Transfer of a business to another Member State

When regulating the transfer of a company’s seat and determining the applicable law for companies, the national laws of the Member States apply either the theory of incorporation, or the theory of real seat, there are therefore significant differences in the possibilities of cross-border transfers of company seats. For this reason, the Court of Justice of the European Union (CJEU) has dealt with the issue of the cross-border transfer of the company’s real seat in its judgements. In doing so, the CJEU makes a distinction between immigration and emigration of companies. In terms of company immigration, the CJEU favoured the theory of incorporation and recognition of the company’s legal personality. In terms of emigration, the CJEU does not prevent the State of incorporation from imposing certain restrictions on the transfer of its seat abroad and favours the theory of real seat.
As regards the transfer of the registered office of a domestic company abroad, a distinction must be drawn between the transfer of the real seat and the transfer of the registered office. Since Croatia belongs to the circle of Member States applying the theory of incorporation, by transferring the real seat to another Member State which also applies this theory, the company retains its legal personality and there is no change in its statutes (the applicable law on legal capacity). If in the Member State to which the company’s real seat is intended to be transferred the theory of real seat applies, a new company must be established under the law of that State.
If a domestic company intends to transfer its registered office to another Member State, there is a change in the company’s statute and this is not possible without dissolving the company in Croatia and setting up a new company in the Member State to which its registered office is transferred.
The transfer of the registered office of a domestic company to another Member State without its liquidation may also be effected through cross-border mergers or absorptions of limited liability companies. The purpose of the provisions of the Companies Act is to facilitate these status changes by special regulation of the decision-making process and its entry in the registers of the Member States the nationality of which the companies involved in the cross-border merger or absorption have. In so doing, each company participating in a status change shall remain subject to the legal rules and procedures of the applicable national law applicable to domestic mergers and absorptions. The advantage of this form of indirect transfer of the registered office is that it can be applied by all domestic limited liability companies by carrying out a merger with a previously established subsidiary in another Member State or by setting up a new company in that State in order to carry out a cross-border merger.
Relevant authority and regulations

Ministry of Justice, Public Administration and Digital Transformation
Ulica grada Vukovara 49
10 000 Zagreb
+385 1 371 45 80
Companies Act (Official Gazette 111/9334/99121/99 - authoritative interpretation, 52/00 - Decision of the Constitutional Court of the Republic of Croatia, 118/03107/07146/08137/09152/11 - consolidated version, 111/1268/13110/15 and 40/19)
Commercial Register Act (Official Gazette 1/9557/961/9830/9945/9954/0540/0791/1090/11,148/1393/14110/15 and 40/19)
Ordinance on Registration in the Commercial Register (NN 121/19)