Seat theory versus incorporation theory

An analysis of the ECJ's jurisdiction and its implications

Research Paper (undergraduate) , 2007 , 27 Pages , Grade: 1,2

Business economics - Law

This report is about the European Court of Justice’s jurisdiction and its implications on
German Corporate Law: It explores how European Law is influencing and thereby changing national Corporate Law. In doing so, the author analyses the impact of the ECJ’s rulings in the cases Daily Mail, Centros, Überseering as well as Inspire Art and their effect on the – until recently in continental Europe prevailing – seat theory. Furthermore, the author carefully analyses the subsequent developments in Germany, with a particular focus on the trend to form a British Limited instead of a German GmbH as well as the thus resulting reform of German Limited Liability Company Act (GmbHG). Finally, the new competition of legal forms is evaluated by balancing the arguments in favour and/or against this development.

Keywords

seat theory, Sitztheorie, incorporation theory, Gründungstheorie, Daily Mail, Centros, Überseering, Inspire Art, race to the bottom, race for laxity, Limited, SE, Limited Liability Company Act, GmbHG

Inhaltsverzeichnis (Table of Contents)

• 1. ABSTRACT
• 2. INTRODUCTION
• 3. SEAT THEORY VERSUS INCORPORATION THEORY: AN ANALYSIS OF THE ECJ'S JURISDICTION AND ITS IMPLICATIONS
• 3.1. ANALYSIS OF THE IMPLICATIONS OF THE ECJ'S JURISDICTION ON GERMAN CORPORATE LAW, WITH PARTICULAR FOCUS ON THE APPLICATION OF THE SEAT THEORY.
• 3.1.1. ISSUE
• 3.1.2. DEFINITIONS
• 3.1.3. LEGAL FOUNDATIONS: THE RELATIONSHIP BETWEEN EUROPEAN LAW AND NATIONAL LAW
• 3.1.4. THE IMPLICATIONS OF THE ECJ'S JURISDICTION ON NATIONAL LAW
• 3.1.5. THE IMPACT OF THE ECJ CASES DAILY MAIL, CENTROS, ÜBERSEERING AND INSPIRE ART
• 3.1.6. CONSEQUENCES REGARDING THE APPLICATION OF THE SEAT THEORY
• 3.2. ANALYSIS OF THE EFFECTS OF THIS ECJ JURISDICTION ON THE USE OF FOREIGN LEGAL FORMS IN GERMANY AND GERMAN GMBHS
• 3.2.1. THREAT: RACE TO THE BOTTOM
• 3.2.2. TREND: FORMATION OF A BRITISH LIMITED IN GERMANY.
• 3.2.3. CONSEQUENCES: MOMIG - REFORM OF THE GERMAN GMBHG
• 3.3. ADVANTAGES AND DISADVANTAGES OF THIS NEWLY CREATED COMPETITION OF LEGAL FORMS WITHIN THE EUROPEAN UNION.
• 3.3.1. ADVANTAGES
• 3.3.2. DISADVANTAGES.
• 3.3.3. FINDINGS
• 4. CONCLUSION / PROSPECTS
• 5. APPENDIX
• 5.1. APPENDIX 1 – FOREIGN LEGAL FORMS PUBLIC COMPANIES AND LIMITED LIABILITY COMPANIES
• 5.2. APPENDIX 2 - ARTICLES APPLIED CONSOLIDATED VERSION OF THE TREATY ESTABLISHING THE EUROPEAN COMMUNITY (EGV) ..

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This report analyzes the European Court of Justice’s (ECJ) jurisdiction and its impact on German corporate law. The author investigates the influence of European law on national corporate law, examining the implications of ECJ rulings in specific cases such as Daily Mail, Centros, Überseering, and Inspire Art. Additionally, the report explores the trend of forming British Limited companies instead of German GmbHs, and the subsequent reform of the German Limited Liability Company Act (GmbHG) in response to these developments. The main focus is on the shift from the seat theory to the incorporation theory in the context of European law. The key themes and objectives of the report can be summarized as follows:
• Analyzing the impact of ECJ jurisdiction on German corporate law, particularly the shift from the seat theory to the incorporation theory.
• Exploring the consequences of ECJ rulings (Daily Mail, Centros, Überseering, Inspire Art) on national corporate law.
• Investigating the trend of forming British Limited companies in Germany and its influence on the reform of the German Limited Liability Company Act (GmbHG).
• Assessing the advantages and disadvantages of the newly created competition between legal forms within the European Union.
• Analyzing the implications of the race to the bottom phenomenon in the context of legal forms.

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1: Abstract provides a brief overview of the report, highlighting its focus on the ECJ's jurisdiction and its implications on German corporate law. It mentions the analysis of specific ECJ cases and the subsequent developments in Germany, including the trend to form British Limited companies and the reform of the GmbHG.
• Chapter 3: Seat Theory Versus Incorporation Theory: An Analysis of the ECJ's Jurisdiction and its Implications delves into the core of the report, analyzing the ECJ's jurisdiction and its impact on the seat theory and national corporate law. The chapter examines the ECJ cases Daily Mail, Centros, Überseering, and Inspire Art, and their consequences for the application of the seat theory in Germany.
• Chapter 3.1: Analysis of the Implications of the ECJ's Jurisdiction on German Corporate Law, with Particular Focus on the Application of the Seat Theory examines the legal foundations for the relationship between European and national law and the implications of the ECJ's jurisdiction on national law. This section provides a detailed analysis of the impact of the ECJ's jurisdiction on German corporate law and the seat theory.
• Chapter 3.2: Analysis of the Effects of this ECJ Jurisdiction on the Use of Foreign Legal Forms in Germany and German GMBHs explores the practical consequences of the ECJ's jurisdiction on the use of foreign legal forms in Germany. This chapter examines the 'race to the bottom' phenomenon, the trend of forming British Limited companies in Germany, and the subsequent reform of the German Limited Liability Company Act (GmbHG).
• Chapter 3.3: Advantages and Disadvantages of this Newly Created Competition of Legal Forms Within the European Union analyzes the advantages and disadvantages of the competition between different legal forms within the European Union. This chapter explores the implications of this new competition for German and other European companies.

Schlüsselwörter (Keywords)

The core concepts and key themes of this report revolve around the intersection of European law and national corporate law, specifically focusing on the evolution of corporate legal forms in the European Union. This involves the analysis of the ECJ's jurisdiction and its impact on the seat theory and the incorporation theory, as well as the examination of specific ECJ cases like Daily Mail, Centros, Überseering, and Inspire Art. The report also explores the trend of forming British Limited companies in Germany and its influence on the German Limited Liability Company Act (GmbHG). This analysis is further enriched by examining the phenomenon of "race to the bottom" and the advantages and disadvantages of the new competition between legal forms within the EU. Therefore, the key terms and topics encompassing this report are: seat theory, incorporation theory, ECJ jurisdiction, Daily Mail, Centros, Überseering, Inspire Art, race to the bottom, Limited company, GmbHG, German corporate law, and European legal forms.

• College: Heilbronn University of Applied Sciences (Business School Heilbronn (MBA))
• Course: The governmental and legal environment of business
• Grade: 1,2
• Author: Manuela Schweizer (Author)
• Publication Year: 2007
• Pages: 27
• Catalog Number: V85963
• ISBN (eBook): 9783638016148
• ISBN (Book): 9783638918916
• Language: English
• Tags: Seat