Creditor protection – a focal point of current developments

The Centros case: from Denmark to Delaware

In any future account of the history of European company law the Centros case will take a pride of place as one of those cases that deserve the epithet ‘seminal’. The case concerned a Danish couple who wanted to set up a business in Denmark, but did not want to use a Danish corporate vehicle. Instead they bought a shelf-company registered in England. When the Danish authorities refused to register their (single) place of business as the Danish branch office of the English company, the couple appealed successfully to the European Court of Justice. The Court accepted the argument that a company formed under the laws of one Member State with a view to carrying on its business exclusively in another Member State had a right to do so under the principle of freedom of establishment enshrined in Articles 43 and 48 of the EC Treaty.

The Centros decision came as a surprise to many lawyers in Germany, and for a short time it engendered an intense debate whether or not it would force them to abandon a doctrine of German domestic law known as the ‘theory of the real seat’. Its conformity with Community law had previously been widely assumed on the basis of an earlier decision by the European Court of Justice in The Queen v HM Treasury, ex parte Daily Mail and General Trust plc.