Short answer
A company can rely on EU freedom of establishment when it is formed under the law of a Member State, has its registered office, central administration or principal place of business within the EU, and undertakes a genuine cross-border establishment operation involving another Member State. Articles 49 and 54 TFEU prohibit unjustified restrictions. They protect cross-border mergers and conversions, including a conversion that transfers only the registered office and changes the law governing the company while its real head office stays put.
But EU law does not give a company a free-standing right to remain governed by its original company law after breaking the connecting factor that law requires. A simple seat transfer that retains the original legal form therefore differs from a conversion into a destination-state form.
For eligible limited-liability companies, the current consolidated supplies harmonised procedures for cross-border conversions, mergers and divisions. National laws transposing the directive govern the filings and competent authorities. The process normally requires draft terms, disclosure, member approval, employee and creditor safeguards, and legality certificates. Authorities may stop an abusive, fraudulent or criminal operation, but choosing a Member State’s more favourable company law or moving only a registered office does not by itself prove abuse.
Which companies receive Treaty protection?
places qualifying companies in the freedom-of-establishment chapter:
“Companies or firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the Union shall, for the purposes of this Chapter, be treated in the same way as natural persons who are nationals of Member States.” —
Article 49 prohibits restrictions on establishment in another Member State and covers setting up and managing undertakings, agencies, branches and subsidiaries. The Treaty definition includes companies under civil or commercial law, cooperatives and other public- or private-law legal persons, except non-profit-making bodies.
The cross-border element matters. A purely domestic reorganisation does not become an Article 49 issue merely because shareholders live elsewhere, and this EU rule does not automatically cover third-country moves. The company must remain validly constituted under a Member State’s law. But , confirms that another Member State cannot generally apply its company law to management acts merely because the company conducts most of its activity there.
Moving a seat is not always the same as converting
The Court of Justice distinguishes two operations. First, a company may seek to move its seat while retaining its original legal form and governing law. In , the Grand Chamber held that, as EU law then stood, the Treaty did not prevent the incorporation state from refusing that arrangement where its company law required the connecting factor to remain there.
Second, a company may move and become a company governed by the destination Member State’s law while preserving legal personality. That cross-border conversion is protected if the company satisfies the destination law’s formation conditions. The departure state cannot insist on winding up or liquidation merely because the conversion is cross-border.
, confirmed that protection can apply even when the real head office does not move:
“freedom of establishment is applicable to the transfer of the registered office of a company formed in accordance with the law of one Member State to the territory of another Member State, for the purposes of its conversion … when there is no change in the location of the real head office of that company.” —
The omitted phrase requires conversion under the destination Member State’s conditions. The Treaty does not permit transfer onto another register while ignoring its legal forms and formation requirements.
The directive creates three structured mobility routes
Directive 2017/1132, as amended by , now gives eligible limited-liability companies a coordinated procedure through national transposition.
Cross-border conversion
Article 86b defines the operation as one in which a company:
“without being dissolved or wound up or going into liquidation, converts the legal form under which it is registered in a departure Member State into a legal form of the destination Member State … and transfers at least its registered office to the destination Member State, while retaining its legal personality”. —
The company must be an Annex II limited-liability type. On effectiveness, its assets, liabilities, contracts, rights and obligations continue in the converted company; members remain members unless they exercise exit rights; and existing employment relationships continue.
Cross-border merger
Articles 118–120 cover limited-liability companies where participants are governed by different Member State laws. Covered mergers transfer assets and liabilities to the resulting company without liquidating the transferring companies.
The Treaty supplied protection before the harmonised procedure existed. In , the Court rejected a general refusal to register a cross-border merger when equivalent domestic mergers could be registered:
“such a rule goes beyond what is necessary to protect those interests.” —
National authorities may still apply proportionate safeguards; they cannot make cross-border status an automatic ground of refusal.
Cross-border division
Articles 160a–160b cover full, partial and separation divisions between Member State legal systems. Recipient companies must be newly formed in the division. Transfers into existing recipients require separate analysis under national law and the Treaty.
The directive excludes certain collective-investment companies and companies already distributing assets in liquidation or subject to specified resolution tools. Member States may also exclude some companies in insolvency, preventive restructuring, other liquidation proceedings or crisis-prevention measures.
will introduce an EU Company Certificate, a digital EU power of attorney and exemptions from legalisation for documents including pre-operation certificates. Member States must transpose it by 31 July 2027 and apply the measures from 31 July 2028. Those future simplifications do not displace the procedures currently in force.
What procedure and protections apply?
The precise filing sequence comes from the relevant national transposition. Across the three routes, the directive’s architecture normally requires:
- detailed draft terms identifying the companies, destination form, exchange terms, timetable and creditor safeguards;
- advance disclosure and management reports explaining legal, economic, member and employee consequences;
- an independent expert report where required;
- general-meeting approval, with cash-compensation rights for eligible dissenting members;
- protection for pre-existing creditors and employee information, consultation and participation arrangements;
- scrutiny and a pre-conversion, pre-merger or pre-division certificate from each competent departure authority; and
- final destination-state scrutiny and coordinated registration through interconnected business registers.
Legal continuity does not erase tax, competition, insolvency, regulatory or labour-law obligations. Separate clearance or security for claims may still be required.
When can an authority refuse?
A restriction can be justified by overriding public-interest requirements—such as protecting creditors, minority members, employees or effective fiscal supervision—only if it is suitable and no broader than necessary. Blanket liquidation, nationality or cross-border exclusions are difficult to reconcile with that test.
The directive expressly requires refusal of the relevant pre-operation certificate where the operation is established to be abusive or fraudulent and aims to evade or circumvent EU or national law, or is for criminal purposes. Suspicion triggers a case-specific assessment; indicative factors cannot be treated in isolation.
That safeguard is not a general “company-law shopping” prohibition. Polbud, following , states:
“The mere fact that a company transfers its registered office from one Member State to another cannot be the basis for a general presumption of fraud”. —
An authority needs objective, transaction-specific evidence. Conversely, freedom of establishment does not immunise sham arrangements, criminal purposes or attempts to evade concrete legal obligations.
Conclusion
A qualifying EU company may use freedom of establishment for a cross-border conversion, merger or division and may convert without moving its real head office. It cannot necessarily retain its original governing law after losing that law’s connecting factor. Eligible companies must follow national procedures implementing Directive 2017/1132 and its safeguards. Authorities may address proven abuse proportionately, but cannot treat the cross-border choice itself as fraud.
Sources
This article provides general legal information, not advice for a specific matter. Laws, facts and procedural deadlines may change the result. Follow the linked primary sources and obtain local advice before acting.