The last decades were spent waiting for EU legislation on the cross-border transfer of seat or conversion and the law governing companies. If, in the future, the EU legislator decides in favour of legislative intervention, he will face almost the same
73 Rome I Regulation, art 1 (2) f) and Rome II Regulation, art 1 (2) d).
74 Rome I Regulation, preamble (7) and Rome II Regulation, preamble (7).
75 Case C–27/02 Petra Engler v Janus Versand GmbH [2005] ECR I–481, para 48.
Companies in EU Private International Law – An EU Law Perspective i103 challenges as a national legislator intending to codify the law applicable to
compa-nies and the transfer of the company seat (cross-border conversion).76
The first question will be the form of intervention. Earlier the chances of the Fourteenth Company Law Directive were discussed; nowadays those calling for EU legislation wish to see a regulation instead.
The scope of such a legislative act raises also questions: The EU has the option to provide for pure conflict of laws rules by determining the law applicable to companies or may choose to lay down substantive provisions for the cross-border transfer of seat of companies or it can also adopt a hybrid set of rules combining the two. It has also been proposed to adopt a comprehensive cross-border mobility directive covering cross-border conversions and mergers as well as demergers.77 Since several company law directives have been consolidated recently, includ-ing the directive on cross-border mergers,78 in a single directive, Directive (EU) 2017/1132, any new rule on cross-border conversion or division could be perhaps well fitted into this directive.
If conflict of laws rules will be determined for companies, they will most prob-ably follow the incorporation doctrine as advocated by almost all scholars and academic groups dealing with this topic.79 If the EU legislator decides in favour of the codification of the law applicable to companies, the precise scope of the appli-cable law should be also determined.
The issue of determining the applicable law arises most frequently in relation to companies. This may be put, however, into a broader perspective. It must be asked whether entities other than companies within the meaning of Article 54 TFEU should be covered by a future EU legislative act in terms of the applicable law and cross-border mobility. Article 54 TFEU does not cover non-profit-making entities and entities without legal personality. This is significant for associations and founda-tions. They are mostly non-profit making entities excluded from the scope of applica-tion of the freedom of establishment provisions. Member States retain their compe-tence to regulate non-profit oriented entities and entities without legal personality.
In practice, there are cases concerning such entities intending to transfer their seat that may also have a conflict of laws consequence. For example, the OLG
76 See Tamás Szabados, ‘Challenges of the Codification of the Law Applicable to Legal Persons from the Perspective of Recodifying Hungarian Private International Law’ (2015) 3 ELTE Law Journal 81.
77 See Schmidt (n 28) 37.
78 Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-bor-der mergers of limited liability companies [2005] OJ L 310/1.
79 Schmidt (n 28) 34; Hans Jürgen Sonnenberger and Frank Bauer (eds), Vorschlag der Spezialkommission für die Neugestaltung des Internationalen Gesellschaftsrechts auf europäischer/deutscher Ebene (Mohr Siebeck 2007) Vorschlag für eine Regelung auf europäischer Ebene, art 2 (1); Vorschlag für eine autonome deutsche Regelung im EGBGB, art 10 (2); GEDIP Proposal, art 3; Gerner-Beuerle, Mucciarelli, Schuster and Siems (n 58) 294–295.
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Zweibrücken rejected the transfer of the registered seat of an association from France to Germany because non-profit-making entities do not fall under the scope of the freedom of establishment provisions.80
In this context, the comparative analysis of the Member States of the EU demon-strates that there are usually no specific conflict of laws norms for entities other than companies: National legislators use two options in principle to address entities other than companies. First, they determine connecting factors general to legal persons, not distinguishing between companies and other legal persons. To supplement such a rule, there are also codifications that contain a norm of reference that orders to apply the law governing legal persons also to entities without legal personality.81 Second, some private international law codifications may take as a point of depar-ture a broad ‘company’ concept, which includes legal persons other than companies in addition to companies.82 In this way, the governing law concerns this broad cate-gory of ‘companies’. The two methods lead to the same outcome: The same conflict of laws rules apply both to companies and other entities.
A further question is what to do with companies established in third countries.
The freedom of establishment provisions cover countries of the European Economic Area (EEA). At present, Member States are free to apply the real seat theory to companies incorporated in third countries unless they did not enter into an inter-national convention with the third country concerned that provides for the appli-cation of the incorporation doctrine. Member States following the real seat theory thus follow a two-channelled approach, the application of the incorporation theory regarding EEA countries and application of the real seat theory concerning third countries.83 It must be decided whether the future EU legislation, which will proba-bly introduce the incorporation theory, is intended to be limited to companies incor-porated in the EEA or also to companies set up in third countries. This is a significant question. Applying the incorporation doctrine universally gives a uniform and more predictable solution.84 Many times, it is much easier to identify the place of regis-tration of a company than the place of the real seat. However, the application of the incorporation doctrine multiplies companies governed by the (perhaps exotic) law of non-Member States that may pose a challenge for judicial practice. Nonetheless, it must be noted that this is already now the reality in the Member States following the incorporation doctrine.
80 OLG Zweibrücken, 27.09.2005, 3 W 170/05.
81 Hungarian Private International Law Act, art 22 (5); Polish Private International Law Act, art 21;
Estonian Private International Law Act, art 17.
82 See Swiss Private International Law Act, art 150 and the Dutch Civil Code, art 10:117.
83 See BGH, 27.10.2008 – II ZR 158/06.
84 Von Hein (n 44) 14.
Companies in EU Private International Law – An EU Law Perspective i105 The EU avoided a two-channelled solution in the Rome I and Rome II
Regulations. It is therefore expected that a similar path will be followed regarding the law applicable to companies, and the applicable law will be determined based on the same connecting factor, irrespective of whether it leads to the application of the law of an EEA Member State or the law of a third country.