JUDGMENT OF THE COURT (Sixth Chamber) 20 September 1988* In Case 136/87 REFERENCE to the Court under Article 177 by the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) for a preliminary ruling in the proceedings pending before that court between Ubbink Isolatie BV and Dak- en Wandtechniek BV on the interpretation of the First Directive of the Council of the European Communities (61/151/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 (Official Journal, English Special Edition 1968 (I), p. 41), THE COURT (Sixth Chamber) composed of: O. Due, President of Chamber, T. Koopmans, K. Bahlmann, C. N. Kakouris and T. F. O'Higgins, Judges, Advocate General: J. L. Cruz Vilaça Registrar: D. Louterman, Administrator after considering the observations submitted on behalf of Ubbink Isolatie BV, by L. Hardenberg, during the written and oral procedure, * Language of the Case: Dutch. 4682
UBBINK ISOLATIE v DAK- EN WANDTECHNIEK the Government of the Kingdom of the Netherlands, by H. J. Heinemann, during the written procedure, the Commission of the European Communities, by G. Antonio Caeiro, Agent, assisted by W. J. L. Calkoen, during the written and oral procedure, having regard to the Report for the Hearing and further to the hearing on 21 January 1988, after hearing the Opinion of the Advocate General delivered at the sitting on 8 March 1988, gives the following Judgment 1 By judgment of 24 April 1987, which was received at the Court on 30 April 1987, the Hoge Raad der Nederlanden referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty four questions on the interpretation of the rules on nullity laid down in Section III of the First Council Directive (68/151) of 9 March 1968 on coordination of safeguards which, for the protection of the interests of members and others, are required of companies within the meaning of the second paragraph of Article 58 of the Treaty (Official Journal, English Special Edition 1968 (I), p. 41) (hereinafter referred to as 'the First Directive'). 2 Those questions arose in proceedings concerning the performance of a contract between Dak- en Wandtechniek BV and the company calling itself Ubbink Isolatie BV (hereinafter referred to as 'the appellant'). 3 At the time of the contested contract, a partnership was registered in the commercial register under the name Ubbink Isolatie BV i. o. (Ubbink Isolatie, a private limited company in the course of formation), listing as partners Ubbink Nederland BV and Isetco BV, both private limited companies, and as general 4683
representative, with the title of director, a certain Mr Juraske. However, there was no private limited company registered in the commercial register under the name Ubbink Isolatie BV. The national court found that as there had been no notarial instrument establishing a private limited company under the name Ubbink Isolatie BV the company had not been duly formed. 4 The appellant concluded the contested contract with Dak- en Wandtechniek under the name Ubbink Isolatie BV without the addition of the expression 'in the course of formation' and proceedings were brought against it under that name by Daken Wandtechniek before the Arrondissementsrechtbank (District Court), Arnhem for the termination of that contract and to establish liability thereunder; the appellant also initially submitted its defence under that name. 5 During the proceedings before that court, the appellant contended that Dak- en Wandtechniek was wrong to bring its action against Ubbink Isolatie BV. The summmons issued upon the application of Dak- en Wandtechniek was void and the application could not be granted because Ubbink Isolatie BV did not exist. 6 In an interlocutory judgment, the Arondissementsrechtbank, Arnhem held that even if Ubbink Isolatie BV had not been formed at all or if the instrument intended to form it was defective, the private limited liability company could not be said not to exist merely on that ground. The company existed until such time as it was wound up or a declaration of nullity was made in accordance with the Netherlands Civil Code. Article 182 (1) of Book 2 of that Code provides that where business has been carried on in the name of a private limited liability company which has not been registered in the commercial register and before an instrument forming the company has been drawn up and certified by a notary or without a declaration that the minister has no objection to the formation of the company, a declaration of nullity may be obtained on the application of any interested party or of the public prosecutor. 7 The appellant appealed against that judgment to the Gerechtshof (Court of Appeal), Arnhem, which confirmed the judgment at first instance. The appellant then appealed to the Hoge Raad, claiming to be 'the party to the proceedings which, at earlier instances, was named as defendant and appeared as Ubbink Isolatie BV, a private limited liability company'. According to the statement of the grounds of appeal, Article 182 does not apply to a case such as this in which no private limited liability company has been constituted and where actions have been 4684
UBBINK ISOLATIE v DAK- EN WANDTECHNIEK wrongfully carried out on behalf or in the name of a fictitious private limited liability company which does not have the structure which is essential for the existence of such a company and in regard to which no instrument constituting the company has been executed. 8 Since it considered that Article 182 must be interpreted in the light of the provisions of Section III of the First Directive, in particular Articles 11 and 12 thereof, the Hoge Raad stayed the proceedings pending a preliminary ruling from the Court of Justice on the following questions : '(1) Where business is carried on in the name of a company within the meaning of the First Directive which has not, however, been constituted under the applicable national law because no authentic instrument of constitution within the meaning of Article 11 (2) (a) of the directive was executed or the rules of preventive control, also within the meaning of Article 11 (2) (a), were not complied with, do the rules laid down in Section III of the First Directive mean that in proceedings brought against it "the company" must be treated as being in existence so long as its nullity has not been declared in separate proceedings for a declaration of nullity and for the winding-up of "the company"? (2) Does it make any difference to the answer to Question 1 whether (a) only the instrument of constitution was not executed or only the rules of preventive control were not complied with, or (b) the instrument was not executed and the aforesaid rules were not complied with either? (3) Does it make any difference to the answer to Question 1 whether (a) business is carried on within the framework of an organization of persons and assets which apart from the fact that business is done in the name of a company gives the outward appearance of a company or (b) business is carried on where there is no question of the existence of such an organization? (4) Is it relevant to the answer to Question 1 that business is carried on within the framework of an organization which, according to the applicable national law, has a different legal form from that of a company within the meaning of the First Directive, for example the legal form of a "vennootschap onder firma" (partnership), and is registered as such in the commercial register under a name which, save as regards the indication of the legal form, is identical to the name of the unconstituted company under which business is carried on?' 4685
9 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. 10 The first two questions put by the national court, which should be considered together, seek essentially to ascertain whether the rules governing nullity laid down in the First Directive are applicable in a case in which acts have been carried out in the name of a limited liability company, a legal form covered by the First Directive, which has not been constituted in national law by reason of the failure to complete the formalities required by that law for the formation of a company. The third and fourth questions seek to determine whether the reply to the first two questions would be different where the outward appearance of a company within the meaning of the First Directive has been created by the existence of an organization of persons or a company not covered by the First Directive. 1 1 It should be observed that the purpose of the First Directive is to coordinate the safeguards required by Member States of companies having a share capital and private limited liability companies in order to protect, in particular, the interests of third parties. 12 Section I of the First Directive provides for formalities in regard to disclosure intended to provide third parties with prior information on the essential features of companies within the meaning of the said directive. As is indicated in one of the recitals in the preamble to the directive, disclosure is intended to permit third parties to ascertain the contents of the basic documents of the company and other information concerning it, especially particulars of the persons who are authorized to bind the company. 1 3 Consequently, third parties may legitimately rely on the information concerning a company within the meaning of the First Directive when that information has been the subject of disclosure in accordance with the provisions of Section I of the First Directive. The purpose of the directive is not therefore to permit third parties to rely on appearances created by the company's organs or representatives if those appearances do not conform to the information contained in the public register. 4686
UBBINK ISOLATIE v DAK- EN WANDTECHNIEK 1 4 Consequently, the rules concerning the nullity of companies laid down in Section III of the First Directive apply only where third parties have been led to believe by information published in accordance with Section I that a company within the meaning of the First Directive exists. 15 On the other hand, third parties are not in that position when no formal disclosure has been made concerning a company within the meaning of the First Directive, in particular when the formalities required by national law for incorporation a certified instrument of constitution and a preventive administrative check have not been completed and for that reason the company appears in the public register as a company in the course of formation. 16 The reply to the first two questions must therefore be that the rules on the nullity of companies contained in the First Directive do not apply where the acts involved were performed in the name of a private limited liability company whose existence is not confirmed by the public register because the formalities for incorporation required by national law have not been completed. 17 Since that reply permits the national court to resolve the question of Community law which has been raised, there is no need to consider the other circumstances set out in the questions. 18 However, it must be pointed out that in so far as acts performed in the name of a limited liability company not yet incorporated are regarded by the applicable national law as having been performed in the name of a company being formed within the meaing of Article 7 of the First Directive, it is for the national law in question to provide, in accordance with that provision, that the persons who perform them are to be jointly and severally liable. 4687
Costs 19 The costs incurred by the Kingdom of the Netherlands and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of 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 (Sixth Chamber), in answer to the questions referred to it by the Hoge Raad der Nederlanden by judgment of 24 April 1987, hereby rules: The rules on the nullity of companies contained in the First Council Directive of 9 March 1968 (68/151) do not apply where the acts in question were performed in the name of a private limited liability company whose existence is not confirmed by the public register because the formalities for incorporation required by national law have not been completed. Due Koopmans Bahlmann Kakouris O'Higgins Delivered in open court in Luxembourg on 20 September 1988. J.-G. Giraud Registrar O. Due President of the Sixth Chamber 4688