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2.3. Transfer of real seat into Real Seat Doctrine State a) General Principles On the other hand, most respondents agreed that, where a company (a “guest” company) established its real seat in a state (a “host” state) where the effect of its law of incorporation was inconsistent with local mandatory requirements, there was a case for permitting the law of incorporation to be overridden to the extent necessary to respect those requirements of the host state. We agree with this view, but, consistently with the bar on refusing recognition on such grounds, we believe that the general EU law principles on freedom of movement must be applied – i.e. any sanction inhibiting such freedom of movement should : -
be imposed only to support a requirement of legitimate general - Legitimate interest; general interest
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not be disproportionate;
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require no more than is necessary and appropriate to secure the - Minimum interest concerned; intervention be non-discriminatory as between companies formed in the host - Non-discrimistate and the company concerned; nation
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- Proportionality
be sufficiently transparent to inhibit to the minimum extent necessary the exercise in practice of the fundamental freedom of - Transparency establishment.
We believe that these are the general principles applicable to the imposition of local law inhibiting freedom of movement, consistent with the case law of the European Court of Justice28. Particularly close attention needs to be given to avoiding the application by the host state of domestic requirements which interfere with the internal governance of the company where external requirements are adequate measures of protection of the interest concerned – for example reporting requirements, provisions for external representation or other general obligations to protect creditors, such as wrongful trading duties. But such external requirements, while easier to justify as a less serious interference, still require to be justified against the general principles listed above.
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The law of a real seat "host" state should only be permitted to override the law of incorporation of a "guest" company, subject to the following conditions:
Where external requirements of the "host" state are sufficient, interference with internal governance of the "guest" company is inadequate
See for example case C-212/97, Centros; cases C-367/98, C-403/99 and C-503/99 (the “Golden Share cases); and the opinion of Advocate General Colomer in Case C-208/00, Uberseering v Nordic Construction..