Regulations for setting up a company in the EU
Prepare a proposal that shows integration of legal issues into the business plan process.
The European Union regulates the setting up of new companies and helps in the funding and registration of companies within its territory. While allowing a company to set up in the European Union, strict guidelines have to be adhered with and also eligibility rules need to be checked before setting up a company. For the particular business, the country chosen is Germany which is a member of the European Union. The factors that need to be checked while applying for a business in EU are whether the subject matter in which the company is dealing is legal and lawful and who are the target audience. European Union also has to check if the company upholds the policies of the European Union.
The European Union Commission merged all the company law directives to make sure that all the EU Company law becomes friendlier towards the investors. The new directive is called the EUR-Lex Directive 2017/1132 (Heinelt 2018). The aim of this directive is to help the companies to create a framework to incorporate modern tools for development. The members are equipped under the directive to help in cross border expansion and mergers. This helps in giving assistance to the companies who want to explore beyond the marked territories.
By virtue of being a member of the European Union, the company can be set up in any country of the European Union if the one of the founders is a citizen of the European Union. The company can also have a subsidiary branch in any EU Though there are certain requirements that need to be met by a country which are country specific but there are a few general regulations. The company has to first register in the home country. In this case, the country is Germany and hence the company will be regulated by civil law. Being a entrepreneurial company, the minimum share capital is EUR 25,000. The non EU country chosen is Australia where the company will set up its subsidiary. The businesses in Australia are governed by the Corporations Act and matters of export and import and governed by the Department of Home Affairs. While being governed by the laws of Australia, it is imperative to give due recognition to the national laws. In setting up a company in another country, it is important to keep in mind that the laws of EU should not conflict with the national laws of the importing country (Radaelli 2017).
EUR-Lex Directive 2017/1132
The nature of trade which the company indulges is export and import. While exporting to a non EU member country, the business has to be registered at the public order office and the registration ahs to be done in the Commercial Register. The citizens from the non European member countries have to apply for a residence permit. INCOTERMS are the delivery conditions that need to be complied with while exporting in a non EU member country. These terms need to be regulated between the exporter and the foreign importer (Kraakman and Hansmann 2017).
Being a car manufacturing company, the industry is regulated by the laws of the member states’ own government. Australia is open to export and import of cars and it is a growing industry in Australia. Australia has a robust automotive industry which has been prevalent since the 20th The Federal Chamber of Automotives is in charge of the automotives industry in Australia (Kraakman and Armour 2017). The Australian Government requires that cyber security deals with their industry and while complying with the cyber security regulations, the EU country might face impediments.
The EU being customs unions emphasizes on the acceptance of all four EU freedoms. These four freedoms are movement of goods, capital, services and people. A single market is built on the four beliefs of freedom as mentioned above (Kharchenko et al. 2015). The members of the EU impose tariffs while importing goods from non EU countries. The aim of the single market is to initiate fairness in regulation of tariffs and also promote a common regulatory framework that will help in imposing a level playing field. This helps in regulating trade and also encourages business because then the country can sell their goods across the countries. This also helps in opening markets across the globe and also in reducing trade. Complying with the single market provisions, there shall be free movement of people and goods. Open market will help in promoting trade and free movement across borders. The four freedoms help in promoting a free trade zone.
An easy option for setting up a company is to invest in a public limited company or in a partnership company when the company has a seat in Germany. This is a very good option for long term business investments. The company can set up a company outside as an independent branch or as a dependent branch office. Agency needs the appointment of an agent and is cost effective. The benefit of an agency agreement that it can be terminated without much trouble. The agent can exercise flexibility in carrying out the agency agreement. Understanding agency in the light of German jurisdiction, there shall be long term investment and it is not in favour of the agents. The agents need to be compensated when the contract is terminated.
Export and import laws
The company incorporated in called a corporation which is governed by company law of the country of incorporation. The company law governs the rights, relations of the companies. The shareholders, employees and shareholders are regulated by the company law. The contract will be important for denoting the rights and duties of the directors who will be governed by the same (Legg, Day, Emmerig 2017). This is important for the industry because in cases if breach, the director will be held accountable and will have to pay damages (Charter 2017). The most important clause for the industry is the confidentiality clause because the primary business of the industry is dealing in cars (Winter and Moffitt 2017). Car manufacturing industries have high level of secrecy involved because the designs are patented. The contract mandates that there shall be a non disclosure agreement that is the parties to the contract are prevented from disclosing the essential details of the company. In cases when the company breaches the non disclosure agreement, the members disclosing the details will be sued for breach of contract (Law 2017).
In Australia there are no specific laws governing joint ventures. For this proposed company, the joint venture shall be governed by the local laws of Australia (Barnard and Peers 2017). The joint venture is a combination of general law rules that govern areas of corporate law, contract and agency laws. The joint venture will also take into consideration matters of trade and taxation and form rules keeping in mind the interests of both the companies. In Australia, there are no specific laws related to joint ventures and hence common law applies in cases of Australian companies(Schütze 2015). By definition, joint venture is a method of bringing together two companies or entities which can work together. For a joint venture set up, the companies need to be independent authorities and a commercial relation exists between the entities that can function together. In this case, the joint venture will be contractual, that is, the joint venture will function as per the terms of the contract. In a contractual joint venture agreement, the parties are bound by the terms of the agreement and in cases of parties breaching the contractual terms, they will need to pay damages. To enter into a joint venture company with a local company, the company has to abide by the local laws and act in accordance with the regulations of the domestic law (Yan and Luo 2016). The problem that can arise in such cases is that the domestic laws and the laws of the EU can conflict and in such cases the problem will arise as to which law will get more primacy.
References
Barnard, C. and Peers, S. eds., 2017. European union law. Oxford University Press.
Charter, M. ed., 2017. Greener marketing: A responsible approach to business. Routledge.
Heinelt, H., 2018. European Union Environment Policy and New Forms of Governance: A Study of the Implementation of the Environmental Impact Assessment Directive and the Eco-management and Audit Scheme Regulation in Three Member States: A Study of the Implementation of the Environmental Impact Assessment Directive and the Eco-management and Audit Scheme Regulation in Three Member States. Routledge.
Kharchenko, P., Kohut, O., Lukyanets, V., Smyrnova, K., Stakheiva, G. and Valitov, S., 2015. ANALYSIS OF LEGAL APPROACHES TO HOSTILE CORPORATE TAKEOVER IN THE EU WITH AN EMPHASIS ON GERMANY. ??????????? ???????, p.285.
Kraakman, R. and Armour, J., 2017. The anatomy of corporate law: A comparative and functional approach. Oxford University Press.
Kraakman, R. and Hansmann, H., 2017. The end of history for corporate law. In Corporate Governance (pp. 49-78). Gower.
Law, C.M., 2017. Restructuring the global automobile industry(Vol. 4). Taylor & Francis.
Legg, M., Day, J. and Emmerig, J., 2017. Corporate law: High court of Australia determines extent to which class members are bound by class action judgment. Governance Directions, 69(2), p.114.
Radaelli, C.M., 2017. Tax policy in the European Union: technocracy or politicization?. In Technocracy in the European Union (pp. 85-115). Routledge.
Schütze, R., 2015. European Union Law. Cambridge University Press.
Winter, B. and Moffitt, M., 2017. Corporate law: Absence of adequate risk assessments result in $1 million fine. Governance Directions, 69(3), p.174.
Yan, A. and Luo, Y., 2016. International joint ventures: Theory and practice. Routledge.
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