European Commission Proposes New Rules To Help Companies Move Across Borders And To Promote The Use Of Digital Tools In Company Law

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Shearman & Sterling LLP

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On 25 April, the EC proposed new company law rules to make it easier for companies to merge, divide and move from one EU Member State to another.
European Union Corporate/Commercial Law

On 25 April, the EC proposed new company law rules to make it easier for companies to merge, divide and move from one EU Member State to another. This proposal follows the landmark judgment in Polbud (C-106/16), in which the European Court of Justice held that it was contrary to the freedom of establishment to require a company to liquidate before transferring its registered office to another Member State.

The new rules would introduce a system of prior consent by the Member State of departure, with specific safeguards put in place against abusive arrangements which aim to circumvent tax rules, undermine workers' rights or harm the protection of creditors or minority shareholder interests. The company can then move while maintaining its legal personality, provided that the conditions laid down in the Member State of destination are satisfied.

The EC also proposed that all Member States should implement digital capabilities to allow company registrations and filings to be done online without the need for applicants to submit in person.

The EC's proposal is available at:

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