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The development in the european company law

The development in the European company law– Are we about to see an outbreak of regulatory competition in Europe?

Introduction

Where we are …?

Since Company law has always been a basis for carrying out any kind of business activities and is an integral part of the common European legislative framework, one of the most important goals of the development of the EC law has always been and still is to create effective and harmonized European Company law, especially including the freedom of movement and establishing of the companies.

Thus, unity of European Company law has been pursued since the beginning of the 1960s. In 1961, the Council presented a general programme to remove the obstacles to the freedom of establishment. For a period of 50 years a number of directives in the field of company law have been adopted. In recent years, the European case law has also helped to clarify the scope of the fundamental freedoms in the Treaty, paving the way for enhanced corporate mobility within the European Union.

Since then, the relevant directives and regulations have been updated several times in order to adapt them to new developments. The First and Second Company law Directives were modernized; furthermore, the Fourth and the Seventh Directives were updated, the Tenth Company law Directive on cross border mergers and the Directive on the exercise of shareholders' voting rights were adopted. At the same time the European Commission has pointed out its priorities with respect to the improvement of the company law framework on European level. On 3rd of October 2007 Commissioner McGreevy introduced, in front of the European Parliament Legal Committee the DG market's future priorities. Among other things the regulation of the European Private Company has became the top priority of the Commission activities as a company vehicle that will reduce the compliance costs and to enhance the mobility and competitiveness of European SMEs. Another important issue that was announced on the same meeting was that the Commission is going to cancel the work on the 14th Company Law Directive (Directive on cross-border transfer of the registered office), because, according to the Commission's opinion there was no economic case for such a directive since such transfer may already be realized by means of an SE or a merger under the 10th Directive for cross-border mergers. However, this decision of the Commission was seriously criticized both on EC and scholarly level.

Thus on 10th of March 2009 the European Parliament adopted a report on the 14th Company Law Directive for the cross-border transfer of the registered office of limited companies and resolution inviting the Commission to submit a legislative proposal to EP by the end of March 2009. The 14th Directive tends to make it easier for companies to move across borders. If it comes into effect, it will make it possible for companies to transfer their registered offices to somewhere else in the EU. Until now such an action is possible under either the 10th Directive for cross-border merger or under the SE Directive, but both the ways are criticized as too costly and burdensome for the companies. The Directive would make it possible, for example, for a German GmbH to transfer its registered office to the UK, and at the same time transform itself into a UK Ltd., applying the UK company law instead German at much lower costs and efforts than if it had used the SE vehicle, or the possibility of cross-border mergers directive.

At the same time a simplification initiative towards reducing the administrative burdens for SMEs within EC has also taken place trough adopting simplification programme on 14 November 2006, complemented by an Action Programme, adopted on 24 January 2007. Since the analyses, carried out by both the Commission and number of Member States clearly have shown that administrative costs caused by EU rules in the area of European company law are particularly high, the process of simplification tend to be the next very important step in the development hereof. Briefly, the simplification should affect the development of European Company law acquis either by reducing the EU company law acquis to those legal acts specifically dealing with cross-border problems or focusing only on concrete, individual simplification measures. For the Company law acquis which addresses specific cross-border problems, individual measures should be undertaken.

Observing these more or less successful attempts, it might be said, that on its long and set with different obstacles way the EC officials, scholars and practitioners involved, have achieved some of its aims. The Societas Europea (SE)is the first completed attempt to create a uniform company vehicle, practically applicable for the European business community. However, in addition to the skepticism about the contribution of the SE to the uniformity of company law, the SE's practical impact remains to be question as well.

One more legislative initiative considered as gear for the small and medium-sized entities (SMEs), the European Private Company (SPE) - now is on the way. In short, the SPE is to be a lighter version of the SE, specially tailored to meet the needs of SMEs, although it must not be forgotten that since use of the SPE is not restricted to the size of a company, larger companies and groups may also take advantage of the SPE.

….and where are going to? The two ways. Considering the recent efforts and attempts for developing European Company law, the question is whether the uniformity of the relevant legislature is still a possible and indispensable way, or it should be abandoned at the expense of the cross-border cooperation and freedom of establishment. It also should be asked whether the benefits of rigid, uniform rules are more than the benefits of allowing the member states to develop their own company vehicle thus increasing the level of the regulatory competition. Thus we are faced with the two possible ways for the development of the European company law.

The first one – the severe way of uniformity is less likely to be taken up for now, as the first few attempts are not very successful. In that sense, uniform company law is an old tune which the European Commission rightfully does not play anymore.

The second and much more appropriate one seems to be the way of cross-border cooperation, mobility and regulatory competition. The new angle of approach, partly inspired by the important position given to the so-called `subsidiarity principle' in the EC Treaty, is mainly aimed at guaranteeing and encouraging cross-border cooperation and freedom of establishment, whilst taking into account the differences existing among the Member States. Thus repealing the EU rules and increasing flexibility by leaving it to Member States to determine the conditions in the relevant areas of Company law would be a viable option. Obviously such a fragmentation based on member states preference, might not be beneficial to the uniformity of the law.

At the same time, particular coordination efforts should also be taken since they could be of high importance for clarifying the relation between two or more national legal systems involved and to increase the legal certainty. The same applies where minimum transparency standards are set up to protect third parties from the dangers that increased mobility of companies can imply for them. In this case, common rules provide for the basis of trust that is needed for a functioning Internal Market.

In our opinion, the political-administrative efforts and the US example of working competitive company law within 51 different company law systems will enable companies in Europe to increase their comparability to one another in the future, becoming more interchangeable and therefore be better able to exercise their right of freedom of establishment within the European Community. These attempts, although at a slow pace, have already resulted in the removal of some of the practical barriers. The new company law vehicles on national level should be the new basis on which the legislature competition will grow up. It seems that we will be able very soon to know who is the new “Delaware” winner in the upcoming European Company Law competition.

For the next part of our assignment we shall discuss the role of the European Court of Justice (hereinafter referred as “the ECJ” or “the Court”) and the Court of First Instance (hereinafter referred as “the CFI”), specifically two recently decided cases and their implications, namely cases Sevic (C-411/03) and Cartesio (Case C-210/06). For the purposes of this assignment we shall not cover old ECJ case law despite its instructive nature, as the page amount is significantly limited. Thus, we shall look at the decisions of the abovementioned cases, and finish with discussing questions which are still left unanswered.

Before dwelling on the most recent cases we would like to make a short note about the nature of company law litigation in Europe. It has become clear that most significant developments (and conflicts for that matter) have occurred in the field of freedom of establishment, and it has become equally clear that decisions such as Inspire art and Centros have had a significant precedence in the ECJ's further decisions. Despite the fact that the abovementioned case law, inter alia, has severely increased the possibilities of firms to migrate into more beneficial member states, there are still issues regarding cross-border mergers for example. These issues and their ECJ solutions shall be discussed in the following paragraphs.

Regarding the Sevic case, the factual situation was as follows: The preliminary reference was brought by a German company, which was unable to merge with a company based in Luxemburg, due to the fact that German legislation provided only for the inscription in the company register of mergers between German firms. The Court ruled that the German legislation non-recognition of foreign companies merging with their German counterparts was in violation of the Treaty Establishing European Communities (hereinafter referred as “the EC treaty” or “the Treaty”), specifically provisions regarding freedom of establishment.

As the German rules treated internal German mergers more favourably than cross-border mergers this constituted a restriction of the freedom of establishment which required justification. The German justifications for treating internal mergers more favourably were: protection of employees, shareholders, creditors, and effectiveness of fiscal supervision. However, the court rejected these justifications, and stated that refusing to register all cross-border mergers even in situations where these interests were not threatened would go beyond what was necessary to protect those interests.

As a concluding note regarding Sevic, it can be said that the Cross-Border Merger directive has taken over the issues to which the court answered in this ruling. However, this does not mean that Sevic will become obsolete, as it has a wide effect. The case has legal implications for cross-border divisions and takeovers, and the EU must have the possibility of having such transactions between Member States. Article 12(3) of the takeover directive may be held to be interfering with community law, as it discriminates between domestic and foreign corporations. This is something that the ECJ must make a ruling in the future.

A case which we found to be most significant for our purposes due to its recentness and its instructive nature was Cartesio. The case raised three issues, which, as identified in McCahery and Vermeulen, are: 1) What is the applicable law, if a company, organized under the corporate law of member state and entered in its commercial register, wishes to transfer its seat to another MS? 2) Can such a company transfer its registered office under art 43 and 48 of EC treaty? 3) Is it possible to subject such a transfer to conditions and approvals by either the State of incorporation or by the host state? We shall first explain the factual situation of Cartesio, then discuss the opinion of Advocate General (hereinafter referred as “A-G”) and the final ruling of the court. We shall finish this provision of our paper with arguments about the future implications this case.

The factual situation in Cartesio was as follows: A Hungarian company, Cartesio (formed as a limited partnership), wanted to transfer its registered office from Hungary to Italy, but still to keep its registry in Hungary, and requested the Court of registry to allow this. Both of the partners in the company are of Hungarian nationality. The court of registry ruled that Cartesio would have to follow the Hungarian corporate law procedure, and Cartesio brought the matter to the ECJ. It should be noted that the ECJ has ruled in Lasteyrie du Saillant (Hughes de Lasteyrie du Saillant v. Ministère de L'Economie, des Finances et de I'Industrie (Case C-9/02)) that levying an exit tax from individuals would be incompatible with the spirit of the EC treaty, and namely the freedom of establishment provisions of the treaty.

The issue was referred to the court as a preliminary hearing under article 243 of the treaty, and the court would interpret articles 43 and 48 – freedom of establishment provisions – in light of the factual situation. The argument raised by Cartesio can be seen, inter alia in paragraph 26 of the judgment, which states Hungarian law cannot require Hungarian companies to choose to establish their seat in Hungary. They also claimed that the court of appeals is a “court or tribunal” within the meaning of article 243, and thus has the requirement of referring the matter to ECJ. However, for the purposes of this assignment we shall not cover the merits of the case in great detail with respect to article 243, due to the fact that articles 43 and 48 are the more significant ones for the purposes of this assignment. It should be noted that the issue of re-opening the oral proceedings is of no relevance for purposes of this assignment. It should be noted that the case also holds importance and interest because it is simply dealing with exit restrictions of primary establishment for the first time after the Daily mail decision.

As is the state in most cases, the Attorney General gave his opinion of the matter before the Court actually gave its ruling. In his opinion he identified that Hungary seems to be a country applying the real seat doctrine. This usually means that the real seat is located at the place where the company does most of its activity and has its head office. Then the A-G went to discuss the scope of articles 43 and 48, and whether “the national measures constitute restrictions to freedom of establishment and whether such restrictions can be justified. Previous case law has established that the articles have direct effect and that the exclusion of those articles is “reversed discrimination”. Thus the AG was of the opinion that the differential treatment Hungary is applying is discriminatory, and thus restricts the freedom of establishment.

We shall conclude this part of the assignment with the final judgment of Cartesio, and the questions it has answered with regard to this field of EC law. The issue which the court ruled on was whether Articles 43 EC and 48 EC are to be interpreted as precluding legislation of a Member State under which a company incorporated under the law of that Member State may not transfer its seat to another Member State whilst retaining its status as a company governed by the law of the Member State of incorporation. In Überseering, The Court concluded that a Member State is able, in the case of a company incorporated under its law, to make the company's right to retain its legal personality under the law of that Member State subject to restrictions on the transfer to a foreign country of the company's actual centre of administration. They court stated that in the light of community case law, the answer to the issue has to be in affirmative, thus it is possible for the company to retain its legal personality. The court further stated that freedom of establishment covers the possibility of a company converting itself into a company governed by statutes of another MS. This was a rather odd statement to make in light of what was said previously in the judgment, namely “It should be pointed out, moreover, that the Court also reached that conclusion on the basis of the wording of Article 48 of the EEC Treaty ... the question whether – and, if so, how – the registered office or real seat of a company incorporated under national law may be transferred from one Member State to another as problems which are not resolved by the rules concerning the right of establishment, but which must be dealt with by future legislation or conventions.” This has been interpreted to mean as long as national legislation allows at least one form of transfer, articles regarding freedom of establishment do not apply. We shall now move on to discuss different business entities at the European level.

European Company – Societas Europaea: Update

As discussed above, The European Company (“SE”) has had limited practical impact so far. However, during the last 2 years we have observed its accelerating rate in use, up to 435 SEs across the Europe as of September 2009.

The gap between the normal SE's, operating and having employees and all the registered ones has also been growing rapidly. Out of 435 SEs, only 97 (22%) were ‘normal'. The 46 ‘empty' SE's with operations but no employees represented 11% and the 63 shelf SE's with nor employees neither operations 14% of all the registered SEs. The biggest group comprises 229 (53%) ‘UFO' SEs with no information on number of employees available. Although there were some changes in proportions of these groups, the overall structure had not changed significantly. The figures for the individual countries changed significantly, though. We can see the Czech Republic as Nr. 1 in the Europe in respect of the SE with 171 SEs registered. However, the success is a result of the companies registering SEs in order to sell them subsequently, as is obvious from the figures of 171 SEs registered and only 3 normal SEs in the Czech Republic. Additional data are attached in the Annex.

In general, there were no changes in respect of the general perception of SE in practice, as the well-known issues of employees' participation, large number of national references in the applicable legislation, minimum capital and tax regime are claimed to be the most significant inhibiters. This might change after potential amendments of the SE regulation, which will be based on the Commission study assessing the five years use of SE, coming in December 2009. The results of the study will also help to determine, whether the SE directive should be reviewed and amended as well.

European Private Company – Societas Private Europaea (SPE)

In June 2008 Commission introduced a proposal of Regulation on the Statute for a European Private Company. The history background of the SPE goes back to the 70's of the 20th century. However, it took decades to become part of theSmallBusinessActforEurope and Commission's Action Plan, what led to a respective feasibility study being published in 2005. The Commission's proposal was published in June 2008 (hereinafter as Proposal). The Proposal attempted to introduce a flexible EU-level business entity suited to the SME's needs by fitting the space between the EEIG, not useable for real business practice and SE, which is more apt for needs of bigger corporations. After the Proposal's release the European Council started to work with the document on several technical meeting and in December 2008 instructed its preparatory bodies to continue discussions in order to reach an agreement on the proposal as soon as possible. The European Parliament discussed the issue and published its views (hereinafter as Amendment) in March 2009 welcoming the Proposal, however amending the original Proposal significantly in order to prevent the potential lock-ups of the process in the Council.

Characteristics

SPE should provide SMEs with the opportunity to take their business in the European level without being forced to the costly and complicated option of setting and running a subsidiary in another Member State. This should be accomplished through a legal entity, which will be as similar as possible in all the Member States. Therefore, the legislation applicable to the SPE should primarily refer to the proposed Regulation and the Articles of Association of a particular SPE, which are provided with further guidance in the attachment of the Proposal and example provisions by the Commission. As comparing to the SE, the number of references to the national law was limited, what should make the legislation applicable to SPE less complicated and confusing. The EP supported this attitude by providing SPE's regulation with the further specific provisions regarding the liability of executive directors, the consequences of defective resolutions and the consequences of ineffective clauses in the articles of association. Another difference in respect to the SE is that it is proposed to grant the possibility to establish a SPE ex nihilo, thus, without having a company established before.

Although the Proposal did not require a cross-border aspect, the EP's Amendment is introducing it. Not to create an obstacle in forming a SPE, the new formed company should fulfill one of the four possibilities of the ex post cross-border requirement within the 2 years after formation, otherwise transformed to a national legal form. Although it should not be difficult to fulfill the requirement and it might give stronger position for SPE to pass the subsidiarity test, depending on the final wording and the monitoring practice to be taken, there is a chance it might narrow the area of use for SPE. Should this not be the case and the requirement will be formal demand only, the questions of its sense might arise.

The very applauded decision to allow SPE to be established with EUR 1 minimal capital is proposed to be changed by requirement of EUR 8 000, unless the articles of association require the executive management body to sign a solvency certificate. Although expected, this decision is not in line with the recent company law developments in Europe and provides the SPE with another restrain.

Employees' participation regime also became more complicated in order to prevent SPE to be used to circumvent employees' rights of participation. However, they should not impair the dynamism of the SPE by being too rigid. Reading the Amendment introducing rather complex regulation meant as a safeguard one could doubt whether the aim was achieved and whether the co-determination will not be one of the major issues anymore.

Conclusion

At the moment, the Proposal is waiting for the final decision expected in December 2009 with the latest updated version being published on 7 October 2009.The European Council has also expressed its opinion about the Presidency compromised proposal (doc. 9065/09) saying that it will facilitate future discussions and make possible swift progress towards an agreement on the proposed Regulation.

Although the SE created conditions and possibilities to regulatory competition among member states, has not significant impact in the area due to its low spread in use. Similarly, if not successful, the SPE will not significantly support emerging regulatory competition, either. Low number of SPEs will neither be a good reference of solutions adopted not a material force to induce member states to any changes. A discrepancy is present, though. The references to the national law are introducing regulatory competition through MS's attempts to amend them in order to create the most attractive form. However, they are generally causing supranational legal forms' regulation to be cumbersome, complicated and confusing. Thus, in order to be successful, SPE has to keep the number of the references low and inducing MS to make the reforms needed in respect of their own national business forms by providing practice proved solutions of high quality.

To conclude, some aspects pleasing rather social Member States are apparently about to be incorporated into the SPE's statute, although non in line with recent developments in the company law. This is a loss not only for the SPE's attractivity for SMEs and other potential founders, but for the other supranational business forms in general, as well. The successful, uncumbersome and modern SPE regulation had a chance to become a path-finder for the amendments of SE and SCE regulations coming. Instead, the SPE is, in order to protect the stakeholders, threatened by the possibility to cease from the aspiration to be a carrier of the progressive reforms needed.We shall now move on to discuss practical results of regulatory competition elements, and we are using the recent German modification of company law rules as an example.

The Reform of the German Company Law

The German reform schedule of private limited companies was often delayed until finally the Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen (MoMiG – Law for the Modernization of the Private Limited Companies Act and to combat its Abuse) entered into force on November 1St, 2008.

Already in 2005, a first draft of the Mindestkapitalgesetz (Law to reduce the minimum capital requirements) was submitted, but due to snap elections of the German parliament and resulting changes in the government, this reform path came to rest.

Two years later, the first draft of the MoMig, introduce by the Bundesjustizministerium (Federal Ministry of Justice), was followed by an official government draft on May 23rd, 2007. This draft was considered by the Bundesrat (Representatives of German state governments in legal proceedings) and delegated by the Bundestag (German parliament) to parliamentary committees in September 2007. A hearing on the reform bill by the committee on legal affairs took place in January 2008 and the bill was finally passed during a plenary discussion and vote in the Bundestag on June 26th, 2008. After that, the Bundesrat discussed the reform bill again and approved it. Signed by the Bundespräsident (Federal President), the MoMiG was published in the Federal Law Gazette on October 28th, 2008 and entered into force on November 1st, 2008 (BMJ).

Major Changes

One of the most noteworthy issues of the reform was the introduction of the Unternehmergesellschaft (UG – Entrepreneurial Company), which is especially designed for entrepreneurs and start up firms. Particularly regulated in §5a GmbHG and granting limited liability, the UG is not a new form of a company but a sub-form of the German GmbH (Close corporation with limited liability), meaning that all rules and regulations applicable for the GmbH will also apply for the UG.

§5a (1) GmbHG states that the newly formed company has to do business under the name Unternehmergesellschaft (haftungsbeschränkt) or its abbreviation UG (haftungsbeschränkt), but not merely UG. This special transparency obligation is supposed to serve as a warning to make clear to the public that one is dealing with a company endowed with very little capital.

This was necessary because an UG can be established with a minimum capital requirement of €1 only, whereas the MoMiG retains the minimum capital requirement for establishing a GmbH at €25.000 (Therefore, it was not reduced to €10.000 as proposed by the Mindestkapitalgesetz). Unless the share capital of the UG remains below €25.000, the UG must comply with the special requirements in §5a GmbHG. Although the MoMiG does not contain any time restraints, the UG can be perceived as an “interim solution” on the way to a “genuine” GmbH (Schmidt 2008). Therefore, the UG has to save 25% of its annual profits minus the accumulated deficits of the preceding year, which may not be distributed to its shareholders but will be accumulated until the threshold of €25.000 is reached, §5a (3) GmbHG.

Mentioning the formation of a private company, the requirement of notarization of the constitution still remains in force for both, the GmbH and the UG. However, the new §2 (1a) GmbHG provides for a simplified incorporation method by using a Musterprotokoll (sample statute), which is an absolute novelty for German law. This procedure is only available for uncomplicated standard cases, meaning a formation that includes three shareholders at the most who may only be natural or legal persons, but no partnerships.

Besides the conversion of the Handelsregister (German register of companies) into electronic form, the MoMiG is supposed to reduce the time to set up a company in two additional ways. First, the review of public licenses is not necessary anymore and second, the review of asset provisions by shareholders is limited to cases which appear suspicious to a reasonable person (Beurskens and Noack 2008).

Another simplification concerns the rights of shareholders of a private limited company. Henceforward, shareholders are allowed to hold as many shares as they want and the value of each part can be freely determined, as long as the value multiplies with €1, §5 (2) GmbHG. Contrary to the GmbH, § 5a (2) GmbHG states that an UG can only be established if the share capital was paid up in total. Before that, the shareholders can be held personally liable. Non-cash distributions are not allowed.

Furthermore, as already ruled by the ECJ (namely the Centros triad), the MoMiG opens the GmbH and the UG for off-shore operations and thereby separating their corporate seat from their place of registration. The fact that the corporate seat can be abroad whereas the place of registration may remain in Germany makes the GmbH more attractive and opens the possibility to German corporations to develop their business operations elsewhere.

The MoMiG was also introduced to combat the abuses of the companies act. Therefore, each company has to be registered in the Handelsregister which is meant to accelerate the delivery of appeals and actions. If the UG lost its directors, the shareholders have to file for bankruptcy immediately. In addition, §5a (4) GmbHG states that the general meeting has to be called in case of an imminent inability of the UG to pay its debts.

Last but not least, the legislator changed the requirements for the transfer of GmbH shares. Whereas there was no exception of the doctrine that a non-owner cannot give a good title before the reform, the new §16 (3) GmbHG introduced a good faith acquisition of GmbH shares itself. The transfer of shares requires the filing of an updated Gesellschafterliste (shareholder list) by the notary to the registration court, which serves as an objective basis for the good faith acquisition. After the transfer, the transferee becomes a member of the company and my exercise shareholder rights. However, there are several limitations for the transfer of shares. In order to acquire GmbH shares in good faith, the shareholder list has to be incorrect for more than three years and the incorrectness has to be attributed to the real shareholder.

Conclusion

Faced with foregoing changes and reformations of the company law of European Union member states, even the conservative German legislator decided to participate in the regulatory competition. The legislator's aim with reforming the German company law by introducing the MoMig was to facilitate and accelerate the formation of companies and to increase the international competitiveness of the German Gesellschaft mit beschränkter Haftung in its international environment (BMJ). Eliminating certain formalities, the MoMig also replaces much of the case law that evolved since the implementation of the GmbH in the 19th century with statutory rules. As shown above, the reform brought several groundbreaking changes to the German law of private limited companies. Some of these changes were even new to the German jurisdiction at all. Surprisingly, the German legislator abode the minimum capital requirement of €25.000 as well as the notarization requirement for the GmbH. On the other hand, the reincorporation for existing firms will be much easier. The admission to relocate administrative headquarters means the end of the real seat doctrine for Germany and will improve corporate mobility. By introducing the Unternehmergesellschaft (haftungsbeschränkt), the legislator also made it much easier for small start-up firms to incorporate their own business since the UG grants limited liability and does not require a minimum capital. Furthermore, the costs of starting a business were decreased. Thus, particularly small start up-firms operating in the tertiary sector which do not require a massive capital endowment are easier to establish.

All in all, the German legislator refused to simply replicate the UK template of the English Limited Liability Company and came up with his own solution to make the GmbH more competitive in the international environment. Being in force for already one year, the reform and the introduction of the UG seems to be a success, as several analysis show (Niemeier 2009). Whereas there was no increase in overall registrations of newly incorporated firms, the number of incorporated Unternehmergesellschaften increased significantly. This means that the UG became more and more popular and a preferred choice for certain entrepreneurs compared to the GmbH and especially the Limited. Whereas the number of formations was at the same level for UGs and LLCs in November 2008, the declining quantity of incorporated LLCs in Germany, which is already exceeded by the quantity of liquidations of LLCs, suggest that only few German entrepreneurs resort to this company model any more.

But as a new study already shows, the MoMiG was not able to achieve the legislator's purpose of accelerating the establishment of new companies. Setting up a UG still takes 44 days (or six weeks) in average (Companea 2009).

References

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  1. Baums, T. “European Company Law beyond the 2003 Action plan”, ECGI - LawPaper No. 81/2007, European Business Organization Law Review, Vol. 8, 2007, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=973456
  2. 2008/2196(INI)
  3. Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions on "Action programme for reducing administrative burdens in the EU”, (COM(2007)
  4. Communication from the Commission on a simplified business environment for companies in the areas of Company law, accounting and auditing, COM (2007) 394 final, available at http://ec.europa.eu/internal_market/company/docs/simplification/com2007_394_en.pdf
  5. Council Regulation (EC) No. 2157/2001 supplemented by Council Directive 2001/86/EC regarding the involvement of employees
  6. After sustained efforts of both the European Commission and Parliament, we are waiting for the final decision of the European Council which is expected to come out in December 2009.
  7. Teichmann, C. “European Parliament Calling for Legislative Action on the European Private Company', Cluwer Law International, European Company Law (2007)
  8. Armour, J., “Who should make Corporate Law? EC Legislation versus Regulatory competition”, ECGI, Law paper 54/2008, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=860444
  9. Kroeze, Maarten J., Vletter - van Doort, Helene M. “History and Future of Uniform Company Law in Europe”, Cluwer Law International, European Company Law (2008)
  10. Including, but not limited to, Inspire Art ,Centros and Überseering
  11. Bomhoff, Jacco. "ECJ Grand Chamber: Sevic Systems (C-411/03). Comparative Law Blogspot. December 15, 2005. http://comparativelawblog.blogspot.com/2005/12/ecj-grand-chamber-sevic-systems-chml. (Accessed December1, 2009)
  12. Freedom of Establishment includes - “the formation and management of those companies under the conditions defined by the legislation of the State of establishment for its own companies. This covers all measures “which permit or even merely facilitate access to another Member State and the pursuit of an economic activity in that State by allowing the persons concerned to participate in the economic life of the country effectively and under the same conditions as national operators
  13. The article reads as: Member States may, under the conditions determined by national law, exempt companies which apply Article9(2) and(3) and/or Article11 from applying Article9(2) and(3) and/or Article11 if they become the subject of an offer launched by a company which does not apply the same Articles as they do, or by a company controlled, directly or indirectly, by the latter, pursuant to Article1 of Directive83/349/EEC
  14. Überseering BV v NCC. C-208/00 (ECJ , November 5, 2002).
  15. The court considered several matters in this case, all of which can be found in Paragraph 40 of Cartesio judgment. For the purposes of this assignment we shall only cover the freedom of establishment issues, namely the fourth issue.
  16. Relying on the judgment in Case C-411/03 SEVIC Systems [2005] ECR I-10805, Cartesio claimed before the Szegedi Ítélőtábla that, to the extent that Hungarian law draws a distinction between commercial companies according to the Member State in which they have their seat, that law is contrary to Articles 43 EC and 48 EC. It follows from those articles that Hungarian law cannot require Hungarian companies to choose to establish their seat in Hungary.
  17. Novotna, Petra. Freedom of Establishment after Cartesio. Praque, Chech Republic: Masarykovy Univerzity, 2008.
  18. Cartesio Case C-210/06 (ECJ, December 18, 2008). Para 23
  19. Supra fn 8
  20. Überseering BV v NCC. C-208/00 (ECJ , November 5, 2002). para 93
  21. Member states may treat their own nationals less favorably then nationals of other member states
  22. As already mentioned above, we will not consider all of the questions raised/answered by the court to be relevant. However, it should be mentioned that the court deemed all the questions to be included under its scope, and gave ruling on those issues.
  23. Cartesio Case C-210/06 (ECJ, December 18, 2008). Para 99
  24. Cartesio Case C-210/06 (ECJ, December 18, 2008). Para 107
  25. Cartesio Case C-210/06 (ECJ, December 18, 2008). Para 124
  26. ETUI: Cartesio. http://www.worker-participation.eu/Company-Law-and-CG/ECJ-Case-Law/Cartesio 16 December 2008. (Accessed 1 December 2009)
  27. Cartesio Case C-210/06 (ECJ, December 18, 2008). Para 108
  28. CommunicationfromtheCommissionTotheEuropeanParliament,theCouncil,theEuropeanEconomicandSocialCommitteeandtheCommitteeoftheRegions:ThinkSmallFirst.ASmallBusinessActforEurope,COM(2008)394final(June25,2008)
  29. Available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2003:0284:FIN:EN:PDF
  30. Available at: http://ec.europa.eu/internal_market/company/epc/conference_en.htm
  31. http://register.consilium.europa.eu/pdf/en/08/st16/st16580.en08.pdf
  32. The debate available at: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+CRE+20090309+ITEM-018+DOC+XML+V0//EN
  33. http://register.consilium.europa.eu/pdf/en/08/st12/st12124.en08.pdf
  34. http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P6-TA-2009-0094+0+DOC+XML+V0//EN
  35. Not yet available at: http://register.consilium.europa.eu/servlet/driver?lang=EN&ssf=DATE_DOCUMENT+DESC&fc=REGAISEN&srm=25&md=400&typ=Simple&cmsid=638&ff_TITRE=SPE&ff_FT_TEXT=&ff_SOUS_COTE_MATIERE=&dd_DATE
  36. http://register.consilium.europa.eu/pdf/en/09/st09/st09658.en09.pdf
  37. The tax-based framework for German private limited companies was already set before by introducing the Unternehmenssteuerreform (Corporate Tax Reform) in 2008 and the Abgeltungssteuer (Capital Gains Compensation Tax) on January 1st, 2009 (Bundesregierung online).

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