What and where is a company's ‘centre of main interest’ – its COMI – and why should you care? This is not an esoteric question but a live issue in determining which nation's courts and laws deal with international insolvency issues including administration and liquidation. The concept of a COMI and its interpretation has been around for some time, but what is perhaps less known is that there is some control over the location of a COMI, and companies are able to think defensively should insolvency issues arise, as certain jurisdictions may have advantages that others do not.

The starting point is Council Regulation 1346-2000-EC on Insolvency Proceedings. This dry, but fundamental, piece of legislation appears to have passed through the EU legislative process on the nod simply because to delay it further would mean that it would never go through. This Regulation deals with what you may think is the darker side of free movement of capital throughout the EU. Insolvency issues affecting mutiple jurisdictions are now commonplace as companies' (and individuals) affairs straddle many countries. Each country in which a company operates has a variety of practices and substantive laws (some of which conflict) and the Regulation has sought to achieve some degree of harmony.

The principal tenet of the Regulation is that the insolvency law of the nation where a company has its COMI should prevail. The Regulation's preamble (at sub-paragraph 12) boldly and clearly states ‘this Regulation enables the main insolvency proceedings to be opened in a member state where the debtor has the centre of his main interest’. This is amplified in sub-paragraph 13 where the COMI ‘correspond[s] to the place where the debtor conducts the administration of his interests on a regular basis and, therefore, is ascertainable by third parties’. The main issues here are (1) where a company conducts its administration and importantly (2) is ascertainable by third parties. This precise nature of ascertainably has exercised many courts. However, in general what the draftsman has sought to identify is the beating heart of a company and in many cases this is a simple and easy task. However, where it is not so easily determined is an area which can possibly be used to advantage and in certain circumstances that heart can be transplanted.

To do so, we must look at the substantive issues in ascertaining the company's COMI. These are found at Article 3.1 of the Regulation. Here the nation where the registered office is located is presumed to be its COMI in the absence of proof to the contrary. Accordingly, in a simple example an English registered company would have its COMI in England, but this is not the final word on the subject. The English Courts have shown themselves more than prepared to overturn that presumption. In one case an English registered company with a factory in Finland (where most of its business took place) was found to have its COMI in Finland where the factory was located. Hence any main insolvency proceedings were not to be commenced in England but must be commenced in Finland instead.

Finally, it is important to note that the COMI is the company's COMI at the time a decision is made by the Court although the Court will be alive to sham or impermanent changes. Some useful guidance on this point and the movement of COMIs generally can be found in Shierson v Vlieland-Boddy [2005] EWLA.

Once insolvency proceedings are opened and the COMI has been established in that nation, Article 4 deals with all the matters which are dealt with under the law in which those proceedings have been opened (wherever they are in Europe or not). There are certain exceptions to this, such as rights in rem, set off, reservation of title, immovable property financial markets, employment, registerable interests, community trademarks and such like. Advice from foreign lawyers on these issues will be necessary.

Once an Order has been made by one Court, recognition of that insolvency Order is automatic upon registration throughout all other member states, pursuant to Article 16. Secondary insolvency proceedings may be taken out in other member states, but the original and principal proceedings remain where it commenced.

In a case this year before Mr Justice Blackburn, on an application for an Administration Order of a French registered company in England, it was successfully argued that whilst the company's original COMI had been in France, due to a number of factors, the company had deliberately chosen to move its COMI to England some six months before the administration took place.

Whilst each matter would rest on its facts, in this particular case a number of factors assisted this argument. First, its principal shareholder and director was located in England (although this by itself had previously been held not to be definitive in establishing a COMI). Second, further conscious steps were taken to transfer the COMI. This entailed the physical and spiritual transfer of its head office, administrative headquarters, records and all its decision making processes to England. One issue encountered was how to demonstrate that the COMI in England was ascertainable by a third party when its registered office remained in France. A foreign company branch registration – ‘F’ registration – was considered but discounted on the grounds that this would identify it as a branch office rather than a main office. But other steps, such as the address on the website and on the stationery were changed. In all a variety of conscious decisions were taken (such as the moving of bank accounts) to establish a genuine and permanent move.

As it was, under French law, all of the company's business interests in France (which did not include real property) were leased to a third party (under an arrangement called a ‘location gérance’) such that its only business interest was the receipt of the rents from this leasing arrangement. Those rents could be received anywhere in the world.

Therefore, with a determined mind (and little real property) it is open to move the COMI. A word of caution: whilst the COMI may be moved, the Courts are very alive to ensure that movements must be real (see Shierson where it was unsuccessfully argued that there was a move and which also demonstrated that the country of the parent was not enough to establish COMI).

One practical issue is how Companies House in England recognises an administration or liquidation of a foreign company. Companies House registers such Orders in a system called the Éclair System. The Éclair System showed (some months ago) there were approximately 60 foreign companies which had been placed into insolvency, liquidation or administration in England, although a large majority of these were companies in the same group. The Éclair system therefore allows Liquidators and Administrators to lodge documents at an English Company Registry, which is technically searchable (on request). Arrangements need also to be made with the Registry of the nation in which the registered office is located to lodge those papers


The EU Regulation provides a coherent framework for international insolvency issues and in particular how to deal with the insolvency of a foreign company in England (or elsewhere in Europe). The key issue is the location of the COMI. It is possible to move the COMI of a company to take advantage of the various insolvency regimes across Europe but care must be taken to demonstrate a real and genuine relocation which is not a mere sham. In one way the Regulation may have enhanced the opportunity to ‘forum shop’ within Europe rather than diminish it as was its stated purpose.