September 10, 2013

On the basis of the Vale-case, case C-378/10 dated 12 July 2012, the European Court of Justice ruled, as a result of the freedom of establishment, the possibility of a cross-border conversion.

This provides a possibility for a company to convert itself into a company governed by the laws of any EU member state. Practically, a company incorporated in one EU member state can relocate to any other member state and at the moment of the relocation the articles of association of this company will be amended into the form appropriate for the recipient member state .

The VALE-decision drastically changed the playing field for cross-border mergers when it comes to relocation of companies within the European Union. Migration into, and out of, the EU has also been extended using an intermediate country, such as Luxembourg. The latter accommodates conversions from and to non-EU member states into a Luxembourg company and then due to VALE case – to a form of the other EU member. Such conversion is only possible provided the legislation of non-EU country permits a cross-border conversion.

The turmoil in Cyprus, as a result of the financial crises, has boosted a demand for cross border conversion of Cyprus ltds into Dutch B.V.’s. The first cross border conversions towards and out of the Netherlands are now being finalized.

If you decide to initiate a cross-border conversion now, you can profit from the experience built up by the parties involved in these cases.