Transfer of company registered office to other Member States
On October 25th, 2017, the Court of Justice of the European Union (the “CJEU”) decided that national laws hindering the transfer of the registered office of a company to another Member State are contrary to the rules of free establishment.
In 2013, Polbud, a Polish company, transferred its registered office to Luxembourg and converted to a company under Luxembourg law. However, Polbud could not be removed from the Polish commercial register. Under Polish law, the removal of a company from the commercial register is dependent on the winding-up of the company following a liquidation procedure. The CJEU held that freedom of establishment includes the right of a company formed in accordance with the legislation of one Member State to convert itself into a company under the law of another Member State, even though that company continues conducting its main or entire business in the first Member State. National legislation demanding mandatory liquidation of companies that wish to transfer their registered office to another Member State constitutes a restriction on the freedom of establishment. The fact that the transfer is made for the purpose of enjoying the benefit of more favourable legislation does not, in itself, constitute an abuse.
For the press release of the Court of Justice, click here.