Judgment — ECLI:EU:C:1999:126
Date: 1999-03-09
Language of the case: Danish
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment
Concepts: General
Procedure: Reference for a preliminary ruling
Origin: Denmark

Summary of the Judgment 
Freedom of movement for persons — Freedom of establishment — Company formed in accor­
dance with the law of a Member State in which it has its registered office but in which it conducts 
no business — Establishment of a branch in another Member State — Registration refused — 
Not permissible — Member States free to adopt measures to combat fraud 
(EC Treaty, Arts 52 and 58) 
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SUMMARY — CASE C-212/97 
It is contrary to Articles 52 and 58 of the 
Treaty for a Member State to refuse to reg­
ister a branch of a company formed in accor­
dance with the law of another Member State 
in which it has its registered office but in 
which it conducts no business where the 
branch is intended to enable the company in 
question to carry on its entire business in the 
State in which that branch is to be created, 
while avoiding the need to form a company 
there, thus evading application of the rules 
governing the formation of companies which, 
in that State, are more restrictive as regards 
the paying up of a minimum share capital. 
Given that the right to form a company in 
accordance with the law of a Member State 
and to set up branches in other Member States 
is inherent in the exercise, in a single market, 
of the freedom of establishment guaranteed 
by the Treaty, the fact that a national of a 
Member State who wishes to set up a com­
pany chooses to form it in the Member State 
whose rules of company law seem to him the 
least restrictive and to set up branches in other 
Member States cannot, in itself, constitute an 
abuse of the right of establishment. 
That interpretation does not, however, pre­
vent the authorities of the Member State con­
cerned from adopting any appropriate mea­
sure for preventing or penalising fraud, either 
in relation to the company itself, if need be in 
cooperation with the Member State in which 
it was formed, or in relation to its members, 
where it has been established that they are in 
fact attempting, by means of the formation of 
a company, to evade their obligations towards 
private or public creditors established in the 
territory of the Member State concerned. 
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