1. European Business Law
Lecture 4
March 28th, 2019

2. Week 4:
Lecture 1 Formation of a NewCo and related case law (Ch. 8).
Lecture 2 The Formation of an SE (Ch. 9).
Today’s lesson

3. A) Formation: by contract or foundation by the act of a single member.
Single member: A company may have a sole member when it is formed and also when all its shares come to be held by a single person (single-member company). Article 2, Twelfth Directive (Dir. 2009/102/EC); a Societas Unius Personae proposal is pending ( content/EN/TXT/?uri=CELEX%3A52014PC0212)
B) Judicial or administrative control: In all Member States whose laws do not provide for preventive, administrative or judicial control, at the time of formation of a company, the instrument of constitution, the company statutes and any amendments to those documents shall be drawn up and certified in due legal form. Article 10, First Directive (Dir. 2009/101/EC)
(Job Centre I and II cases)
Setting-up

4. C) Registration: In each Member State, a file shall be opened in a central register, commercial register or companies register, for each of the companies registered therein. Article 3, First Directive (Consultation of the register is open; copies of any records may be obtained at a cost not exceeding the administrative cost).
? Does a company exist before registration in the register? (Ubbink Isolatie Case, Vorgesellschaft Doctrine)
Setting-up

5. Job Centre Coop: is a company in course of setting-up, seeking for judicial preventive control.
Milan Court of First Instance: finds that JCC scope is unlawful, as being an intermediary in the job market is reserved by the Italian law to only State agencies; the Court raises a question for preliminary ruling to the ECJ.
ECJ (I): declines authority.
Milan Court of Appeals: refers to the ECJ for a preliminary ruling, questioning whether national laws on employment procurement constitute a breach of EU competition law principles.
ECJ (II): affirms the principle that Italian employment procurement law is in breach of the TFEU (see also Höfner u. Elser case); hence, JCC scope is lawful and JCC must be granted registration.
Job Centre I & II Cases

6. Ubbink Isolatie BV: is a company on course of setting-up.
This “pre-company” (Vorgesellschaft) entered into negotiations with other companies; those companies brought an action against Ubbink, who claimed to be an non existing company.
A question was raised as to whether nullity of a company not yet registered in the company register may be declared.
ECJ: solved the question by affirming that rules on nullity only apply to registered companies (this case is also relevant for directors’ powers, see § 14).
Ubbink Isolatie case

7. The laws of the Member States may not provide for the nullity of companies otherwise than in accordance with the following provisions:
(a) nullity must be ordered by decision of a court of law;
(b) nullity may be ordered only on the grounds:
(i) that no instrument of constitution was executed or that the rules of preventive control or the requisite legal formalities were not complied with;
(ii) that the objects of the company are unlawful or contrary to public policy;
(iii) that the instrument of constitution or the statutes do not state the name of the company, the amount of the individual subscriptions of capital, the total amount of the capital subscribed or the objects of the company;
(iv) of failure to comply with the provisions of the national law concerning the minimum amount of capital to be paid up;
(v) of the incapacity of all the founder members;
(vi) that, contrary to the national law governing the company, the number of founder members is less than two.
Apart from the foregoing grounds of nullity, a company shall not be subject to any cause of non-existence, absolute nullity, relative nullity or declaration of nullity.
Nullity of companies

8. Marleasing S.A.: is claiming that La Comercial internacional de Alimentacion SA (Spain) is a “fake” company, as its creation and the connected contributions were made only to the detriment of creditors, including Marleasing
M. claims that La Comercial is null and void for lack of cause, as ‘sham transactions’ are under Spanish Civil Code; therefore, contributions must be deemed as never made.
Defendants object that ‘lack of cause’ is not listed in the directive as proper ground for nullity.
ECJ: solved the question by affirming that only grounds listed in the directive may lead to nullity.
Marleasing case

9. The SE main features Formation Minimum capital: 120.000 €
By merger of national companies from different member states
By creation of a joint venture between companies (or other entities) in different member states
By creation of an SE subsidiary of a national company (or an SE subsidiary of another SE) (incubator)
By conversion of a national company into an SE
Minimum capital: €
Registered office: the place where it has its central administration, i.e. true centre of operations
Applicable law: Reg., Statute, Nat’l law A, Nat’l law B
Do SEs have any success? Why choosing an SE? Some figures follow…
The SE main features

10. Overall numbers

11. Distribution

12. New SEs

13. New SEs

14. New SEs

15. New SEs

16. New SEs

17. New SEs

18. New SEs

19. SE categories

20. SCE facts