Based on the VALE decision of the ECJ of 12 July 2012 (C 378/10), the higher regional court of Berlin (Kammergericht Berlin) has held that a French S.à.r.l. may relocate its legal seat to Germany by way of a conversion into the legal form of a German GmbH. The ECJ had ruled that national laws, which provide for a conversion into a domestic legal form only for domestic companies, but not for companies under the laws of other member states, violate the freedom of establishment under EU law (articles 49, 54 TFEU). Therefore, the Kammergericht concludes, the provisions of the German Reorganisation Act (UmwG), which enumerate the types of entities, which may change their legal form, need to be construed to include comparable entities under the laws of other member states, unless their national laws prohibit a conversion. A corresponding decision concerning a cross-border conversion of a Luxembourg S.á.r.l. was handed down by the higher regional court of Nuremberg on 19 June 2013 (12 W 520/13).

The Kammergericht has taken the view that in the case at issue the change of legal seat was to be effected in accordance with the provisions of the UmwG rather than those concerning a relocation of the legal seat of a European stock corporation under the SE Regulation. Although, in the courts opinion, the SE Regulation does, in principle, apply to a relocation of the legal seat across the border, its provisions are largely tailored to large enterprises and far stricter than those of the UmwG. Therefore, if these rules were applied in this case, the French S.à.r.l. would have been discriminated against a comparable German GmbH, which the court considers to be against the freedom of establishment under EU law.

For the sake of clarity the court pointed out that pursuant to the provisions of the UmwG, a conversion into a German legal entity requires compliance with the provisions governing the establishment of an entity of this type. If the respective requirements were not met, registration of the converted entity into the commercial register could not be effected.

The German text of the decision can be found here. If you are interested in further information on this topic, please do not hesitate to contact Christine Oppenhoff.