European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

European corporate law has its source in Article 54 TFEU: the principle of freedom of establishment allows any company formed in accordance with the law of a Member State and having its registered office, central administration or principal place of business within the Union, to establish itself in another Member State. The word “company” under Article 54 TFEU means “companies or firms constituted …

Context

European corporate law has its source in Article 54 TFEU: the principle of freedom of establishment allows any company formed in accordance with the law of a Member State and having its registered office, central administration or principal place of business within the Union, to establish itself in another Member State. The word “company” under Article 54 TFEU means “companies or firms 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-profit-making”. However, the general principle of mutual recognition is not sufficient to guarantee the harmonization of national regulations and the Council has adopted a whole series of directives on the basis of Article 50(2)(g) TFEU. Currently, the European legislation covers questions as different as advertising, the validity of commitments and the nullity of capital companies , the constitution of a public limited company, the maintenance and modification of its capital , single member companies , national and cross-border mergers  of limited liability companies, national divisions of limited liability companies , annual accounts of capital companies , consolidated accounts of capital companies  and statutory audits of annual accounts and consolidated accounts .

As major actors of the internal market, companies must develop in a less onerous legal environment in terms of administrative expenses. In March 2007, having initially found that the administrative expenses induced by European law limited the competitiveness of European undertakings, the Council started the simplification of the legal and accounting environment of companies, which has given rise to several provisions, including Directive No 2007/63 , which dispenses undertakings from resorting to an independent expert for assessing the draft terms of merger or division, or Directive No 2009/109 , which simplifies the formalities of publication of social documents by, in particular, resorting to electronic means of communication. 

These provisions tend to achieve limited harmonization: directives on companies lay down minimum requirements regarding publication and audit while leaving it to Member States to choose the means, the main objective being the protection of third parties and the legal certainty of relations between the company and those third parties or its partners. Although the directives make a certain comparison with substantial rules, the objective of free movement prevails over the will to integrate and impose a common rule. This is not the case for regulations adopted to unify the rules applicable to companies, such as Regulation No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) and Regulation No 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG). In practice, the scope of unification remains limited. The Regulation for a European company refers to the creation of a company which, beside those which fall within national law, is governed by a uniform European law. However the national link dominates: the companies are not subject to European but to national control since the publication and registration take place in the Member State of the registered office according to that Member State's law. As a true code for the European company, the regulation contains many referrals to the law of the Member State of the registered office and mainly includes the material rules contained in the harmonization Directives. Likewise, the EEIG was created to give natural persons, companies and other legal bodies a tool enabling them to cooperate across frontiers. As for the European company, the law applicable to the EEIG is the domestic law of the Member State of the registered office, subject to the provisions of the regulation. In other words, the European rule prevails over the national rules in matters covered by the regulation. Lastly, relations with third parties are excluded from the area of the law of the registered office and are governed by the law designated by the conflict-of-law rule pursuant to Regulation No 593/2008 of 17 June 2008 (Rome I).

Second Directive No 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent, OJ L 26 of 31.1.1977, 1.

Third Directive No 78/855/EEC of 9 October 1978 based on Article 54(3)(g) of the Treaty concerning mergers of public limited liability companies, OJ L 295 of 20 October 1978, 36.

Directive No 2009/102/EC of 16 September 2009 on single member companies, OJ L 258 of 1 October 2009, 20.

Directive No 2011/35/EU of the European Parliament and of the Council of 5 April 2011 concerning mergers of public limited liability companies OJ L 110 of 29.4.2011.

Sixth Directive No 82/891/EEC of 17 December 1982 based on Article 54(3)(g) of the Treaty, concerning the division of public limited liability companies, OJ L 378 of 31 December 1982, 47.

Fourth Directive No 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies, OJ L 222 of 14 August 1978, 11.

Seventh Directive No 83/349/EEC of 13 June 1983 based on the Article 54(3)(g) of the Treaty on consolidated accounts, OJ L 193 of 18 July 1983, 1.

Eighth Directive No 84/253/EEC of 10 April 1984 on the approval of persons responsible for carrying out the statutory audits of accounting documents, OJ L 126 of 12 May 1984, 20; now superseded by Directive No 2006/43/EC of 17 May 2006 on statutory auditors of annual accounts and consolidated accounts, amending Council Directives No 78/660/EEC and No 83/349/EEC and repealing Council Directive No 84/253/EEC, OJ L 157 of 9 June 2006, 87, lastly modified by Directive No 2014/56/EU of 16 April 2014, OJ L 158 of 27 May 2014, 196.

Directive No 2007/63/EC of 13 November 2007 amending Council Directives No 78/855/EEC and No 82/891/EEC as regards the requirement of an independent expert's report on the occasion of merger or division of public limited liability companies, OJ L 300 of 17 November 2007, 47.

Directive No 2009/109/EC of 16 September 2009 amending Council Directives No 77/91/EEC, No 78/855/EEC and No 82/891/EEC, and Directive No 2005/56/EC as regards reporting and documentation requirements in the case of mergers and divisions, OJ L 259 of 2 October 2009, 14.

European Business Law

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