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
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)
6. REFERENCES
Objectives & Core Themes
This paper examines how the European Court of Justice's (ECJ) jurisdiction regarding the freedom of establishment has challenged the traditional "seat theory" in German corporate law. It explores the resulting trend of German entrepreneurs choosing foreign legal forms, such as the British Limited, and the subsequent legislative response in Germany through the modernization of the GmbH law (MoMiG).
- Evolution of legal theory: Transition from "seat theory" to "incorporation theory" in Europe.
- Impact of landmark ECJ rulings: Analysis of Daily Mail, Centros, Überseering, and Inspire Art.
- Regulatory shift in Germany: The "Limited boom" and its consequences for market competition.
- Legislative modernization: Evaluation of the MoMiG reform and its goals to increase attractiveness.
- Critical evaluation: Balancing the benefits of increased competition against risks for third parties (creditors/customers).
Excerpt from the Book
3.1.5.1. Daily Mail (1988)
The ECJ-case Daily Mail focuses on a British company that intended to transfer its domicile to the Netherlands, which has been refused by the British legal authorities for tax approval reasons. The ECJ has followed the argumentation of the British authorities, following the approach that rules that restrict the im- and expatriation of companies are not conflicting with the freedom of establishment pursuant §§ 43, 48 EGV. Consequently, a limitation of ex- and impatriation of companies was supported by the ECJ.
Summary of Chapters
1. ABSTRACT: Provides an overview of the report's focus on ECJ rulings and their impact on German corporate law and the seat theory.
2. INTRODUCTION: Outlines the rise of British Limited companies in Germany and the underlying research motivation regarding legal frameworks and risks.
3. SEAT THEORY VERSUS INCORPORATION THEORY: AN ANALYSIS OF THE ECJ’S JURISDICTION AND ITS IMPLICATIONS: Analyzes the shift in European case law and its influence on national regulations and company recognition.
4. CONCLUSION / PROSPECTS: Summarizes the transformation of national corporate laws and points to the necessity of further discussion regarding liability tools.
5. APPENDIX: Lists foreign legal forms and provides the original text of relevant articles of the Treaty establishing the European Community (EGV).
6. REFERENCES: Contains a comprehensive list of the books, journals, internet resources, and legal verdicts cited in the report.
Keywords
seat theory, incorporation theory, European Court of Justice, ECJ, German Corporate Law, freedom of establishment, British Limited, MoMiG, race to the bottom, GmbH, legal capacity, European Community, impatriation, expatriation, corporate law reform
Frequently Asked Questions
What is the central focus of this research paper?
The paper examines the impact of the European Court of Justice's (ECJ) jurisdiction on German corporate law, specifically how EU rulings have challenged the traditional German "seat theory."
What are the primary thematic fields addressed in the work?
The primary themes include the competition of legal systems within the EU, the legal freedom of establishment, the shift in popularity from the German GmbH to foreign legal forms like the British Limited, and the subsequent legislative reforms in Germany.
What is the main research question or goal?
The goal is to analyze how European law influences and changes national corporate laws, whether the traditional seat theory remains applicable, and how these changes impact the competitiveness and protection of third parties in Germany.
Which scientific methodology does the author employ?
The author uses a qualitative legal analysis approach, evaluating landmark ECJ case law (Daily Mail, Centros, Überseering, Inspire Art) and comparing the legal framework of the seat theory versus the incorporation theory.
What core topics are covered in the main section of the paper?
The main section covers the legal foundations of ECJ jurisdiction, the consequences for the application of the seat theory, the trends of foreign company formation in Germany, and the evaluation of the MoMiG reform.
Which keywords best characterize this work?
Key terms include seat theory, incorporation theory, European Court of Justice, freedom of establishment, British Limited, and MoMiG.
What significance does the "race to the bottom" have in this context?
The term describes a phenomenon where jurisdictions compete for business by lowering legal standards, which the author uses to discuss the risks regarding creditor protection when entrepreneurs opt for foreign legal forms with lower foundation requirements.
How does the MoMiG reform attempt to address the "Limited boom"?
The MoMiG reform seeks to make the German GmbH more attractive and competitive by accelerating the foundation process, reducing capital requirements, and streamlining administrative procedures, while also combating malpractice.
Does the author consider the influence of third-country legal forms?
Yes, the author notes that the influence of non-EU legal forms, such as the Delaware Limited Liability Company, remains a complex and somewhat unclear area that warrants further research.
- Quote paper
- Manuela Schweizer (Author), 2007, Seat theory versus incorporation theory, Munich, GRIN Verlag, https://www.grin.com/document/85963
