TUTORIAL 2 EUROPEAN COMPANY LAW

Requirements of incorporation UK:

Private company (Ltd): Public company (Plc):

No minimum capital requirements
Memorandum and articles of association
Registration at Companies Register
Company obtains legal personality at the
moment of registration
50,000 pound minimum capital
Memorandum and articles of association*
Registration at Companies Register
Company obtains legal personality at the
moment of registration

*Register. You need memorandum (statement of the members, usually includes purpose) and
articles of association (constitution – the decision are taken)
 no need for a notary

AoA: constitution of the company’ decision

Requirements of incorporation Germany:

Private company (GmbH): UG (Mini-GmbH): Public company

(AG):
€ 25,000 minimum capital No minimum capital requirements € 50,000 minimum
capital
Articles of association in notary Articles of association in notary Articles of association
act act in notary act
Registration at German Register Registration at German Register Registration at
of companies of companies German Register of
companies
Company obtains legal Company obtains legal Company obtains
personality at the moment of personality at the moment of legal personality at
registration registration the moment of
registration

difference UK:
- Transparency requirements: only for UG (not for UK Limited)  trade under
designation
in Germany you have a minimum requirement whereas in the UK no.
The UG is for family companies but there are certain limitations to it: you need to have max
3 founders of the company + each year from their net profit they must spend 25% on … (but
it is not compulsory the last one) . most UG try to convert to GmbH with the money they
collect every year form the 25% and when they are gmbh they will not have to pay the 25%
anymore.
 UG can expand to GmbH without the need for registration

Requirements of incorporation France:

Private company (SARL): Public company (SA):

No minimum capital requirements € 37,000 minimum capital

Total number of members: max. 100
Signing of articles of association
Registration in French Register of
commercial companies
Company obtains legal personality at the
moment of registration
€ 225,000 for the listed SA
Minimum number of shareholders: 7
Signing of articles of association
Registration in French Register of
commercial companies
Company obtains legal personality at the
moment of registration

FRANCE: you need to register, and you acquire legal personality by registering.
Private company: articles of association (you can do it in a notarial deed or in the contract
itself – no obligatory to got to the notary)

For real estates – if the company wants to acquire one as a legal person the notarial deed is
obligatory

why there are two different requirements for capitals in the public company? FIND
ANSWER

Requirements of incorporation Netherlands:

Private company (BV): Public company (NV):

No minimum capital requirements
Articles of association in notary act
Act of incorporation in notary act
Company obtains legal personality at the
moment of notary act
€ 45,000 minimum capital
Articles of association in notary act
Act of incorporation in notary act
Company obtains legal personality at the
moment of notary act

Registration is required to avoid liability, Registration is required to avoid liability,

but is no requirement for incorporation but is no requirement for incorporation

NL:

No need to register in order to exist

Only a post factum act – not a requirement for existence

But you need to register in order to have limited liability

If you don’t register the company does not exist for third parties – when you sign a contract
in the name of the company but the company si not registered than the person would bear
the responsabilities
Shareholder, who normally do not have liability , even if the company is not registered then
do not have liability whereas the full unlimited liability is with the Directors

Why are the directors to blame and not shareholder? Bc they are responsible for the
registration
First company law directive:

1. Disclosure of companies - Need of legal certainty and need to protect third (you
need to know who will be held liable if something goes wrong) – protection of both
creditors and third parties
Section 1
- Dahatshu case
Discussions about the directives arise and different implementation in different
ms
 any person who has interests in the company should be able to check any
company (disclosure to external world)
 GE: you get the information without giving any add information

2. Pre-incorporation contracts:
a. before you create your company the directive does not apply since there is no
company at all  so use of national law (most national jurisdiction say that the
person who sign the contract in the name of the non existing company is
responsible)
b. Other scenario: company is registered, then it depends on the directors, if they take
over the contract and they start making bills to pay stuff, it means that the company
is starting to be part of the company, so if the director stop paying the bills than the
company is responsible.

Section 2 (art. 8)

Case study 2(1): the company is formed on may 15 so it is a company. Therefore, the
company is incorporated and exist form 15 may and there is a problem and so we
have to see the first directive (tries to regulate who is liable before the company
start to exist) and so you have to check the scopes and see that the dir applies and
then apply art 8 and edgar Johnson would be liable under art. 8 if the company does
not take over. If the company would take over than it would be ‘johnson design ltd’
itself under art. 8.

(2 question): what if the company was not registered? Then the directive does not
apply bc there is not a company and national law would apply

in NL: non registered does not mean that it does not exist, so in NL if the company
exist but is not registered than the dir applies

3. Nullity of the company

Section 3 (art 12)
- Marleasing case

Art 12 there are grounds on which you can nullify a company (= make the company non
existence from the beginning (retroactive effect)) – retroactively take away the legal
personality of the company
The grounds are exhaustive and the MS cannot provide other grounds (marleasing case)

Needed for legal certainty (you need to know criteria to have a company or not) and for the
right of establishment

Question course book:

Q2(1) : so they can use the concept of limited liability (which is a privilege – for quality,
transparency, legal certainty)

The legislator puts already at the beginning a strong control of what is a company and what
is not.  to protect third parties

Personal liability of the directors: at the end of existence of company, liquidation, after the
creditors are paid you have to consider how the directors behaved during the existence fo
the company (mid-stream control)  e.g. disclosure of annual account for directs –
transparency

Q2(2): legal certainty is important

Case study 1 :

- You can set up a company using art. 49 in conj with 54 TFEU – freedom of
establishment
- Limited liability is a very special characteristic of a company, that’s why we do
regulate the company to make sure the justice will be served. We don’t do it for
the partnership bc there is unlimited liability so for sure the justice will be
served.
- For public not for private yet (based on 12 directive art 2 – scope (art 1) directive
: only private companies based on the MS) MS can extend the scope of
applicability to public companies (requirement of minimum 7 shareholders for a
public company in FR)

Case study 2: Fr is the only one with the requirements of shareholders

For the rest of the countries there are no requirements and therefore they extend the
applicability of the directive (to public?)

UK entitles the directive to public companies

Case study 3:

Look slide picture