By Dr Robert Lewandowski, attorney at law (radca prawny) at Derra, Meyer & Partners in Warsaw
On 25th October 2017, the Court of Justice of European Union (Judgment in Case C- 106/16) issued a decision regarding the relocating of the registered office of a company within European Union boarders. Polbud sp. z o.o. was a private limited company incorporated under Polish law (“Company” or “Polbud” ). In September 2011, its shareholders passed a resolution transferring the registered office of Polbud from Poland to Luxemburg without co-transferring the Company’s assets and businesses which remained in Poland . As a consequence of this relocating, Polbud was later no longer called “Polbud” but renamed as “Consoil Geotechnik” and then registered under Luxemburg law. On the basis of the shareholders resolution of Polbud on relocation, the liquidation procedure was initiated at the Polish commercial register. However, the Polish commercial register refused to strike off Polbud from the register due to the departure to Luxemburg insisting on submission of further papers and declarations to complete the winding up of the company. Polbud brought an action against this decision and the matter was finally decided by judges from the Polish Supreme Court. The question arises as to whether freedom of establishment is applicable to the transfer only of the registered office of a company incorporated under the law of one Member State to another Member State while the company head (main) business remains in the previous state. The Court of Justice of the European Union stated in its judgment that the freedom of establishment includes also the right of a company to convert itself into a company in another Member State and the previous Member State cannot prevent this cross boarder relocation. The Polish legislation on additional liquidation measures constitutes a restriction on the freedom of establishment and cannot impose further obstacles in this respect.
The judgment of the Court of Justice of European Union should be followed by Polish courts and the Polish legislator should tailor Polish law to lift restrictions and burdens currently encumbering companies which restrict their freedom of establishment and freedom of movement within EU borders.
