditors, namely tort creditors, will not negotiate and will not be protected. So, guarantees given to tort creditors diminished. Another feature is that the legislation provides for the limitation of transfering shares; they have no acces to capital markets and they have limited liability, even if personal guarantees will always be required to the owners. Therefore comes the restriction to the right to grander share: there is a pre-emption right of the other shareholders of the company of the assets that the company is intended to sell. The second restriction is to make the sale of shares subject to the approval of the director or the shareholder. In some legislation, these limitations are written in the law as default rules for private limited liability companies (in Italy we do not have such default rules but in practice 99% of private limited liability companies are subject to this limit). That is also because in some states private companies are conceived as personal ones, because of the relevance of the intuitu personae. 15 di 109   fi ffi ff ff  BUSINESS AND COMPANY LAW Belgium besloten vennootschap (BV) / société à responsabilité limitée (SARL) France société à responsabilité limitée (SARL) Germany Gesellschaft mit beschränkter Haftung (GmbH) Luxembourg société à responsabilité limitée (SARL) Netherlands besloten vennootschap met beperkte aansprakelijkheid (BV) Poland spólka z ograniczoną odpowiedzialnością (spólka z o.o. / sp. z o.o.) Spain sociedad de responsabilidad limitada (S.R.L. / S.L.) United private limited company (Ltd.) Kingdom Italy società a responsabilità limitata (S.r.l.) PUBLIC OR STOCK COMPANIES - Good for large enterprises / those wanting access to funding through capital markets - They have fully personality and are fully incorporated - Limited liability for shareholders The idea is to be designed for large enterprises, particularly those wanting access to funding through capital markets, even if most of them are not properly open to the public and have few shareholders. These companies are incorporated, granting them full legal personality as the most developed forms of company, which allows them to engage in signi cant economic activities. They require higher minimum capital requirements, ensuring stability and credibility in the market. One key feature is that there is no limit on the number of shareholders, and shares are freely transferable, allowing for greater liquidity. However, shareholders typically have little or no management control, as the operational decisions are made by the board of directors. The historical innovation brought by these companies is the share, a tool used to collect capital quickly, which also provides investors a new way to enter and exit from an investment in a very short time. The minimum capital requirement is higher because of the harmonization by the second company law directive. In principle, shares may be transferred without limitation but this is just a default rule; limitations may be introduced, at least if the public limited liability company is not open. Shareholders have little or no management control. Since they are impersonal companies there is a stringent control on raising capital, disclosure of information to shareholders and general public, accounting/audits, minority shareholders protection. The stringent controls foresee on raising capital and disclosure of information to shareholders and the general public. This includes detailed accounting practices and audits to ensure transparency and accountability. There are also provisions for minority shareholder protections, which help safeguard the interests of smaller investors. Another feature is that these companies have a well-de ned internal organization; there are shareholders, a board of directors, and a supervisory controlling body to ensure that there are no abuses of power and that the balances are in order. This structure is voluntarily in exible to protect investors and third parties from the behavior of the directors. These companies are also known for being nameless, as their activities are carried out in no one’s name apart from the name of the company itself. The emphasis is on the share 16 di 109  fi  fl fi  BUSINESS AND COMPANY LAW as a new tool of investment, promoting growth in capital markets while safeguarding the interests of investors. Country Public Company Forms Belgium naamloze vennootschap (NV) / société anonyme (SA) France société anonyme (SA) Germany Aktiengesellschaft (AG) Luxembourg société anonyme (SA) Netherlands naamloze vennootschap (NV) Poland spólka akcyjna (SA) Spain sociedad anónima (SA) United public limited company (plc) Kingdom Italy società per azioni (S.p.A.) HYBRID FORMS Legal forms rarely used that consist in a mix of limited partnership and the public limited liability companies. They are shared companies (like public companies) but with a dual class of shareholders, one of which has limited liability and the other unlimited (in Italy società in accomandita per azioni). Country Hybrid Company Forms France société en commandite par actions (SCA) Germany Kommanditgesellschaft auf Aktien (KGaA) Luxembourg société en commandite par actions (SCA) Poland spólka komandytowo-akcyjna (SKA) Spain sociedad comanditaria por acciones (S. Com. por A.) Italy società in accomandita per azioni (S.a.p.a.) 17 di 109    BUSINESS AND COMPANY LAW RECENT HISTORY OF EUROPEAN COMPANY LAW 1990 - Harmonisation Strategy Faces Di culties —>The initial strategy to harmonize company law across EU member states encounters signi cant challenges due to di ering national laws and regulatory environments. 1999 - Centros Case (and Its Progeny) —>The European Court of Justice's ruling in the Centros case allows companies to be registered in any EU country, emphasizing the principle of freedom of establishment and prompting a review of national laws concerning company registration. 2001 - Failed Enactment of the Directive on Takeover Bids —>A proposed directive aimed at regulating takeover bids fails to pass, re ecting the complexities and di ering interests of member states in corporate governance. 2001 - Adoption of the Regulation on the Societas Europaea —>The Regulation on the Societas Europaea (SE) is adopted, allowing companies to operate under a European legal form, thus facilitating cross-border business operations. 2001 - High Level Group of Company Law Experts —>The establishment of a high-level group to provide advice on company law issues aims to promote more e ective and coherent regulations across member states. 2003 - Action Plan 2005: Directive on Takeover Bids —>The European Commission sets forth an action plan aimed at reforming company law, including the reintroduction of a directive on takeover bids to enhance shareholder rights and corporate governance. 2005 - Directive on Cross-border Mergers —>The adoption of the Directive on Cross-border Mergers facilitates the merger of companies registered in di erent EU member states, promoting greater integration in the European market. 2006 - Review of the Second Company Law Directive —>A comprehensive review of the Second Company Law Directive is conducted to address emerging issues and improve the regulatory framework for companies in the EU. 2008 - Societas Privata Europaea (Proposal) —>A proposal for the Societas Privata Europaea (SPE) is introduced, aiming to create a simpli ed legal form for small and medium-sized enterprises to facilitate cross- border operations. 2008 - Financial Crisis —>The global nancial crisis prompts a reassessment of corporate governance and regulatory frameworks, highlighting the need for stronger oversight and investor protection. 2011 - Report of the Re ection Group —>A report by the Re ection Group on the Future of EU Company Law provides recommendations for modernizing and enhancing the company law framework in the EU. 2012 - European Foundation (Proposal) —>A proposal for the establishment of a European Foundation aims to create a legal form for non-pro t organizations, facilitating cross-border activities in the non-pro t sector. 2012 - Action Plan 2012 (and EP Position) 18 di 109   fi fi fi fi ff fl ff fl ff ffi ff fl fi  BUSINESS AND COMPANY LAW —>The European Commission presents an action plan for company law reform, focusing on improving corporate governance, transparency, and cross-border operations. 2012 - BRIS Directive (Directive 2012/17/EU) —>The BRIS Directive is adopted, enhancing the exchange of information on companies across the EU and promoting transparency in corporate governance. 2014 - Societas Unius Personae (Proposal) —>A proposal for the Societas Unius Personae (SUP) is introduced, aiming to create a simple and exible legal form for single-member companies in the EU. 2015 - European Model Company Act —>The European Model Company Act is proposed to provide a framework for harmonizing company law across member states, facilitating cross-border business operations. 2015 - Kornhaas Case —>The Kornhaas case further clari es the principles of company law in the EU, impacting how national laws interact with EU regulations and emphasizing the need for consistent application of company law principles. 2017 - Codi cation of EU Company Law —>The European Commission initiates the codi cation of EU company law to consolidate various directives and regulations into a coherent framework, enhancing clarity and accessibility. 2019 - Company Law Package —>A comprehensive company law package is introduced, containing several proposals aimed at modernizing and simplifying company law regulations within the EU. 2022 - Corporate Sustainability Due Diligence —>The proposal for corporate sustainability due diligence is introduced, emphasizing the responsibility of companies to assess and mitigate environmental and human rights impacts throughout their supply chains. 2023 - Upgrading Digital Company Law —>The European Commission proposes to upgrade digital company law to address the challenges posed by digital transformation, aiming to enhance online registration processes and corporate governance in the digital age. In 1968 the 1st Directive on EU company law was enacted; it was the rst instrument in the domain of private law. After this rst assessment, they continued with these harmonization directives. In the 90s, a crisis in the harmonization strategy was met. Then, the Centros case (1999) opened the oor to grant companies the possibility to act in other Members. At the end of the century, a failure at political eu level concerned the enactment of the 13th company law directive on takeover bids. In 2001, a regulation on the Societas Europaea was adopted after 40 years of negotiations; they crewed a high level group of company law experts that developed an Action Plan in 2003. Then, a solution was found in 2005 with the approval of a takeover bid directive; it is completely di erent from the original proposal mainly because it gives the Members a set of options to decide what was better for them to do. It gave many options and this resulted in not having a real harmonization (enabling law approach, a “menu of options”). At the same time, another directive was enacted, the cross-border mergers directive, which gave a framework to carry out mobility transactions. Then in 2006 the review of the second company law directive occurred because it was felt that the latter was to hold outdated and non compliant rules. The UK pushed for this review to modernize EU company law. 19 di 109   fi ff fl fl fi fi fi fi  BUSINESS AND COMPANY LAW In 2008, the EU commission proposed the introduction of new legal entities, among them the societas privata europaea. The failure of the SPE failed in providing the minimum capital request and also in the involvement of employees. 2008 led to a nancial crisis; in 2012 the proposal for a European Foundation failed too, and the Action Plan by the commission was approved. Then, in 2012 a business register in the connection system was enacted with the BRIS directive (2012/17); it was not considered a big achievement, but the idea was to create a community between business registers across Europe. The aim was to create a EU business register but it failed and they created an interconnection between the various registers in the states. The information was limited at the beginning but more recently a new directive increased the information exchange. Now, all kinds of EU companies rely on this register. Afterwards, in 2014 the Societas Unius Personae was proposed but resulted in another failure of the commission. The strategy was completely di erent from what was seen until now because EU companies and cooperatives were all enacted using Art. 352 as legal basis, which allows to create authentic EU legal entities; on the other hand in this case the commission proposed to introduce this single member company by using a directive to be transposed in each Member. In the end, we wouldn’t have had a single type but di erent nuances for each state, resulting in national and not European legal entities. The problem with the use of Art. 352 was that it required a unanimous acceptance and, since the commission thought that it was not possible to achieve unanimity, they decided to go for a directive that could be approved by the majority. Yet, they were not able to approve it and the proposal was withdrawn. Given the di culty of having legislative initiatives approved, the new strategy was that of the European Model Company Act, typical of northern countries (Denmark, Sweden, Norway who work together on the basis of comparative tools) and replicated by the Danish scholarship. This was an academic project that played a role in the evolution of eu company law, in particular cross-border merger, conversion and division. The professor in charge closely worked on the directive later adopted in 2019. When the project was published in 2015, it was not completely accepted by everyone and the commission was not anymore of the idea of recommending its adoption. At the same time, the Kornhaas case of 2015, one of the last cases on the freedom of establishment of companies, was very restrictive and gave to members the possibility to introduce serious limitations on the freedom of establishment as long as these were considered as part of insolvency law and not company law. The former is more serious in matters related to liquidation or bankruptcy and limits freedom of establishment to a larger extent than company law. In 2017 the Polbud case took place, which closed the discussion on the cross-border mobility of companies by saying something controversial; the company was from Poland and it transferred its registers in Luxembourg but continuing to have its base in Poland; still, to be a Luxembourg company there was also the need to carry out some activities in that country. The ECJ stated that, also without carrying out activities in the member state of destination, it was possible to transfer the register. 20 di 109  ff  ffi fi ff  BUSINESS AND COMPANY LAW In 2017 a codi cation of European company law took place with Directive 11/32, by merging the directives (not all of them). The twelfth directive on liability companies in particular was not codi ed because the Societas Unius Personae proposal was still in discussion to amend the said directive. In 2019 the Commission proposed two new measures, the Company law package, including the digitization initiative, the cross-border mobility of companies. The third initiative that was considered but never approved was the initiative to harmonize the private international law applicable to companies; an harmonized instrument, probably a regulation, on the private international law applicable to companies and to impose on all MSs the incorporation theory as mandatory. This was not politically feasible so it was not even proposed. In 2022 a novelty appeared; European company law decided to give some substance also to the sustainability debate with regards to companies and it did this through the Corporate sustainability due diligence, a directive that could make the principles contained in international treaties on the sustainability subject also applicable to European companies. It imposes on companies of bigger dimension due diligence obligations, the duties to control the supply chain. More recently, in 2023 a directive that was proposed at the end of march as a continuation of the Digitalisation Directive (11/51) and called Upgrading digital company law. It implies disclosure on more things, including the partnerships, and on groups of companies, and in general some enhancements of previous rules. EUROPEAN UNIFICATION STRATEGY EU approaches to company law: - Companies created by treaties; - Harmonisation programme; - Uni cation; - Regulatory competition; - Use of model laws (soft-law approach/ bottom-up approach) (EMCA) At the very beginning of the evolution of company law the idea was that companies could be created also with the use of international treaties (e.g. companies managing nuclear power with co-ownership by the French and German government), but later on this approach was left aside. Harmonisation Programme Company law directives: - 1st, 2nd, 4th, 3rd, 6th, 7th, 8th, 11th, 12th directives; - The 5th is the directive on the harmonization of the internal structure of companies (two tier structure of Germany and Austria and the Anglo American model; Italy takes some things from both the approaches). - The 9th directive is one the harmonization of the rules of group companies; the UK was against it since they do not have legislation on group companies. It was never approved and they later tried to do something aiming at providing a kind of legal framework to organize groups. - The 14th was on the other hand the directive on the transfer of seats, what is now called a cross-border conversion. It is in fact now substituted by the cross border mobility directive. - Other directives are: the cross-border mergers and the takeover bids. The adoption of the 10th and 13th company law directives failed and they were kind of re-enacted in such a way. - Financial market regulation; 21 di 109   fi fi fi  BUSINESS AND COMPANY LAW - shareholder rights directives → harmonization of the rules regarding the rights shareholders enjoy in company listed in regulatory markets; - multiple-vote shares structures → a recent directive addressed only to companies that are SMEs, small listed companies, and member states have to allow the introduction of multiple-vote shares; - Accounting → separate sets of rules. Scope of EU Diretice: EU instruments are mainly addressed to public and private limited liability companies; more precisely: - Private limited liability companies: included in the 1th, 4th, 7th, 8th, 11th and 12th. - Public limited liability companies: more or less all directives cover public limited liability companies except the 12th. - Listed companies: addressed in the takeover bids directive or in another initiative which is the shareholder rights directive. - Partnership: there is no harmonization but some rules can be found in the 4th directive on accounts. The current directives are: directive 2017/11-32; directive 2009/102/EC; directive 2013/34/EU; directive 2006/43/EC (statutory audits). COMPANY LAW DIRECTIVES The European Union has implemented various directives to regulate company law, aiming to ensure transparency, accountability, and e ective governance in businesses. The scope of EU directives covers various business structures, including private and public limited liability companies, listed companies, and partnerships. They aim to create a uni ed legal framework that regulates these entities and enhances nancial market transparency. Key areas include shareholder rights, addressing multiple-vote share structures, and establishing accounting standards to ensure accurate nancial reporting and accountability in the corporate sector. The current directives in force include: 1. Directive (EU) 2017/1132: Simpli es and consolidates company law regulations. 2. Directive 2009/102/EC: Concerns the formation and management of companies. 3. Directive 2013/34/EU: Sets accounting and reporting requirements for companies. 4. Directive 2006/43/EC: Establishes standards for statutory audits, essential for verifying the accuracy of nancial statements. Existing EU Company Forms The European Economic Interest Grouping (EEIG), established in 1985, promotes cooperation between businesses across EU member states for joint projects. The Societas Europaea (SE), introduced in 2001, allows companies to move their registered o ce between EU countries, relying on EU law and national law where needed. The Societas Cooperativa Europaea (SCE), introduced in 2003, provides a legal framework for cooperatives operating in Europe. Proposed EU Company Forms Several proposed company forms have been withdrawn, including the Societas Privata Europaea (SPE) in 2008, aimed at creating a private company structure; the Fundatio 22 di 109  ffi fi  fi fi ff fi fi  BUSINESS AND COMPANY LAW Europaea (FE) in 2012 for non-pro t organizations; and the Societas Unius Personae (SUP) in 2014 for single-member companies. These proposals highlight the EU's ongoing e orts to enhance its company law framework, despite challenges in implementation. Regulatory Competition —> possible approaches: At the beginning of the history of EU company law the idea was that mutual recognition of companies was not possible between Members and that they recalled, under Art. 293, to come together to stipulate conventions and recognize companies in the various states. Then the jurisprudence of the ECJ got rid of this article. - Consensus (international treaties, see Art. 293); - Freedom of establishment (lack of consensus resulted in ECJ decisions based on primary sources of law, e.g Arts. 49 and 54 TFEU); - Uni cation: relied to a lesser extent to transfer seats and e ectuate cross-border conversion. (EEIG, SE, SCE); - Harmonisation (e.g the 11th company law directive (foreign branches) and the directive on cross-border mergers). The idea was that the mutual recognition of companies was not possible among MSs so they were called to come together to stipulate a treaty to make sure that companies were mutually recognised among MSs. To some extent, this relies also on uni ed legal entities and on harmonization, since in EU companies you can transfer the seat from one country to another and this was the rst example of a cross border mobility of companies that was imposed by the EU institutions on MSs. Then, with the Lisbon Treaty and the directive allowing the cross border motion of national legal entities the problem was completely addressed. The less barriers companies have in moving cross borders, the more MSs feel the pressure of implications, so the legislators will be more attentive to the rules related to the subject. 23 di 109  ff fi  fi fi ff fi  BUSINESS AND COMPANY LAW EUROPEAN UNION FREEDOMS AND COMPANIES Companies are considered as natural person regarding the freedom of establishment, which has not always been like this; in particular in the beginning of the EUropean process it was necessary to conclude international convention for companies to enjoy this freedom. Today this freedom is considered as the freedom as establishing a secondary establishment, there is the distinguish between the primary and the secondary right of establishment where: - the secondary right of establishment is the most important among the two referring to the creation of a branch of the company in another meber state; - on the other side the primary right of establishment comes secondly and it re ects the freedom of a company to move its headquartes and legal base to another MS. Another idea came out wanting to companies having the freedom of establishment of natural persons meaning that a company can decide to become a company of another state moving from a system to another, this should be framed in the section of private international law with the problem of the law applicable to each company. CROSS BORDER MOBILITY A regulatory competition among companies from all the MS can be insured in di erent ways: 1. Consensus: at rst there were international treaties, repealed Art. 293; 2. Harmonization of rules to improve the cross border mobility of companies, this happened with the 11th Company Law Directive. It can also be based on cross border conventions. 3. Uni cation , EU Company forms: meaning that a legal entity created in a MS can transfer itself in another MS: a uniform tool to create a European Company Law with spe cicprocedures to move a company. 4. Freedom of establishment: lack of consensus resulted in ECJ decisions based on primary sources of law, e.g., Arts 49 and 54 TFEU. Key issues: Member states currently decide such issues according to their own national laws, using their private international law criteria. There are two main approaches to this issue: the Real Seat doctrine, traditionally derived from German jurisprudence, and the Statutory Seat theory, typically associated with common law systems, although it also applies in many civil law nations. The Italian approach, which still uses to the statutory doctrine, is quite di erent from the British. 1. The Real Seat doctrine addresses the question of applicable law, focusing on the nationality of the company and which law it is subject to. However, nationality does not always directly lead to the applicable law, as various situations may arise (e.g., the Barcelona Tractor case). This doctrine examines factual elements to determine where the company's activities are conducted. Traditionally, this involved the headquarters, but today it often considers where key managerial decisions are made. Thus, the focus shifts to the location of the directors' meetings, which typically aligns with the headquarters. This criterion, therefore, is subject to change over time. 2. In contrast, the Statutory Seat doctrine does not rely on factual circumstances, as doing so could lead to ambiguity regarding the applicable law. Instead, it emphasizes a formal element that varies by country, usually following the incorporation doctrine in 24 di 109  fi fi  ff fi fl ff  BUSINESS AND COMPANY LAW common law nations. In company bylaws or documents, the address of the company is signi cant; in common law, it is the address recorded at the time of incorporation, while in civil law countries, it is the address currently listed in the company's documents. Consequently, in common law countries, a company remains incorporated under a speci c legal system and cannot change its applicable law merely by relocating. Conversely, civil law jurisdictions allow changes in the applicable law to follow the company. Common law countries restrict the freedom of establishment for companies while enhancing the growth of secondary rights, as many companies establish branches abroad, often contributing signi cantly to foreign economies while retaining their national status. The Netherlands is another country that maintains this approach, having rejected the uniformity of the Real Seat approach in the 1960s in favor of the incorporation theory. In its strictest sense, the Statutory Seat doctrine seen in continental Europe is more open to mobility, permitting companies to migrate across borders with minimal changes to their bylaws. Returning to the Real Seat doctrine, it is often criticized for limiting freedom of establishment, as it does not permit activities in a country other than the origin country without losing national character. An additional limitation arises when foreign companies operate in a country, as that country recognizes these companies as national entities, creating challenges for cross-border activities. European law applies only to companies incorporated according to member state laws and considered companies from an EU perspective. There is a need to recognize that companies exist as legal entities, enjoying the right of establishment, and should be allowed to operate fully in other member states under the same conditions as in their own. Furthermore, they should have the ability to change their applicable law, nationality, and legal status. This principle con icts with both seat doctrines since, in common law countries, a company cannot be re-registered or undergo cross-border conversion to another member state after its creation. The incorporation theory, typically adopted in continental Europe, may o er the best compromise. The two theories discussed are not the only ones in existence, as the Real Seat doctrine can also be interpreted through the Principal Establishment and Place of Business theories. Another traditional theory is the Exercise of Control, which posits that the determining factor for a company's nationality is who exercises control over the legal entity. This theory is often used in public international law to apply sanctions, though it rarely applies in peacetime. Lastly, there is the Center of Main Interest (COMI) theory, which combines elements of the rst two theories and is relevant in insolvency law. This theory asserts that the location where activities are carried out is crucial, but it relies on certain presumptions, such as that the COMI is where th