Transfers of cross-border registered offices: how the market developed a practice allowing such transfers within (or even outside) the European Union

EU

The genesis

In 2003, the draft 14th Directive on cross-border transfers of registered offices was initiated by the European Commission. It was subsequently abandoned in 2007, particularly due to the resistance from certain Member States which were opposed to abandoning some legislative autonomy in the field of company law[1].

Towards a harmonization of the rules on registered offices transfers within the European Union?

This project has been put on hold on the agenda and Vera Jourovà, European Commissioner for Justice in charge of the draft 14th Directive on cross-border transfer explained: "I am well aware that cross-border transfers are a complex subject and that is why we are carefully assessing how to address it it. We want to take into account all the different interests at stake. "[2]. This project’s goal is to respond to the "urgent need for a special European framework for the cross-border transfer of registered offices".[3]

A successful confirmation from the ECJ

While this possible harmonization is pending, the European Court of Justice, in a 25 October 2017 decision, sanctioned Poland's refusal to remove from the local register a company that had transferred its registered office to Luxembourg. In this instance Poland had considered that the removal necessarily implied the completion of liquidation formalities (ECJ, 25 October 2017 n°C-106/16, Polbud-Wykonawstwo), please see our previous Law-Now here.  In that decision, the Court found that Polish legislation disproportionately infringed on the principle of freedom of establishment within the Union and established for companies the right to cross-border conversion while retaining their legal personalities.[4] 

France as a good pragmatic student

In this respect, France is a rather good student and, subject to compliance with a now well-defined procedure and certain conditions, the clerks of the commercial courts de facto recognise the validity of transfers of cross-border registered offices with maintenance of legal personality both when France is the country of departure and when France is the host country[5]; in the latter case, a document must be submitted to the French Registrar confirming that foreign law authorizes the transformation of a foreign company into a French company; this document may be a legal provision of the domestic law of the country of departure (assuming such a provision exists) or, more generally, a legal opinion issued by a notary or lawyer from the country of departure. In practice, it is at this stage that difficulties may arise. A prominent example of these difficulties is illustrated by the fact that less than 200 days from Brexit, and since the United Kingdom does not have legal provisions or practice governing such operations, transfers of registered offices from the United Kingdom to another EU country (and in particular France) are not possible.

In short, a transfer of headquarters to (or from) France takes place in 4 stages:

 

 

France as the country of departure

 

France as the host country

 

Step1

 

Unanimous decision of the shareholders to transfer the registered office, subject to the resolutory condition that the company will not be registered in the register of the host country

 

Decision of the shareholders to transfer the registered office to France in accordance with the provisions of local domestic law

 

Step 2

 

Completion of the formalities in France, i.e. filing with the RCS the project to transfer the registered offices abroad

 

Request to the French judge to proceed with the registration of the transfer with the required certificate (e.g. legal opinion above)

 

Step 3

 

Completion of formalities in the host country with maintenance of legal personality (if permitted by the law of the host country) for its registration

 

Registration of the company in France

 

 

Step 4

 

Filing of the request for cancellation of the company from the French RCS with maintenance of legal personality (cf. form M4 of cancellation available on Infogreffe and no longer via a request addressed to the judge)

 

 

Removal of the company from the register of the country of departure and communication to the French Registrar

Alternative tools in the absence of harmonization

If it is not yet possible to reconcile the conditions imposed by the mandatory provisions of each national law on the transfer of registered office (and, for example, in France, the unanimity requirement in the case of a cross-border transfer), practice has developed alternative solutions that achieve more or less the same result, such as prior transformation into a European company followed by a transfer (European Regulation 2157/2001 of 8 October 2001) or cross-border mergers within the Union (Directive 2017/1132 of the European Parliament and of the Council of 14 June 2017) or even outside the Union, subject to the compatibility of national laws (and, for example, with Switzerland), without forgetting - in the specific case of a reorganization involving France as the country of departure -, a tool offered by the French Civil Code for the universal transfer of the assets of a French company to its sole shareholder - regardless of the country of registration of the sole shareholder - by way of dissolution without liquidation (cf. Article 1844-5 of the Civil Code).

In this context, one may wonder whether such harmonization – even though it has been long awaited for -  is still imperative.



[1] Source: Evaluation of European added value EAVA 3/2012 (p. 23)

[2] Brussels tackles head office mobility, Fréderic Simon, 3 October 2017

[3]Cross-border mergers and divisions, transfers of seat: Is there a need to legislate? Study, June 2016; in the same vein, Company law: the Commission proposes new rules to help companies cross borders and find online solutions, 25 April 2018

[4] "Right to cross-border transformation of companies in the Union: the ECJ passes the third! "Thomas Mastrullo, Bulletin Joly Sociétés January 1, 2018 n°1 p. 19

[5]See in this sense Cass. 27 October 2009 n°08-16115 Comment Michel Menjucq Bulletin Joly Sociétés - February 2010