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In a judgement dated 23 June 1999 (ZIP 1999, 1710), the Frankfurt Higher Regional Court held that the separate legal identity and legal capacity of an association duly organised as a private limited company under the laws of England (so-called offshore company) was properly determined under the place-of-incorporation theory, not the seat-of-management theory when the entity in question had no seat of management as a practical matter.
While the court stated that the seat-of-management theory was properly applied as a general rule, it held that an exception to this rule existed in the case before it. The articles of incorporation of the offshore company prohibited its managers from meeting in England or conducting business there. As a factual matter, the company was managed from the managers' places of residence and from other locations, which changed frequently. Since no seat of management was discernible under these circumstances, the court recurred to the place-of-incorporation theory.
At issue was the capacity of the offshore company to bring suit. Applying the place-of-incorporation theory, the Higher Regional Court held that the company had separate corporate identity and capacity to act as a party in legal proceedings by virtue of its incorporation in England.
See article no. 190 discussing the ECJ's Centros decision for an explanation of the seat-of-management and place-of-incorporation theories. The result reached by the Higher Regional Court, though not its reasoning, is consistent with the Centros decision, which indicates that the separate legal existence and capacity to sue of the offshore company should have been recognised under Articles 52 and 58 (now Articles 43 and 48) of the EC Treaty.
For further information, please send a fax or an e-mail stating your inquiry to KPMG
Frankfurt, attn. Christian Looks: Fax (0)69-9587-2262, e-mail cLooks@kpmg.com. You may also send an e-mail to KPMG
Germany by clicking the Contact Contributor button on this screen.
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