144	5  Cross-Border Corporate Activities

When asked whether this rejection was compatible with the Freedom of Establishment the ECJ decided that

as Community law now stands, Articles 43 EC and 48 EC [today: Art. 49, 54 TFEU] are to be interpreted as not precluding legislation of a Member State under which a company incorporated under the law of that Member State may not transfer its seat to another Member State whilst retaining its status as a company governed by the law of the Member State of incorporation.31

The ECJ reasoned that the question of whether the Freedom of Establishment applied to a company which seeks to rely on the fundamental freedom enshrined in that article—like the question whether a natural person was a national of a Member State, hence entitled to enjoy that freedom—was a preliminary matter which, as Community law now stands, can only be resolved by the applicable national law. The ECJ, therefore, respected the competence of the Member States to determine independently the requirements necessary to form a company under its national law, as well as the requirements such a company has to fulfill to remain in this national legal form. In effect, that decision confirmed the distinction (introduced in Daily Mail) between restrictions imposed by the company’s country of origin and such obstacles arising from national measures of the host state.

As a consequence for the controversial debate in Germany (and other countries), whether or not the Überseering and Inspire Art decisions could also apply to cases in which a company transfers its place of management from Germany to another Member State (‘Wegzugsfälle’), it is now clear that the Freedom of Establishment does not protect such a transfer.32

In an obiter dictum, however, the Court stated that its ruling only applied to restrictions of the movement of a company by the state of its incorporation if the company intended to emigrate while maintaining its legal status as a company of this state. If the company was willing to combine the transfer of its seat with a change of its legal form, i.e. converted into a legal form provided by the law of the state of immigration, restrictions imposed by the state of emigration, such as the need of a winding-up or liquidation, were prohibited under the EU Treaties.33

5.1.5  Status-quo of German Conflict-of-Laws Rules for Companies

The decisions of the ECJ (especially Centros, Überseering and Inspire Art) led to a paradigm shift in Germany regarding the compatibility of the ‘real seat doctrine’ with the EU Treaties. With only a few exceptions, the prevailing opinion today is that as far as companies which were formed in accordance with the rules of a European Member State are concerned, the ‘theory of incorporation’ (Gründung-

31  ECJ, case C-210/06 Cartesio ECR I-9641 [2008] I-9641, para. 124.

32  The German legislature, however, has made such transfer possible for the GmbH by amending Sec. 4a GmbHG in the course of the MoMiG; see supra, Sect. 3.1.

33  ECJ, case C-210/06 Cartesio ECR I-9641 [2008] I-9641, paras. 112 et seq.