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Karsten Engsig Sørensen

Company names and company mobility in the internal market: How to balance the interests of the holders of name rights and the freedom of establishment?

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  • Department of Business Law
  • Centre for International Business Law (CIBL)
 

Ten years on from Centros, empirical studies tell us that corporate mobility within the EU's internal market has dramatically increased. Subsequent ECJ rulings confirm that the use of freedom of establishment as a means to enter new markets and circumvent national requirements is within the meaning of Community law irrespective of where the business activities are actually based.

The intensifying patterns of corporate movement means the public face more and more 'foreign-based' companies on their domestic markets, and the vast majority of these companies will be unfamiliar to them. When talking about companies with legal personality and limited liability, it is paramount that the legal identity of the company, i.e. its name and legal status, is transparent and revealed to all. A basic requirement is that the public, comprising traders, consumers and authorities, can read and understand the name in question. Confusing or misleading information will damage the public and cause inefficiencies in the market. Therefore, while the law and policy of company names within the internal market is not a new topic, the exponential growth of corporate branches brings the matter to the fore. A pressing legal issue is which names should be allowed and how this should be judged and dealt with.

There are two other points that make this area worthy of investigation at the moment. First, this part of company law is not regulated at EU level nor is there any direct ECJ precedent to draw on. Second, reflecting this is a matter for the Member States, we are seeing a tangible shift of approach by some national authorities and courts to the regulation of branch names. An increasingly inconsistent and unclear picture of law and practice is emerging in terms of company names, especially branch names. We believe this is not helped by a complex and intricate overlap of company names (and thus company law) with other legal regimes concerning names, which reflects upon the market interaction of company names with other powerful rights such as trade marks.

With these matters in mind, this analysis examines the current position as regards company names in the internal market. The critical aspects are to examine whether the company law sets of rules are the same and clear across the internal market, whether they offer a sufficient protection of company names and how they impact upon the freedom of establishment in the case of branches. Is it the case for instance, and should it be, that a company name previously accepted in another Member State (as a registered name for the purposes of incorporation) is sufficient in itself to be recognised as the same in another part of the EU territory-in a 'mutual recognition' kind of way? Or are there good grounds to argue against this approach, and what basis, if at all, there is to form a Community-based system? In dealing with these kinds of questions, the analysis also considers other overlapping sets of rules outside company law; specifically the rules for trade names and trade marks.  

The reason for looking at these other legal regimes is to gauge what impact they have in dealing with what we argue to be unacceptable 'gaps' in the regulatory system regarding branch names in particular. These gaps are created by the present application of company law and this influences us to refocus attention on the role of company law in resolving the branch-related problems we identify. In the end therefore, we discuss a series of possible 'solutions' grounded in company law. Though a complex situation, the suggestions put forward are an important kick-start to a debate on how to deal with what we perceive as a series of developing problems due to the fact that company law, at national level, seems to be moving away from operating as an effective, first instance regulator of company names within the EU.

Original languageEnglish
JournalEuropean Business Law Review
Pages (from-to)851-887
Number of pages37
ISSN0959-6941
Publication statusPublished - 2009

    Research areas

  • company names - company mobility - EU - branches - reform

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