CELEX: 62001CJ0167
Language: en
Date: 2003-09-30 00:00:00
Title: Judgment of the Court of 30 September 2003. # Kamer van Koophandel en Fabrieken voor Amsterdam v Inspire Art Ltd. # Reference for a preliminary ruling: Kantongerecht te Amsterdam - Netherlands. # Articles 43 EC, 46 EC and 48 EC - Company formed in one Member State and carrying on its activities in another Member State - Application of the company law of the Member State of establishment intended to protect the interests of others. # Case C-167/01.

Case C-167/01 Kamer van Koophandel en Fabrieken voor AmsterdamvInspire Art Ltd(Reference for a preliminary ruling from the Kantongerecht te Amsterdam)
         
            «(Articles 43 EC, 46 EC and 48 EC – Company formed in one Member State and carrying on its activities in another Member State – Application of the company law of the Member State of establishment intended to protect the interests of others)»
            
               
                  Opinion of Advocate General Alber delivered on 30 January 2003 
                     
                
               
            
                   
               
               
            
               
                  Judgment of the Court, 30 September 2003  
                     
                
               
            
                   
               
               
            
            Summary of the Judgment
         
         
                  1..
                  Member States – Obligations – Obligation to penalise infringements of Community law – Scope  (Art. 10 EC) 
         
                  2..
                  Freedom of movement for persons – Freedom of establishment – Companies – Directive 89/666 – Disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of
                     another State – Mandatory and optional disclosure requirements – National legislation introducing disclosure requirements not provided for by the directive – Not permissible  
                  (Council Directive 89/666, Art. 2) 
         
                  3..
                  Freedom of movement for persons – Freedom of establishment – Company formed in accordance 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 subjected to conditions relating to minimum capital and directors' liability – Not permissible – Possibility of adoption by Member States of measures to combat fraud – Limits   
                  (Arts 43 EC and 48 EC) 
         
         1.
          Where a Community regulation does not specifically provide any penalty for an infringement or refers for that purpose to national
         laws, regulations and administrative provisions, Article 10 EC requires the Member States to take all measures necessary to
         guarantee the application and effectiveness of Community law. For that purpose, while the choice of penalties remains within their discretion, the Member States must ensure in particular
         that infringements of Community law are penalised in conditions, both procedural and substantive, which are analogous to those
         applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective,
         proportionate and dissuasive. see para. 62
         
         2.
          It is contrary to Article 2 of the Eleventh Directive 89/666 concerning disclosure requirements in respect of branches opened
         in a Member State by certain types of company governed by the law of another State, which contains a list of the information
         which must be disclosed in the Member State in which the branch is established and a list of optional measures imposing disclosure
         requirements, for national legislation to impose on the branch of a company formed in accordance with the laws of another
         Member State disclosure obligations not provided for by that directive, such as recording in the commercial register the fact
         that the company is formally foreign, recording in the business register of the host Member State the date of first registration
         in the foreign business register and information relating to sole members, the compulsory filing of an auditor's certificate
         to the effect that the company satisfies the conditions as to minimum capital, subscribed capital and paid-up share capital
         or mention of the company's status of a formally foreign company on all documents it produces. Without affecting the information obligations imposed on branches under social or tax law, or in the field of statistics,
         harmonisation of the disclosure to be made by branches, as brought about by the Eleventh Directive, is exhausted. see paras 65, 69-70, 72, 143, operative part 1
         
         3.
          It is contrary to Articles 43 EC and 48 EC for national legislation to impose on the exercise of freedom of secondary establishment
         in that State by a company formed in accordance with the law of another Member State certain conditions provided for in domestic
         law in respect of company formation relating to minimum capital and directors' liability. The reasons for which the company
         was formed in that other Member State, and the fact that it carries on its activities exclusively or almost exclusively in
         the Member State of establishment, do not deprive it of the right to invoke the freedom of establishment guaranteed by the
         Treaty, save where the existence of an abuse is established on a case-by-case basis. A Member State is certainly entitled to take measures designed to prevent certain of its nationals from attempting, under
         cover of the rights created by the Treaty, improperly to circumvent their national legislation or to prevent individuals from
         improperly or fraudulently taking advantage of provisions of Community law. However, the provisions of the Treaty on freedom of establishment are intended specifically to enable companies formed in
         accordance with the law of a Member State and having their registered office, central administration or principal place of
         business within the Community to pursue activities in other Member States through an agency, branch or subsidiary. That being so, the fact that a national of a Member State who wishes to set up a company can choose to do so in the Member
         State the company-law rules of which seem to him the least restrictive and then 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. In addition, the fact that a company does not conduct any business in the Member State in which it has its registered office
         and pursues its activities only or principally in the Member State where its branch is established is not sufficient to prove
         the existence of abuse or fraudulent conduct which would entitle the latter Member State to deny that company the benefit
         of the provisions of Community law relating to the right of establishment. see paras 105, 136-139, 143, operative part 2
      

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
            
            JUDGMENT OF THE COURT30 September 2003  (1)
         
         
            
         
               ((Articles 43 EC, 46 EC and 48 EC – Company formed in one Member State and carrying on its activities in another Member State – Application of the company law of the Member State of establishment intended to protect the interests of others))
               
             In Case C-167/01, 
             REFERENCE to the Court under Article 234 EC by the Kantongerecht te Amsterdam (Netherlands) for a preliminary ruling in the
            proceedings pending before that court between
            
            
            
            Kamer van Koophandel en Fabrieken voor Amsterdam
            
            and
            
            Inspire Art Ltd,
            
             on the interpretation of Articles 43 EC, 46 EC and 48 EC,
            
            THE COURT,,
            
             composed of: G.C. Rodríguez Iglesias, President, J.-P. Puissochet, M. Wathelet (Rapporteur), R. Schintgen and C.W.A. Timmermans (Presidents of Chambers), C. Gulmann, D.A.O. Edward, A. La Pergola, P. Jann, V. Skouris, F. Macken, N. Colneric, S. von Bahr, J.N. Cunha Rodrigues and A. Rosas, Judges, 
            
             Advocate General: S. Alber, Registrar: M.-F. Contet, Principal Administrator, 
            
            
            after considering the written observations submitted on behalf of:
               
               
               ─
                the Kamer van Koophandel en Fabrieken voor Amsterdam, by C.J.J.C. van Nispen, advocaat, 
               
               
               ─
                Inspire Art Ltd, by M.E. van Wissen and G. van der Wal, advocaten, 
               
               
               ─
                the Netherlands Government. by H.G. Sevenster, acting as Agent, 
               
               
               ─
                the German Government, by B. Muttelsee-Schön and A. Dittrich, acting as Agents, 
               
               
               ─
                the Italian Government, by I.M. Braguglia, acting as Agent, and by M. Fiorilli, Avvocato dello Stato, 
               
               
               ─
                the Austrian Government, by H. Dossi, acting as Agent, 
               
               
               ─
                the United Kingdom Government, by R. Magrill, acting as Agent, and J. Stratford, Barrister, 
               
               
               ─
                the Commission of the European Communities, by C. Schmidt and C. van der Hauwaert, acting as Agents, 
               
               
            
            
            having regard to the Report for the Hearing,
            
            after hearing the oral observations of the Kamer van Koophandel en Fabrieken voor Amsterdam, represented by R. Hermans and
               E. Pijnacker Hordijk, advocaten, of Inspire Art Ltd, represented by G. van der Wal, of the Netherlands Government, represented
               by J.G.M. van Bakel, acting as Agent, of the German Government, represented by A. Dittrich, of the United Kingdom Government,
               represented by J. Stratford, and of the Commission, represented by C. Schmidt and H. van Lier, acting as Agent, at the hearing
               on 26 November 2002,
            
            
            after hearing the Opinion of the Advocate General at the sitting on 30 January 2003,
         gives the following
         
         
         Judgment
         1
            
          By order of 5 February 2001, received at the Court on 19 April 2001, the Kantongerecht te Amsterdam (Amsterdam Cantonal Court)
         referred to the Court for a preliminary ruling under Article 234 EC two questions on the interpretation of Articles 43 EC,
         46 EC and 48 EC. 
         
         
         2
            
          Those questions were raised in proceedings between the Kamer van Koophandel en Fabrieken voor Amsterdam (Amsterdam Chamber
         of Commerce and Industry), Netherlands (
         the Chamber of Commerce) and Inspire Art Ltd, a company governed by the law of England and Wales (
         Inspire Art), concerning the obligation imposed on Inspire Art's branch in the Netherlands to record, with its registration in the Dutch
         commercial register, its description as a  
         formeel buitenlandse vennootschap (formally foreign company) and to use that description in its business dealings, such obligations being imposed by the Wet
         op de Formeel Buitenlandse Vennootschappen (Law on Formally Foreign Companies) of 17 December 1997 (
         Staatsblad 1997 No 697,  
         the WFBV). 
         
            
               I ─ The legal framework
             The relevant provisions of Community law
         
         
         3
            
          The first paragraph of Article 43 EC provides: Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member
         State in the territory of another Member State shall be prohibited.  Such prohibition shall also apply to restrictions on
         the setting-up of agencies, branches or subsidiaries by nationals of any Member State established in the territory of any
         Member State.
         
         
         4
            
          Article 48 EC extends entitlement to freedom of establishment, subject to the same conditions as those laid down for individuals
         who are nationals of the Member States, to  
         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 Community. 
         
         
         5
            
          Article 46 EC permits the Member States to restrict the freedom of establishment of foreign nationals by adopting  
         provisions laid down by law, regulation or administrative action, in so far as such provisions are justified  
         on grounds of public policy, public security or public health. 
         
         
         6
            
          Article 44(2)(g) EC empowers the Council of the European Union, for the purpose of giving effect to freedom of establishment,
         to coordinate  
         to the necessary extent the safeguards which, for the protection of the interests of members and others, are required by Member
         States of companies or firms within the meaning of the second paragraph of Article 48 of the EC Treaty with a view to making
         such safeguards equivalent throughout the Community.
         
         
         7
            
          Various directives have in that manner been adopted by the Council on that basis (
         company-law directives) and, in particular, the following directives referred to in the dispute in the main proceedings. 
         
         
         8
            
          The First Council Directive 68/151/EEC of 9 March 1968 on coordination of safeguards which, for the protection of the interests
         of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58
         of the Treaty, with a view to making such safeguards equivalent throughout the Community (OJ, English Special Edition 1968
         (I), p. 41,  
         the First Directive), applies to companies with share capital.  It provides for three measures calculated to protect the interests of other persons
         dealing with those companies: the opening of a file containing certain obligatory information for each company registered
         in the relevant commercial register, harmonisation of the national rules on the validity and enforceability of obligations
         entered into in the name of the company (including companies being formed) and the drawing up of a list exhaustively setting
         out the cases entailing the nullity of a company. 
         
         
         9
            
          The Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the
         interests of members and others, are required by Member States of companies within the meaning of the second paragraph of
         Article 58 of the Treaty, with regard to the formation of public limited liability companies and the maintenance and alteration
         of their capital, with a view to making such safeguards equivalent (OJ 1977 L 26, p. 1,  
         the Second Directive), specifies the information which must mandatorily be given in the statutes or the instrument of incorporation of public
         limited companies and the minimum amount of share capital required for such companies and it provides for harmonised rules
         concerning contributions to assets, paying up of shares, the nominal value of shares and the distribution of dividends to
         shareholders. 
         
         
         10
            
          The Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of
         certain types of companies (OJ 1978 L 222, p. 11,  
         the Fourth Directive) applies to companies limited by shares. It harmonises national provisions relating to the drawing up of the annual accounts
         of undertakings, their content, structure and publication. 
         
         
         11
            
          The Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts
         (OJ 1983 L 193, p. 1,  
         the Seventh Directive) pursues the same objective as the Fourth Directive with regard to the drawing up of consolidated accounts. 
         
         
         12
            
          The Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened
         in a Member State by certain types of company governed by the law of another State (OJ 1989 L 395, p. 36,  
         the Eleventh Directive) concerns the branches of partnerships and companies with share capital. 
         
         
         13
            
          According to the third recital in the preamble to the Eleventh Directive, that act was adopted in consideration of the fact
         that  
         the opening of a branch, like the creation of a subsidiary, is one of the possibilities currently open to companies in the
         exercise of their right of establishment in another Member State. 
         
         
         14
            
          The fourth recital in the preamble to that directive recognises that  
         in respect of branches the lack of coordination, in particular concerning disclosure, gives rise to some disparities, in the
         protection of shareholders and third parties, between companies which operate in other Member States by opening branches and
         those which operate there by creating subsidiaries. 
         
         
         15
            
          According to the fifth recital in the preamble to that directive  
         in this field the differences in the laws of the Member States may interfere with the exercise of the right of establishment
         ... [and] it is therefore necessary to eliminate such differences in order to safeguard, inter alia, the exercise of that
         right. 
         
         
         16
            
          The 12th recital in the preamble states that the Eleventh Directive in no way affects the disclosure requirements for branches
         under other provisions of, for example, employment law on the workers' right to information and tax law, or for statistical
         purposes. 
         
         
         17
            
          Article 2(1) of the Eleventh Directive provides a list of the information which must be disclosed in the Member State in which
         the branch is established, namely: 
         
         (a)
          the address of the branch; 
         
         
         (b)
          the activities of the branch; 
         
         
         (c)
          the register in which the company file mentioned in Article 3 of Council Directive 68/151/EEC is kept, together with the registration
         number in that register; 
         
         
         (d)
          the name and legal form of the company and the name of the branch if that is different from the name of the company; 
         
         
         (e)
          the appointment, termination of office and particulars of the persons who are authorised to represent the company in dealings
         with third parties and in legal proceedings; 
         
         
         
               ─
                   as a company organ constituted pursuant to law or as members of any such organ, in accordance with the disclosure by the company
                  as provided for in Article 2(1)(d) of Directive 68/151/EEC, 
                as a company organ constituted pursuant to law or as members of any such organ, in accordance with the disclosure by the company
         as provided for in Article 2(1)(d) of Directive 68/151/EEC, 
         
         
         
         
               ─
                   as permanent representatives of the company for the activities of the branch, with an indication of the extent of their powers;
                  
                as permanent representatives of the company for the activities of the branch, with an indication of the extent of their powers;
         
         
         
         
         (f)
          the winding-up of the company, the appointment of liquidators, particulars concerning them and their powers and the termination
         of the liquidation in accordance with disclosure by the company as provided for in Article 2(1)(h), (j) and (k) of Directive
         68/151/EEC, 
         
         
         
         ─
             insolvency proceedings, arrangements, compositions, or any analogous proceedings to which the company is subject; 
          insolvency proceedings, arrangements, compositions, or any analogous proceedings to which the company is subject; 
         
         
         (g)
          the accounting documents in accordance with Article 3; 
         
         
         (h)
          the closure of the branch.
         
         
         
         18
            
          Furthermore, Article 2(2) of the Eleventh Directive permits the Member State in which the branch has been opened to provide
         for additional disclosure requirements concerning the following: 
         
         (a)
          the signature of the persons referred to in paragraph 1(e) and (f) of this Article; 
         
         
         (b)
          the instruments of constitution and the memorandum and articles of association if they are contained in a separate instrument
         in accordance with Article 2(1)(a), (b) and (c) of Directive 68/151/EEC, together with amendments to those documents; 
         
         
         (c)
          an attestation from the register referred to in paragraph 1(c) of this Article relating to the existence of the company; 
         
         
         (d)
          an indication of the securities on the company's property situated in that Member State, provided such disclosure relates
         to the validity of those securities.
         
         
         
         19
            
          Article 4 of the Eleventh Directive provides that the Member State in which the branch has been opened may stipulate that
         another official language of the Community must be used and that the translation of the documents published must be certified,
         in particular in respect of the publication referred to in Article 2(2)(b) of that directive. 
         
         
         20
            
          Article 6 of the Eleventh Directive provides that the Member States are to prescribe that letters and order forms used by
         a branch are to state, in addition to the information prescribed by Article 4 of the First Directive, the register in which
         the file in respect of the branch is kept together with the number of the branch in that register. 
         
         
         21
            
          Finally, Article 12 of the Eleventh Directive requires the Member States to provide for appropriate penalties for failure
         to comply with the disclosure requirements laid down by that directive in respect of branches in the host State. 
          The relevant provisions of national law
         
         
         22
            
          Article 1 of the WFBV defines a  
         formally foreign company as  
         a capital company formed under laws other than those of the Netherlands and having legal personality, which carries on its
         activities entirely or almost entirely in the Netherlands and also does not have any real connection with the State within
         which the law under which the company was formed applies .... 
         
         
         23
            
          Articles 2 to 5 of the WFBV impose on formally foreign companies various obligations concerning the company's registration
         in the commercial register, an indication of that status in all the documents produced by it, the minimum share capital and
         the drawing-up, production and publication of the annual documents. The WFBV also provides for penalties in case of non-compliance
         with those provisions. 
         
         
         24
            
          In particular, Article 2 of the WFBV requires a company falling within the definition of a formally foreign company to be
         registered as such in the commercial register of the host State.  An authentic copy in Dutch, French, German or English, or
         a copy certified by a director, of the instrument constituting the company must also be filed in the commercial register of
         the host State, and a copy of the memorandum and articles of association if they are contained in a separate instrument. 
         The date of the first registration of that company, the national register in which and the number under which it is registered
         must also appear in the commercial register and, in the case of companies with a single member, certain information concerning
         that sole shareholder. 
         
         
         25
            
          Article 4(4) provides for directors to be jointly and severally liable with the company for legal acts carried out in the
         name of the company during their directorship until the requirement of registration in the commercial register has been fulfilled.
         
         
         
         26
            
          Pursuant to Article 3 of the WFBV, all documents and notices in which a formally foreign company appears or which it produces,
         except telegrams and advertisements, must state the company's full name, legal form, registered office and chief place of
         business, and the registration number, the date of first registration and the register in which it is required to be registered
         under the legislation applicable to it.  That article also requires it to be indicated that the company is formally foreign
         and prohibits the making of statements in documents or publications which give the false impression that the undertaking belongs
         to a Netherlands legal person. 
         
         
         27
            
          Pursuant to Article 4(1) of the WFBV, the subscribed capital of a formally foreign company must be at least equal to the minimum
         amount required of Netherlands limited companies by Article 2:178 of the Burgerlijke Wetboek (Netherlands Civil Code,  
         the BW), which was EUR 18 000 on 1 September 2000 (
         Staatsblad 2000, N 322).  The paid-up share capital must be at least equal to the minimum capital (Article 4(2) of the WFBV, referring
         back to Article 2:178 of the BW).  In order to ensure that formally foreign companies fulfil those conditions, an auditor's
         certificate must be filed in the commercial register (Article 4(3) of the WFBV). 
         
         
         28
            
          Until the conditions relating to capital and paid-up share capital have been satisfied, the directors are jointly and severally
         liable with the company for all legal acts carried out during their directorship which are binding on the company.  The directors
         of a formally foreign company are likewise jointly and severally responsible for the company's acts if the capital subscribed
         and paid up falls below the minimum required, having originally satisfied the minimum capital requirement. The directors'
         joint and several liability lasts only so long as the company's status is that of a formally foreign company (Article 4(4)
         of the WFBV). 
         
         
         29
            
          Nevertheless, Article 4(5) of the WFBV states that the minimum capital provisions do not apply to a company governed by the
         law of a Member State or of a Member State of the European Economic Area (
         the E.E.A.) to which the Second Directive is applicable. 
         
         
         30
            
          Article 5(1) and (2) of the WFBV requires the directors of formally foreign companies to keep accounts and hold them for seven
         years.  Directors must produce annual accounts and an annual report.  Those documents must be published by being lodged in
         the commercial register and must satisfy the conditions laid down in Title 9 of Book 2 of the BW, which makes it possible
         to be sure that they are consistent with the annual documents produced by Netherlands companies. 
         
         
         31
            
          Directors are additionally bound to lodge in the commercial register before 1 April each year proof of registration in the
         register determined by the law applicable to the company (Article 5(4) of the WFBV).  For the application of the WFBV persons
         responsible for the day-to-day management of the company are treated in the same way as directors, in accordance with Article
         7 of that law. 
         
         
         32
            
          Articles 2:249 and 2:260 of the BW are applicable by analogy to formally foreign companies.  Those articles provide for the
         joint and several liability of directors and auditors for damage caused to others by the publication of misleading annual
         documents or interim figures. 
         
         
         33
            
          Article 5(3) of the WFBV provides, however, that the obligations under Article 5(1) and (2) of the WFBV relating to accounts
         and annual documents are not to apply to companies governed by the law of a Member State or by the law of a Member State of
         the E.E.A. and falling within the ambit of the Fourth and/or the Seventh Directive. 
         II ─ The dispute in the main proceedings and the questions referred for a preliminary ruling
         
         34
            
          Inspire Art was formed on 28 July 2000 in the legal form of a private company limited by shares under the law of England and
         Wales and it has its registered office at Folkestone (United Kingdom).  Its sole director, whose domicile is in The Hague
         (Netherlands), is authorised to act alone and independently in the name of the company. The company, which carries on activity
         under the business name  
         Inspire Art Ltd in the sphere of dealing in  
         objets d'art, began trading on 17 August 2000 and has a branch in Amsterdam. 
         
         
         35
            
          Inspire Art is registered in the commercial register of the Chamber of Commerce without any indication of the fact that it
         is a formally foreign company within the meaning of Article 1 of the WFBV. 
         
         
         36
            
          Taking the view that that indication was mandatory on the ground that Inspire Art traded exclusively in the Netherlands, the
         Chamber of Commerce applied to the Kantongerecht te Amsterdam on 30 October 2000 for an order that there should be added to
         that company's registration in the commercial register the statement that it is a formally foreign company, in accordance
         with Article 1 of the WFBV, which would entail other obligations laid down by law, set out in paragraphs 22 to 33 above. 
         
         
         37
            
          Inspire Art denies that its registration is incomplete, primarily because the company does not meet the conditions set out
         in Article 1 of the WFBV.  As a secondary point, if the Kantongerecht were to decide that it met those conditions, it maintained
         that the WFBV was contrary to Community law, and to Articles 43 EC and 48 EC in particular. 
         
         
         38
            
          In its order of 5 February 2001 the Kantongerecht held that Inspire Art was a formally foreign company within the meaning
         of Article 1 of the WFBV. 
         
         
         39
            
          As regards the compatibility of the WFBV with Community law, it decided to stay proceedings and refer the following questions
         to the Court of Justice for a preliminary ruling: 
         
         1.
          Are Articles 43 EC and 48 EC to be interpreted as precluding the Netherlands, pursuant to the Wet op de formeel buitenlandse
         vennootschappen of 17 December 1997, from attaching additional conditions, such as those laid down in Articles 2 to 5 of that
         law, to the establishment in the Netherlands of a branch of a company which has been set up in the United Kingdom with the
         sole aim of securing the advantages which that offers compared to incorporation under Netherlands law, given that Netherlands
         law imposes stricter rules than those applying in the United Kingdom with regard to the setting-up of companies and payment
         for shares, and given that the Netherlands law infers that aim from the fact that the company carries on its activities entirely
         or almost entirely in the Netherlands and, furthermore, does not have any real connection with the State in which the law
         under which it was formed applies? 
         
         
         2.
          If, on a proper construction of those articles, it is held that the provisions of the Wet op de formeel buitenlandse vennootschappen
         are incompatible with them, must Article 46 EC be interpreted as meaning that the said Articles 43 EC and 48 EC do not affect
         the applicability of the Netherlands rules laid down in that law, on the ground that the provisions in question are justified
         for the reasons stated by the Netherlands legislature?
         
         III ─ Preliminary observations
         
         40
            
          The Chamber of Commerce, the Netherlands Government and the Commission of the European Communities are of the view that the
         questions were too broadly framed by the national court.  Since the dispute in the main proceedings concerned only the registration
         of a company in the commercial register, the Court must confine its analysis exclusively to the provisions of national law
         relating to that point. 
         
         
         41
            
          Consequently they suggest that the Court should exclude from consideration Articles 3 and 6 of the WFBV entirely, and also
         various parts of Articles 2, 4 and 5 of that law (more specifically the end of Article 2(1), Article 2(2), Article 4(1), (2),
         (4) and (5), and Article 5(1) and (2) of that law). 
         
         
         42
            
          In this connection, settled case-law makes it clear that the procedure provided for by Article 234 EC is an instrument for
         cooperation between the Court of Justice and the national courts (see, inter alia, Case C-343/90  
         Lourenço Dias [1992] ECR I-4673, paragraph 14). 
         
         
         43
            
          In the context of that cooperation, the national court before which the dispute has been brought, which alone has direct knowledge
         of the facts of the case in the main proceedings and must assume responsibility for the subsequent judicial decision, is in
         the best position to determine, in the light of the particular circumstances of the case, both the need for a preliminary
         ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court (
         Lourenço Dias, cited above, paragraph 15, and Case C-390/99  
         Canal Satélite Digital [2002] ECR I-607, paragraph 18). 
         
         
         44
            
          Consequently, where the question submitted by the national court concerns the interpretation of Community law, the Court of
         Justice is, in principle, bound to give a ruling (
         Lourenço Dias, paragraph 16; Case C-415/93  
         Bosman [1995] ECR I-4921, paragraph 59; Case C-379/98  
         PreussenElektra [2001] ECR I-2099, paragraph 38, and  
         Canal Satélite Digital, cited above, paragraph 18). 
         
         
         45
            
          It is nevertheless equally settled case-law that the Court considers that it may, if need be, examine the circumstances in
         which the case was referred to it by the national court, in order to assess whether it has jurisdiction (Case 244/80  
         Foglia [1981] ECR 3045, paragraph 21, and  
         Canal Satélite Digital, paragraph 19).  The spirit of cooperation which must prevail in preliminary ruling proceedings requires the national court
         for its part to have regard to the function entrusted to the Court of Justice, which is to contribute to the administration
         of justice in the Member States and not to give opinions on general or hypothetical questions (see,  
         inter alia,  
         Foglia, cited above, paragraphs 18 and 20;  
         Lourenço Dias, paragraph 17;  
         Bosman, cited above, paragraph 60, and Case C-451/99  
         Cura Anlagen [2002] ECR I-3193, paragraph 26). 
         
         
         46
            
          Moreover, in order to enable the Court to give a useful interpretation of Community law, it is essential for the national
         court to explain why it considers that an answer to its questions is necessary for resolving the dispute (see, inter alia,
          
         Foglia, paragraph 17). 
         
         
         47
            
          With that information in its possession, the Court will then be in a position to ascertain whether the interpretation of Community
         law which is sought is related to the actual nature and subject-matter of the main proceedings.  If it should appear that
         the question raised is manifestly irrelevant for the purposes of deciding the case, the Court must declare that there is no
         need to proceed to judgment (
         Lourenço Dias, paragraph 20). 
         
         
         48
            
          Having regard to the foregoing, the Court must consider whether the questions referred by the national court in this case
         are relevant to resolution of the dispute. 
         
         
         49
            
          Although the issue at the heart of the dispute in the main proceedings is whether or not Inspire Art must be registered as
         a formally foreign company in the business register, the fact remains that that registration automatically and inextricably
         entails a number of legal consequences provided for by Articles 2 to 5 of the WFBV. 
         
         
         50
            
          The national court has thus considered that the question of compatibility with Articles 43 EC, 46 EC and 48 EC arose more
         particularly in respect of certain of the obligations provided for by Articles 2 to 5 of the WFBV, namely, those relating
         to registration as a formally foreign company, the indication of that status in all documents produced by the company, the
         minimum capital required and the personal liability of the directors as joint and several debtors when the company's share
         capital has never reached or has fallen below the minimum amount of capital required by law. 
         
         
         51
            
          In order to provide the national court with a helpful answer, within the meaning of the case-law referred to above, it is
         in consequence necessary to examine all those provisions, having regard to freedom of establishment as guaranteed by the EC
         Treaty, and also to the company-law directives. 
         Consideration of the questions referred
         
         52
            
          By those questions, which may appropriately be considered together, the national court seeks in substance to ascertain: 
         
         
         ─
             whether Articles 43 EC and 48 EC must be interpreted as precluding legislation of a Member State, such as the WFBV, which
            attaches additional conditions, such as those laid down in Articles 2 to 5 of that law, to the establishment in that Member
            State of a company formed under the law of another Member State with the sole aim of securing certain advantages compared
            with companies formed under the law of the Member State of establishment which imposes stricter rules than those imposed by
            the law of the Member State of formation with regard to the setting-up of companies and paying-up of shares; 
          whether Articles 43 EC and 48 EC must be interpreted as precluding legislation of a Member State, such as the WFBV, which
         attaches additional conditions, such as those laid down in Articles 2 to 5 of that law, to the establishment in that Member
         State of a company formed under the law of another Member State with the sole aim of securing certain advantages compared
         with companies formed under the law of the Member State of establishment which imposes stricter rules than those imposed by
         the law of the Member State of formation with regard to the setting-up of companies and paying-up of shares; 
         
         
         
         ─
             whether the fact that the law of the Member State of establishment infers that aim from the circumstance of that company's
            carrying on its activities entirely or almost entirely in that latter Member State and of its having no genuine connection
            with the State in accordance with the law of which it was formed makes any difference to the Court's analysis of that question;
            
          whether the fact that the law of the Member State of establishment infers that aim from the circumstance of that company's
         carrying on its activities entirely or almost entirely in that latter Member State and of its having no genuine connection
         with the State in accordance with the law of which it was formed makes any difference to the Court's analysis of that question;
         
         
         
         
         ─
             and whether, if an affirmative answer is given to one or other of those questions, a national law such as the WFBV may be
            justified under Article 46 EC or by overriding reasons relating to the public interest. 
          and whether, if an affirmative answer is given to one or other of those questions, a national law such as the WFBV may be
         justified under Article 46 EC or by overriding reasons relating to the public interest. 
         
         
         
         
         53
            
          In the first place, Article 5(1) and (2) of the WFBV, mentioned in the questions referred for a preliminary ruling, concerns
         the keeping and filing of the annual accounts of formally foreign companies.  Article 5(3) of the WFBV provides, however,
         that the obligations laid down in those subparagraphs are not to apply to companies governed by the law of another Member
         State and to which the Fourth Directive, inter alia, applies. Inspire Art is covered by that exception, since it is governed
         by the law of England and Wales and since it falls within the scope  
         ratione personæ of the Fourth Directive. 
         
         
         54
            
          There is therefore no longer any need for the Court to consider whether a provision such as Article 5 of the WFBV is compatible
         with Community law. 
         
         
         55
            
          Secondly, several of the provisions of the WFBV fall within the scope of the Eleventh Directive, since that concerns disclosure
         requirements in respect of branches opened in a Member State by companies covered by the First Directive and governed by the
         law of another Member State. 
         
         
         56
            
          In that connection, first, as the Commission observes, some of the obligations imposed by the WFBV concern the implementation
         in domestic law of the disclosure requirements laid down by the Eleventh Directive. 
         
         
         57
            
          Those are, more specifically, the provisions requiring: an entry in the business register of the host Member State showing
         registration in a foreign business register, and the number under which the company is registered in that register (Article
         2(1) of the WFBV and Article 2(1)(c) of the Eleventh Directive), filing in the Netherlands business register of a certified
         copy of the document creating the company and of its memorandum and articles of association in Dutch, French, English or German
         (Article 2(1) of the WFBV and Articles 2(2)(b) and 4 of the Eleventh Directive), and the filing every year in that business
         register of a certificate of registration in the foreign business register (Article 5(4) of the WFBV and Article 2(2)(c) of
         the Eleventh Directive). 
         
         
         58
            
          Those provisions, the compatibility of which with the Eleventh Directive has not been called into question, cannot be regarded
         as constituting any impediment to freedom of establishment. 
         
         
         59
            
          Nevertheless, even if the various disclosure measures referred to at paragraph 57 above are compatible with Community law,
         that does not automatically mean that the sanctions attached by the WFBV to non-compliance with those disclosure measures
         must also be compatible with Community law. 
         
         
         60
            
          Article 4(4) of the WFBV provides for directors to be jointly and severally liable with the company for legal acts adopted
         in the name of the company during their directorship for so long as the requirements concerning disclosure in the business
         register have not been met. 
         
         
         61
            
          It is true that Article 12 of the Eleventh Directive requires the Member States to provide for appropriate penalties where
         branches of companies fail to make the required disclosures in the host Member State. 
         
         
         62
            
          The Court has consistently held that where a Community regulation does not specifically provide any penalty for an infringement
         or refers for that purpose to national laws, regulations and administrative provisions, Article 10 EC requires the Member
         States to take all measures necessary to guarantee the application and effectiveness of Community law.  For that purpose,
         while the choice of penalties remains within their discretion, they must ensure in particular that infringements of Community
         law are penalised in conditions, both procedural and substantive, which are analogous to those applicable to infringements
         of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and
         dissuasive (Case 68/88  
         Commission v  
         Greece [1989] ECR 2965, paragraphs 23 and 24; Case C-326/88  
         Hansen [1990] ECR I-2911, paragraph 17; Case C-36/94  
         Siesse [1995] ECR I-3573, paragraph 20, and Case C-177/95  
         Ebony Maritime and Loten Navigation  [1997] ECR I-1111, paragraph 35). 
         
         
         63
            
          It is for the national court, which alone has jurisdiction to interpret domestic law, to establish whether the penalty provided
         for by Article 4(4) of the WFBV satisfies those conditions and, in particular, whether it does not put formally foreign companies
         at a disadvantage in comparison with Netherlands companies where there is an infringement of the disclosure requirements referred
         to in paragraph 56 above. 
         
         
         64
            
          If the national court reaches the conclusion that Article 4(4) of the WFBV treats formally foreign companies differently from
         national companies, it must be concluded that that provision is contrary to Community law.  
         
         
         65
            
          On the other hand, the list set out in Article 2 of the Eleventh Directive does not include the other disclosure obligations
         provided for by the WFBV, namely, recording in the commercial register the fact that the company is formally foreign (Articles
         1 and 2(1) of the WFBV), recording in the business register of the host Member State the date of first registration in the
         foreign business register and information relating to sole members (Article 2(1) of the WFBV), and the compulsory filing of
         an auditor's certificate to the effect that the company satisfies the conditions as to minimum capital, subscribed capital
         and paid-up share capital (Article 4(3) of the WFBV).  Similarly, mention of the company's status of a formally foreign company
         on all documents it produces (Article 3 of the WFBV) is not included in Article 6 of the Eleventh Directive. 
         
         
         66
            
          It is therefore necessary to consider, with regard to those obligations, whether the harmonisation brought about by the Eleventh
         Directive, and more particularly Articles 2 and 6 thereof, is exhaustive. 
         
         
         67
            
          The Eleventh Directive was adopted on the basis of Article 54(3)(g) of the EC Treaty (now, after amendment, Article 44(2)(g) EC)
         which provides that the Council and Commission are to carry out the duties devolving on them under that article  
         by coordinating to the necessary extent the safeguards which, for the protection of the interests of members and others, are
         required by Member States of companies or firms within the meaning of the second paragraph of Article 58 with a view to making
         such safeguards equivalent throughout the Community. 
         
         
         68
            
          Furthermore, it follows from the fourth and fifth recitals in the preamble to the Directive that the differences in respect
         of branches between the laws of the Member States, especially as regards disclosure, may interfere with the exercise of the
         right of establishment and must therefore be eliminated. 
         
         
         69
            
          It follows that, without affecting the information obligations imposed on branches under social or tax law, or in the field
         of statistics, harmonisation of the disclosure to be made by branches, as brought about by the Eleventh Directive, is exhaustive,
         for only in that case can it attain the objective it pursues. 
         
         
         70
            
          It must likewise be pointed out that Article 2(1) of the Eleventh Directive is exhaustive in formulation.  Moreover, Article
         2(2) contains a list of optional measures imposing disclosure requirements on branches, a measure which can have no  
         raison d'être unless the Member States are unable to provide for disclosure measures for branches other than those laid down in the text
         of that directive. 
         
         
         71
            
          In consequence, the various disclosure measures provided for by the WFBV and referred to in paragraph 65 above are contrary
         to the Eleventh Directive. 
         
         
         72
            
          It must therefore be concluded on this point that it is contrary to Article 2 of the Eleventh Directive for national legislation
         such as the WFBV to impose on the branch of a company formed in accordance with the laws of another Member State disclosure
         obligations not provided for by that directive. 
         
         
         73
            
          Thirdly, several of the provisions of the WFBV do not fall within the scope of the Eleventh Directive.  Those are the rules
         relating to the minimum capital required, both at the time of registration and for so long as a formally foreign company exists,
         and those relating to the penalty attaching to non-compliance with the obligations laid down by the WFBV, namely, the joint
         and several liability of the directors with the company (Article 4(1) and (2) of the WFBV).  Those provisions must therefore
         be considered in the light of Articles 43 EC and 48 EC. 
          The existence of an impediment to freedom of establishment
          Observations submitted to the Court
         
         
         74
            
          The Chamber of Commerce and the Netherlands, German, Italian and Austrian Governments are of the view that application of
         provisions such as those of the WFBV is not contrary to Articles 43 EC and 48 EC. 
         
         
         75
            
          In the first place, the rules laid down by the WFBV concern neither the formation of companies under the law of another Member
         State nor their registration (and consequently their recognition).  The validity of those companies is in fact recognised
         and they are not refused registration, with the result that freedom of establishment is not compromised. 
         
         
         76
            
          They submit that the considerations of the Court in Case C-212/97  
         Centros [1999] ECR I-1459 are therefore irrelevant to the present case, because the latter is concerned solely with the rule governing
         registration of foreign companies without affecting the Member States' freedom to lay down conditions for the carrying on
         of certain trades, professions or businesses. 
         
         
         77
            
          The Netherlands Government maintains that for companies formed under the law of another Member State and intending to carry
         on their activities in the Netherlands, the system of incorporation applied in the Netherlands is extremely liberal.  In accordance
         with that principle, as formulated in Article 2 of the Wet conflictenrecht corporaties (the Law concerning the rules on conflict
         of laws applicable to legal persons) of 17 December 1997 (
         the rules-of-conflict Law),  
         a company which, by virtue of its contract or instrument of incorporation, has, at the time of its formation, its registered
         office or, failing that, the centre of its external operations in the State under the law of which it was formed, shall be
         governed by the law of that State. 
         
         
         78
            
          The Netherlands Government submits that the existence of companies validly formed under the law of another Member State is
         recognised without further formality in the Netherlands.  Those companies are subject to the law of the State of formation;
         it is as a rule important that those companies should carry on some activity in that State. 
         
         
         79
            
          It has however become apparent that that very accommodating system has in practice led to increased use of foreign companies
         for ends which the Netherlands legislature had not covered or even foreseen.  More and more frequently companies that carry
         on their activity principally or even exclusively on the Netherlands market are formed abroad with the aim of evading the
         overriding requirements of Netherlands company law. 
         
         
         80
            
          In order to tackle that development, Article 6 of the rules-of-conflict Law has  established a limited exception to that liberal
         regime, by providing that  
         this law is without prejudice to the provisions of the [WFBV]. 
         
         
         81
            
          Next, the Chamber of Commerce and the Netherlands, German, Italian and Austrian Governments observe that the provisions of
         the WFBV do not concern freedom of establishment but are confined to imposing on companies with share capital formed under
         a law other than that of the Netherlands a limited number of additional obligations relating to the exercise of their business
         activities and the running of the company, with a view to ensuring that others are clearly informed that companies such as
         Inspire Art are formally foreign companies and that they are in addition given the same guarantees ─ by means of the filing
         of certain documents and certificates ─ when concluding contracts with those companies as they have when concluding contracts
         with Netherlands companies. 
         
         
         82
            
          In their opinion, those conditions are non-discriminatory since they correspond to the mandatory rules of Netherlands company
         law applicable to limited-liability companies formed in the Netherlands.  Moreover, the purpose of those conditions, which
         must be satisfied by Netherlands companies as well as by formally foreign companies, is to safeguard non-economic interests
         ─ recognised at Community level ─ concerning the protection of consumers and creditors. 
         
         
         83
            
          Maintaining that the WFBV is applicable under private international law, the Chamber of Commerce and the Netherlands, German
         and Austrian Governments refer to the judgment in Case 81/87  
         Daily Mail and General Trust [1988] ECR 5483 and the relevant case-law.  In their submission, in that case the Court held that Articles 43 EC and 48 EC
         did not constitute a restriction on the powers of the Member States to determine the relevant factor connecting a company
         to their national legal order.  They infer from that judgment that those articles do not preclude the adoption under private
         international law of rules applying to companies falling in part within the scope of Netherlands law.  In that context, the
         WFBV does no more than attach significance to the place in which the company carries on its activities, in addition to the
         connecting factor of the  
         place of incorporation and registration. 
         
         
         84
            
          In addition, the German and Austrian Governments have asserted that as a matter of principle the purpose of Articles 43 EC
         and 48 EC, as regards freedom to set up branches, is to enable undertakings carrying on activities in one Member State to
         achieve growth in another Member State, which is not so in the case of  
         brass-plate companies. 
         
         
         85
            
          The German and Austrian Governments question whether, with regard to formally foreign companies, branches ought not actually
         to be regarded as principal establishments and whether there ought not to be applied to them the principles of freedom of
         primary establishment.  Following the same reasoning, the Italian Government maintains that the fact that a company established
         in one Member State has never carried on any activity in that State means that it cannot be considered to be a branch when
         it carries on activity in another Member State.  By placing the sole centre of its activities in a State other than that to
         which it formally belongs, such a company must be considered to be primarily established in that first State. 
         
         
         86
            
          Finally, the Netherlands, German and Italian Governments observe that in its case-law the Court has recognised that a Member
         State is entitled to take measures designed to prevent certain of its nationals from attempting, under cover of the rights
         created by the Treaty, improperly to circumvent their national legislation or to prevent individuals from improperly or fraudulently
         taking advantage of provisions of Community law (
         Centros, paragraph 24, and the case-law cited therein).  Whether or not there is any improper use must be determined taking into
         account, in particular, the objectives pursued by the provisions of Community law in question (Case C-206/94  
         Paletta [1996] ECR I-2357, paragraph 25). 
         
         
         87
            
          Those Governments argue that, according to the judgments in Case 79/85  
         Segers [1986] ECR 2375, paragraph 16, and  
         Centros, paragraph 29, the fact that a company has been formed in one Member State but carries on all its activities through its
         branch established in another Member State does not constitute a sufficient reason for denying the persons concerned the right
         to freedom of establishment by pleading abuse, deceit and/or the unacceptable evasion of national laws. 
         
         
         88
            
          Nevertheless, in this case those Governments submit that, without refusing to recognise a company formed under the law of
         another Member State or preventing the registration of a branch, the WFBV does no more than provide for a few limited preventive
         measures and penalties where a company evades the overriding rules of company law applicable in the Member State in which
         all the activities are carried on. 
         
         
         89
            
          In consequence, where, as in the main proceedings, a company goes beyond merely exercising its right to freedom of establishment
         and where it was formed in another Member State for the purpose of circumventing the body of rules applying to the formation
         and running of companies in the Member State in which it carries on all its activities, those Governments maintain that the
         result of allowing that company to rely on freedom of establishment would be an unacceptable evasion of national law.  Adoption
         of measures such as those set out in the WFBV is therefore justified as Community law now stands. 
         
         
         90
            
          By contrast, in the view of Inspire Art, the United Kingdom Government and the Commission the provisions of the WFBV constitute
         interference with the freedom of establishment guaranteed by Articles 43 EC and 48 EC, in that they impose on formally foreign
         companies obligations which render the right of establishment markedly less attractive for those companies.  That indeed is
         the stated purpose of those provisions. 
         
         
         91
            
          Inspire Art, the United Kingdom Government and the Commission submit that the rules on freedom of establishment are applicable
         to a situation such as that concerned in the main proceedings. Referring to  
         Segers and to  
         Centros, they argue that a company may also rely on freedom of establishment where it was formed in one Member State for the sole
         purpose of being able to establish itself in another Member State where it carries on the essential part, or even all, of
         its activities.  It is immaterial that the company was formed in the first Member State solely in order to avoid the statutory
         provisions of the second Member State.  According to that case-law, there is no abuse, merely the exercise of the freedom
         of establishment guaranteed by the Treaty. 
         
         
         92
            
          The United Kingdom Government and the Commission maintain that Article 1 of the WFBV takes account of the place where the
         company's activity is carried on in order to attach to it a number of provisions mandatory in the host Member State.  Use
         of actual activity as a connecting factor, which does not correspond to any yardstick provided for in Article 48 EC, interferes
         with freedom of establishment inasmuch as it makes the exercise of that freedom less attractive to companies formed abroad
         which intend subsequently to carry on activity in the Netherlands, on the ground that other rules have been held to be applicable,
         in addition to those of the State of formation. 
         
         
         93
            
          Inspire Art argues for a similar interpretation of the WFBV.  It states that although under the national legislation companies
         are as a rule governed by the law of the State in which they were formed, the Netherlands legislature sought to counter the
         formation, which it regarded as improper, of companies under foreign laws with the aim of carrying on activity exclusively
         or principally in the Netherlands by declaring that the provisions of Netherlands company law were applicable to those companies.
          The legislature justified that regime by invoking the protection of creditors.  It follows that the WFBV cannot be seen as
         an application of the real head office theory according to which a company is governed by the law of the Member State in which
         it has its actual head office. 
         
         
         94
            
          Lastly, the United Kingdom Government notes that it is of fundamental importance to the operation of the common market that
         it should be possible to set up secondary establishments in other Member States.  It submits that in the circumstances of
         the case  
         Centros is fully applicable. 
          The Court's answer
         
         
         95
            
          The Court has held that it is immaterial, having regard to the application of the rules on freedom of establishment, that
         the company was formed in one Member State only for the purpose of establishing itself in a second Member State, where its
         main, or indeed entire, business is to be conducted (
         Segers, paragraph 16, and  
         Centros, paragraph 17).  The reasons for which a company chooses to be formed in a particular Member State are, save in the case
         of fraud, irrelevant with regard to application of the rules on freedom of establishment (
         Centros, paragraph 18). 
         
         
         96
            
          The Court has also held that the fact that the company was formed in a particular Member State for the sole purpose of enjoying
         the benefit of more favourable legislation does not constitute abuse even if that company conducts its activities entirely
         or mainly in that second State (
         Segers, paragraph 16, and
         Centros, paragraph 18). 
         
         
         97
            
          It follows that those companies are entitled to carry on their business in another Member State through a branch, and that
         the location of their registered office, central administration or principal place of business serves as the connecting factor
         with the legal system of a particular Member State in the same way as does nationality in the case of a natural person (Case
         270/83  
         Commission v  
         France [1986] ECR 273, paragraph 18;  
         Segers, paragraph 13, and  
         Centros, paragraph 20. 
         
         
         98
            
          Thus, in the main proceedings, the fact that Inspire Art was formed in the United Kingdom for the purpose of circumventing
         Netherlands company law which lays down stricter rules with regard in particular to minimum capital and the paying-up of shares
         does not mean that that company's establishment of a branch in the Netherlands is not covered by freedom of establishment
         as provided for by Articles 43 EC and 48 EC.  As the Court held in  
         Centros (paragraph 18), the question of the application of those articles is different from the question whether or not a Member
         State may adopt measures in order to prevent attempts by certain of its nationals improperly to evade domestic legislation
         by having recourse to the possibilities offered by the Treaty. 
         
         
         99
            
          The argument that freedom of establishment is not in any way infringed by the WFBV inasmuch as foreign companies are fully
         recognised in the Netherlands and are not refused registration in that Member State's business register, that law having the
         effect simply of laying down a number of additional obligations classified as  
         administrative, cannot be accepted. 
         
         
         100
            
          The effect of the WFBV is, in fact, that the Netherlands company-law rules on minimum capital and directors' liability are
         applied mandatorily to foreign companies such as Inspire Art when they carry on their activities exclusively, or almost exclusively,
         in the Netherlands. 
         
         
         101
            
          Creation of a branch in the Netherlands by companies of that kind is therefore subject to certain rules provided for by that
         State in respect of the formation of a limited-liability company.  The legislation at issue in the case in the main proceedings,
         which requires the branch of such a company formed in accordance with the legislation of a Member State to comply with the
         rules of the State of establishment on share capital and directors' liability, has the effect of impeding the exercise by
         those companies of the freedom of establishment conferred by the Treaty. 
         
         
         102
            
          The last issue for consideration concerns the arguments based on the judgment in  
         Daily Mail and General Trust, namely, that the Member States remain free to determine the law applicable to a company since the rules relating to freedom
         of establishment have not led to harmonisation of the provisions of the private international law of the Member States.  In
         this respect it is argued that the Member States retain the right to take action against  
         brass-plate companies, that classification being in the circumstances of the case inferred from the lack of any real connection with the State
         of formation. 
         
         
         103
            
          It must be stressed that, unlike the case at issue in the main proceedings,  
         Daily Mail and General Trust concerned relations between a company and the Member State under the laws of which it had been incorporated in a situation
         where the company wished to transfer its actual centre of administration to another Member State whilst retaining its legal
         personality in the State of incorporation.  In the main proceedings the national court has asked the Court of Justice whether
         the legislation of the State where a company actually carries on its activities applies to that company when it was formed
         under the law of another Member State (Case C-208/00  
         Überseering [2002] ECR I-9919, paragraph 62). 
         
         
         104
            
          It follows from the foregoing that the provisions of the WFBV relating to minimum capital (both at the time of formation and
         during the life of the company) and to directors' liability constitute restrictions on freedom of establishment as guaranteed
         by Articles 43 EC and 48 EC. 
         
         
         105
            
          It must therefore be concluded that Articles 43 EC and 48 EC preclude national legislation such as the WFBV which imposes
         on the exercise of freedom of secondary establishment in that State by a company formed in accordance with the law of another
         Member State certain conditions provided for in domestic law in respect of company formation relating to minimum capital and
         directors' liability. The reasons for which the company was formed in that other Member State, and the fact that it carries
         on its activities exclusively or almost exclusively in the Member State of establishment, do not deprive it of the right to
         invoke the freedom of establishment guaranteed by the Treaty, save where abuse is established on a case-by-case basis. 
          Whether there is any justification
         
         
         106
            
          As a preliminary point, there can be no justification for the disclosure provisions of the WFBV, which have been found to
         be contrary to the Eleventh Directive (see paragraphs 71 and 72 above).  As a result, only the arguments concerning the provisions
         of the WFBV relating to minimum capital and directors' liability will be considered below. 
         
         
         107
            
          Given that those rules constitute an impediment to freedom of establishment, it must be considered whether they can be justified
         on one of the grounds set out in Article 46 EC or, failing that, by an overriding reason relating to the public interest.
         
          Observations submitted to the Court
         
         
         108
            
          According to the Chamber of Commerce and the Netherlands, German and Austrian Governments, the provisions of the WFBV are
         justified both by Article 46 EC and by overriding reasons relating to the public interest. 
         
         
         109
            
          They maintain that the purpose of the WFBV is to counter fraud, protect creditors and ensure that tax inspections are effective
         and that business dealings are fair. Those aims have been recognised in the Court's decisions to be legitimate sources of
         justification. 
         
         
         110
            
          According to the Chamber of Commerce and the Netherlands, German and Austrian Governments, the rule in Article 4 of the WFBV
         concerning minimum capital, its paying-up and its maintenance serves to protect creditors and others.  Thus, the importance
         of minimum capital is expressly recognised in Article 6 of the Second Directive.  The purpose of the rules on minimum capital
         is above all to strengthen the financial capacity of companies and thus to provide greater protection of private and public
         creditors.  In a general way they help to protect all creditors against the risk of fraudulent insolvency connected to the
         formation of companies which have insufficient capital from the outset. 
         
         
         111
            
          The Netherlands Government submits that directors' liability constitutes an appropriate sanction for non-compliance with the
         provisions of the WFBV.  In the absence of Community harmonisation measures, the Member States enjoy a wide margin of discretion
         in determining the penalties to be applied in the case of non-compliance with their national rules (Case C-265/95  
         Commission v  
         France [1997] ECR I-6959, paragraph 33).  The choice of that penalty is on the one hand motivated by the wish to apply the same
         rule as that laid down for directors of a Netherlands company.  Nor is it unknown to Community law, as may be seen from Article
         51 of Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) (OJ 2001 L 294, p.
         1).  
         
         
         112
            
          On the other hand, the Netherlands Government maintains that, since directors are responsible for the proper conduct of company
         matters, it is to be expected that they should incur liability if the company does not comply with the provisions of the WFBV.
         
         
         
         113
            
          Finally, Article 4(1) of the Second Directive permits the Member States to adopt suitable liability rules in respect of obligations
         entered into by the company or in its name, where the company cannot be wound up. 
         
         
         114
            
          The Chamber of Commerce adds that the provisions of the WFBV are not discriminatory.  In its view, they lead instead to the
         application to foreign companies of the rules applicable to companies governed by Netherlands law. 
         
         
         115
            
          The Netherlands Government submits that the provisions of the WFBV concerning minimum capital and directors' liability are
         appropriate for the purpose of attaining the sought-after objective.  In this regard it emphasises the point that that assessment
         cannot be made without taking into account the fundamental and central objective of the WFBV, namely, to combat improper use
         of foreign companies and abuse of freedom of establishment. 
         
         
         116
            
          In addition, the Austrian Government observes that the rules on minimum capital are an appropriate and proportionate means,
         as is recognised by Community law. As regards joint-stock companies, the Second Directive itself established the importance
         of minimum capital.  There is however no such rule for limited-liability companies.  Nevertheless, all the Member States,
         except Ireland and the United Kingdom of Great Britain and Northern Ireland, have rules on the minimum capital to be guaranteed
         by those companies. Unlike members' personal liability, which would frequently be of no use in the event of compulsory liquidation,
         company capital offers greater security. 
         
         
         117
            
          The Chamber of Commerce submits that those measures do not go beyond what is necessary if the objective pursued is to be attained.
          Non-compliance with the obligations imposed by the WFBV does not result in refusal to recognise the foreign company but only
         in the joint and several liability of its directors.  In that regard the Chamber of Commerce maintains that the fact that
         a company does not satisfy, or no longer satisfies, the rules on minimum capital is clear evidence that there is a risk of
         abuse or fraud, where moreover that company has no real connection to its State of formation. 
         
         
         118
            
          Inspire Art, the United Kingdom Government and the Commission put forward the opposite argument and are of the view that the
         provisions of the WFBV are not justified. 
         
         
         119
            
          In the first place, there is no justification for the WFBV to be found in Article 46 EC. 
         
         
         120
            
          As regards abuse of the law, it follows from  
         Centros that the mere fact that a company does not carry on any activity in the State of formation cannot constitute such abuse.
          It is instead for the national authorities and courts to establish in every case whether the conditions on which such a restriction
         might be justified have been satisfied.  Legislation as general as the WFBV does not meet that condition. 
         
         
         121
            
          In their submission,  
         Centros recognised that it was possible for a Member State to restrict freedom of establishment where it pleaded non-compliance with
         provisions concerning the carrying on of certain trades, professions or businesses.  That is not so in the circumstances of
         this case.  So far as Inspire Art is concerned, the issue is not regulation of the conduct of its activities in the Netherlands
         but whether or not the rules of Netherlands company law, such as those on minimum capital, must be observed on setting up
         a secondary establishment in the Netherlands.  The Court held in that judgment that taking advantage of the more favourable
         rules of another Member State cannot, in itself, constitute an abuse of the right of establishment but is a right inherent
         in the exercise of freedom of establishment. 
         
         
         122
            
          Inspire Art, the United Kingdom Government and the Commission also note that the Court held in  
         Centros that the protection of creditors does not in theory fall within the ambit of the system of derogations under Article 46 EC.
         
         
         
         123
            
          Nor, in their submission, can the provisions of the WFBV concerning minimum capital and directors' liability be justified
         by the imperative public-interest requirement of protection of creditors, because those provisions are not such as to guarantee
         that protection. 
         
         
         124
            
          In that context, Inspire Art and the Commission observe that the company holds itself out as a company governed by the law
         of England and Wales and that creditors cannot therefore be deceived on that subject. 
         
         
         125
            
          Furthermore, creditors must take some measure of responsibility for their own actions.  If the assurances given them by the
         law of England and Wales do not satisfy them, they can either insist on additional security or refuse to conclude contracts
         with a company governed by foreign law. 
         
         
         126
            
          The United Kingdom Government and the Commission maintain that the WFBV would not have been applicable if Inspire Art had
         carried out even minor activity in another Member State.  In that case the risk run by creditors would, however, have been
         as great as it would have been if the activities were carried out in the Netherlands exclusively, or indeed greater. 
         
         
         127
            
          According to Inspire Art, the minimum capital requirements do not guarantee any protection for creditors.  Thus, the minimum
         capital might, for example, be converted into a loan immediately once it had been contributed and the company registered,
         even if the company was governed by Netherlands law.  It would not therefore satisfy the creditors.  Consequently, the provisions
         of the WFBV concerning minimum capital are not such as to achieve the intended purpose of protecting creditors. 
         
         
         128
            
          Inspire Art and the Commission maintain that the rules on the joint and several liability of directors are discriminatory.
          Article 4(4) of the WFBV makes them jointly and severally liable where, after the company has been registered in the business
         register, minimum capital falls below the limit set.  By contrast, the directors of a limited liability company governed by
         Netherlands law are not subject to that strict liability.  Moreover, as opposed to companies governed by Netherlands law,
         the circle of potentially liable persons is extended to those who actually conduct the company's activities. 
         
         
         129
            
          Inspire Art, the United Kingdom Government and the Commission submit that the provisions of Article 4(1), (2) and (4) of the
         WFBV are disproportionate because Inspire Art holds itself out as a company governed by the law of England and Wales. 
         
         
         130
            
          Furthermore, less radical measures could in their view be envisaged.  For example, as the Court has acknowledged in  
         Centros, it could be made possible in law for public creditors to obtain the necessary guarantees from those foreign establishments,
         in so far as they feel that they are insufficiently protected by the company law of the State of formation. 
          The Court's answer
         
         
         131
            
          It must first of all be stated that none of the arguments put forward by the Netherlands Government with a view to justifying
         the legislation at issue in the main proceedings falls within the ambit of Article 46 EC. 
         
         
         132
            
          The justifications put forward by the Netherlands Government, namely, the aims of protecting creditors, combating improper
         recourse to freedom of establishment, and protecting both effective tax inspections and fairness in business dealings, fall
         therefore to be evaluated by reference to overriding reasons related to the public interest. 
         
         
         133
            
          It must be borne in mind that, according to the Court's case-law, national measures liable to hinder or make less attractive
         the exercise of fundamental freedoms guaranteed by the Treaty must, if they are to be justified, fulfil four conditions: they
         must be applied in a non-discriminatory manner; they must be justified by imperative requirements in the public interest;
         they must be suitable for securing the attainment of the objective which they pursue, and they must not go beyond what is
         necessary in order to attain it (see, in particular, Case C-19/92  
         Kraus [1993] ECR I-1663, paragraph 32; Case C-55/94  
         Gebhard [1995] ECR I-4165, paragraph 37, and  
         Centros, paragraph 34). 
         
         
         134
            
          In consequence, it is necessary to consider whether those conditions are fulfilled by provisions relating to minimum capital
         such as those at issue in the main proceedings. 
         
         
         135
            
          First, with regard to protection of creditors, and there being no need for the Court to consider whether the rules on minimum
         share capital constitute in themselves an appropriate protection measure, it is clear that Inspire Art holds itself out as
         a company governed by the law of England and Wales and not as a Netherlands company.  Its potential creditors are put on sufficient
         notice that it is covered by legislation other than that regulating the formation in the Netherlands of limited liability
         companies and, in particular, laying down rules in respect of minimum capital and directors' liability.  They can also refer,
         as the Court pointed out in  
         Centros, paragraph 36, to certain rules of Community law which protect them, such as the Fourth and Eleventh Directives. 
         
         
         136
            
          Second, with regard to combating improper recourse to freedom of establishment, it must be borne in mind that a Member State
         is entitled to take measures designed to prevent certain of its nationals from attempting, under cover of the rights created
         by the Treaty, improperly to circumvent their national legislation or to prevent individuals from improperly or fraudulently
         taking advantage of provisions of Community law (
         Centros, paragraph 24, and the decisions cited therein). 
         
         
         137
            
          However, while in this case Inspire Art was formed under the company law of a Member State, in the case in point the United
         Kingdom, for the purpose in particular of evading the application of Netherlands company law, which was considered to be more
         severe, the fact remains that the provisions of the Treaty on freedom of establishment are intended specifically to enable
         companies formed in accordance with the law of a Member State and having their registered office, central administration or
         principal place of business within the Community to pursue activities in other Member States through an agency, branch or
         subsidiary (
         Centros, paragraph 26). 
         
         
         138
            
          That being so, as the Court confirmed in paragraph 27 of  
         Centros, the fact that a national of a Member State who wishes to set up a company can choose to do so in the Member State the company-law
         rules of which seem to him the least restrictive and then 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. 
         
         
         139
            
          In addition, it is clear from settled case-law (
         Segers, paragraph 16, and  
         Centros, paragraph 29) that the fact that a company does not conduct any business in the Member State in which it has its registered
         office and pursues its activities only or principally in the Member State where its branch is established is not sufficient
         to prove the existence of abuse or fraudulent conduct which would entitle the latter Member State to deny that company the
         benefit of the provisions of Community law relating to the right of establishment. 
         
         
         140
            
          Last, as regards possible justification of the WFBV on grounds of protection of fairness in business dealings and the efficiency
         of tax inspections, it is clear that neither the Chamber of Commerce nor the Netherlands Government has adduced any evidence
         to prove that the measure in question satisfies the criteria of efficacy, proportionality and non-discrimination mentioned
         in paragraph 132 above. 
         
         
         141
            
          To the extent that the provisions concerning minium capital are incompatible with freedom of establishment, as guaranteed
         by the Treaty, the same must necessarily be true of the penalties attached to non-compliance with those obligations, that
         is to say, the personal joint and several liability of directors where the amount of capital does not reach the minimum provided
         for by the national legislation or where during the company's activities it falls below that amount. 
         
         
         142
            
          The answer to be given to the second question referred by the national court must therefore be that the impediment to the
         freedom of establishment guaranteed by the Treaty constituted by provisions of national law, such as those at issue, relating
         to minimum capital and the personal joint and several liability of directors cannot be justified under Article 46 EC, or on
         grounds of protecting creditors, or combating improper recourse to freedom of establishment or safeguarding fairness in business
         dealings or the efficiency of tax inspections.  
         
         
         143
            
          In light of all the foregoing considerations, the answers to be given to the questions referred for a preliminary ruling must
         be: 
         
         
         ─
             It is contrary to Article 2 of the Eleventh Directive for national legislation such as the WFBV to impose on the branch of
            a company formed in accordance with the laws of another Member State disclosure obligations not provided for by that directive.
            
          It is contrary to Article 2 of the Eleventh Directive for national legislation such as the WFBV to impose on the branch of
         a company formed in accordance with the laws of another Member State disclosure obligations not provided for by that directive.
         
         
         
         
         ─
             It is contrary to Articles 43 EC and 48 EC for national legislation such as the WFBV to impose on the exercise of freedom
            of secondary establishment in that State by a company formed in accordance with the law of another Member State certain conditions
            provided for in domestic company law in respect of company formation relating to minimum capital and directors' liability.
             The reasons for which the company was formed in that other Member State, and the fact that it carries on its activities exclusively
            or almost exclusively in the Member State of establishment, do not deprive it of the right to invoke the freedom of establishment
            guaranteed by the EC Treaty, save where the existence of an abuse is established on a case-by-case basis. 
          It is contrary to Articles 43 EC and 48 EC for national legislation such as the WFBV to impose on the exercise of freedom
         of secondary establishment in that State by a company formed in accordance with the law of another Member State certain conditions
         provided for in domestic company law in respect of company formation relating to minimum capital and directors' liability.
          The reasons for which the company was formed in that other Member State, and the fact that it carries on its activities exclusively
         or almost exclusively in the Member State of establishment, do not deprive it of the right to invoke the freedom of establishment
         guaranteed by the EC Treaty, save where the existence of an abuse is established on a case-by-case basis. 
         
         
         
         Costs
         144
            
          The costs incurred by the Netherlands, German, Italian, Austrian and United Kingdom Governments and by the Commission, which
         have submitted observations to the Court, are not recoverable.  Since these proceedings are, for the parties to the main proceedings,
         a step in the action pending before the national court, the decision on costs is a matter for that court. 
         
         On those grounds, 
         
         
         
            
            THE COURT,
         
         
          in answer to the questions referred to it by the Kantongerecht te Amsterdam by order of 5 February 2001, hereby rules: 
         
            
            1.
             It is contrary to Article 2 of the Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements
            in respect of branches opened in a Member State by certain types of company governed by the law of another State for national
            legislation such as the Wet op de Formeel Buitenlandse Vennootschappen (Law on Formally Foreign Companies) of 17 December
            1997 to impose on the branch of a company formed in accordance with the laws of another Member State disclosure obligations
            not provided for by that directive. 
            
            
            2.
             It is contrary to Articles 43 EC and 48 EC for national legislation such as the Wet op de Formeel Buitenlandse Vennootschappen
             
            to impose on the exercise of freedom of secondary establishment in that State by a company formed in accordance with the law
               of another Member State certain conditions provided for in domestic company law in respect of company formation relating to
               minimum capital and directors' liability.  The reasons for which the company was formed in that other Member State, and the
               fact that it carries on its activities exclusively or almost exclusively in the Member State of establishment, do not deprive
               it of the right to invoke the freedom of establishment guaranteed by the EC Treaty, save where the existence of an abuse is
               established on a case-by-case basis.
            
                  Rodríguez Iglesias
               
               
                  Puissochet 
               
               
                  Wathelet 
               
            
                  Schintgen
               
               
                  Timmermans 
               
               
                  Gulmann 
               
            
                  Edward
               
               
                  La Pergola 
               
               
                  Jann 
               
            
                  Skouris
               
               
                  Macken 
               
               
                  Colneric 
               
            
                  von Bahr
               
               
                  Cunha Rodrigues 
               
               
                  Rosas 
               
            
            
            
            
            
            
            
            
         
         
          Delivered in open court in Luxembourg on 30 September 2003. 
         
         
         
         
                  R. Grass 
               
               
                  G.C. Rodríguez Iglesias  
               
            
         
         
         
                  Registrar
               
               
                  President
               
            
      
      
          1 –
            
             Language of the case: Dutch.