Stibbe, the leading Benelux law firm, recently advised on innovative inbound cross-border company conversions that have been executed by way of a Dutch notarial deed at Stibbe's offices in Amsterdam. Through the conversions, the companies that were previously governed by the laws of another EU jurisdiction, are now turned into Dutch companies, without discontinuing them
Until recently, this route was assumed to be open only in a limited number of situations, mainly by means of the transfer of the effective management of a company among two countries that abide by the siège réel or real seat doctrine. This summer, the EU Court of Justice (“ECJ”) clarified the EU principles at stake in its judgment in the Vale case1, which built on the Cartesio case2. In the Vale case the ECJ held that EU law precludes national legislation which enables companies established under national law to convert, but does not allow, in general, companies governed by the law of another Member State to convert to companies governed by its national law.
Dutch law enables the conversion of a national company of one type into a national company of another. It does, however, not contain specific rules for cross-border conversion. Pursuant to the ECJ’s clarifications the Netherlands has to accept incoming cross-border conversions. Stibbe has followed the national conversion procedure (inter alia providing for a notarial deed of conversion) while at the same time observing the procedural requirements in the source country by transferring the registered office and principal place of business of the companies.
The possibility of cross-border migrations makes companies within the EU much more versatile. It enables them to change jurisdictions without having to liquidate, without creating a dual residency and without the necessity to re-execute all important contracts.