Redefining the Freedom of Establishment under EU Law as the Freedom to Choose the Applicable Company Law: A Discussion after the Judgment of the Court of Justice (Grand Chamber) of 25 October 2017 in Case C-106/16, Polbud
Posted: 11 Jan 2018 Last revised: 21 Sep 2018
Date Written: september 10, 2018
On 25 October 2017, the Court of Justice handed down a judgment in the Polbud case (C-106/16). This is the result of three preliminary questions raised by the Polish SC. The facts in the case concern the Polish private limited liability company which wanted to transfer its registered office to Luxembourg and to change its legal form. In general, the questions refer totwo pertinent issues: first, if the national law providing for mandatory company’s liquidation in case of transferring the company’s seat abroad complies with the EU law, and second, if the so-called isolated cross-border conversion is covered by the freedom of establishment. With little doubt, the first question was answered in the negative. As to the second issue, the Court holds that it is not mandatory in the light of EU law for the company wishing to transfer its registered office and convert itself into a company governed by the law of another MS to establish an economic presence in that MS. It is likely that the Court of Justice’s findings will open another Pandora’s box with many unknown results, mainly concerning minority shareholders’ and creditors’ protection as well as further (un)desired liberalisation of the internal market.
Keywords: Polbud-Wykonastwo, Polbud, cross-border transfer of corporate seat, cross-border conversion, C-106/16
JEL Classification: K22
Suggested Citation: Suggested Citation