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Case C-212/97 Centros [1999]

Facts

  • To establish a company in Denmark, a minimum share capital of DKK 125,000 (~£12,000) was required to be paid into that company. This was said to help prevent fraudulent insolvencies
  • Centros Ltd, a wine exporting company, was established as an English company, where the minimum share capital is £1, by all Danish shareholders
  • Denmark refused Centros’ application to trade in Denmark, claiming that Centros were trying to circumvent Denmark’s minimum share capitalisation law

Issue

  • Did this refusal breach EU law on the freedom of movement of persons and establishment?

Decision

  • Yes

Reasoning

  • Whilst Members States may implement measures with the aim of preventing fraud, Centros’ action did not abuse the right of freedom of establishment, and Denmark could not adequately justify the national law in question
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